In light of the assumption that the use of hormones in promoting the growth of cattle may lead to risks to human health, European authorities began to enact regulations to prohibit the use of such hormones. The law also requires a trade ban over the meat carrying such veterinary drug residues. The United States and Canada, while permitting the use of hormones, suffered heavily from the trade restrictions. After the failure of consultations with Europe, these two countries filed a complaint at the World Trade Organization (WTO), alleging that the European measures violate the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS).
The 1998 WTO ruling sided with the complaints. Yet, there was no sign that the trade ban would be lifted. The trade regime then authorized the complaining parties to apply sanctions against Europe. Following the verdict, Europe continued to conduct research on hormones and made every effort to provide more definite risk assessments and to offer more convincing scientific evidence. Europe was confident that its newly adopted hormones directives complied with relevant obligations of the SPS Agreement, and appealed to its counterparts to terminate the retaliation. When no consensus was reached, Europe decided to bring the dispute to the WTO for adjudication on the continuing sanctions. The new proceeding offers a good opportunity for reviewing the compatibility of such regulations with European obligations under trade agreements.
With respect to substantial issues, it is found that the Panel took a narrow stance on the consistency of the European directives with the SPS agreement. In contrast, the AB reversed the panel’s approach and was inclined to favor the European argument regarding possible risks arising from hormones, although it refrained from deciding on the legality of such new measures.
Article 5.1 of the SPS Agreement requires WTO members to base their SPS measures on risk assessment. First, the Panel rejected the misuse or abuse of hormones as a factor in defining an appropriate risk assessment. Yet, the AB sided with Europe and overruled the Panel. This approach appears to add a non-science element to risk assessment, reshaping a process that should be based entirely on science.
Secondly, in terms of standard of review, the Panel is required to conduct an objective assessment of the facts and evidence. The AB found that the Panel committed several missteps in conducting the assessment. The Panel needs to review and confirm whether the European risk assessment has a scientific basis. The AB believes that the basis does not need to reflect the majority view within the scientific community, but the Panel has to decide whether the finding results from reliable sources and to judge whether the European decision would be valid on the basis of the scientific evidence. However, the AB found that the Panel failed to conduct an objective assessment. The Panel put much energy into describing the extent to which the genotoxicity of oestradiol- 17β has been widely accepted by the science community. Instead of deciding that the reliability of the sources that may sustain the European directives, the Panel investigated whether the majority view of the scientific community agreed with the European perspective. The Panel appeared to favor the view of a certain group so as to decide that the genotoxicity of oestradiol- 17β remained an open question, and it did not take into account opinions favorable to the European position. The AB viewed the flawed investigation as a failure of its duty to conduct an objective assessment. Further, the AB found that errors were made by the Panel in the selection of experts. The Panel ignored the European suggestion and selected two scientists who had served on the Joint Expert Committee on Food Additives (JECFA) and participated in the risk assessment of the hormones. The AB considered such experts as acting as an interface between the Panel and the scientific evidence. That the Panel only relied on these two experts, in the AB’s view, undermined the independence and impartiality of the judicial process and infringed on the Europeans’ right of due process.
Article 5.7 of the SPS Agreement allows WTO members to provisionally adopt SPS measures that may vary from the disciplines of the SPS Agreement where scientific evidence is insufficient. As the JECFA has conducted a risk assessment on the five hormones prohibited by Europe, the Panel concluded that the scientific evidence regarding these hormones was not insufficient. Thus, the European measures did not meet the requirements specified in Article 5.7. Yet, the AB weakened the linkage between JECFA’s finding and the determination of such test. It further contended that the higher level of protection pursued by the European directives could constitute one factor in deciding whether the requirement was met. Thus, the international standards of the JECFA, whose level of protection is lower than that of Europe, should not prevent members from invoking Article 5.7. Though the Panel’s ruling was reversed, the AB still refrained from ruling on whether the new European measures on these five hormones would be consistent with Article 5.7.
Indeed, the 2008 AB report did not fully vindicate either side, and thus arguably push disputant parties to reach a political settlement. As a result of the long battle over the hormones dispute, Europe’s tireless efforts to prove the risks of hormones have been largely recognized. Thus WTO members enjoy more extensive discretion in pursing national health objectives. However, the dispute is also indicative of the limitations of the WTO dispute settlement mechanism, which occasionally falls short of providing a thorough judicial resolution.