China’s Recent Restrictions on Trade and the SPS Agreement

Since June 2020, China turned its eye on trade measures to battle the spread of COVID-19 in its country. It introduced several measures, from extensive testing of containers and content of imported food and agricultural products to complete import bans of specific products (such as pork from Tönnies and poultry products from Tyson Foods Inc. and OK Foods). These measures have been met by harsh criticism from other WTO members which question their legality under the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement; if not indicated otherwise, all articles and annexes are such of this Agreement). The matter has been brought to the attention of the SPS Committee, most recently by a notification submitted on 18 November 2020 by the United States, and was discussed during its last meeting in November 2020, where China defended its measures. This contribution aims to shed light on the most invasive measure imposed by China, namely the suspension of imports, by discussing said measure on the example of Tyson Foods Inc. (Tyson), being among the first companies affected by a complete suspension.

The Import Suspension as an SPS Measure

Generally, states are allowed to introduce restrictions to trade in agricultural products and food to protect the health and life of their citizens. However, to prevent misuse of such measures, the SPS Agreement sets certain requirements for a measure to be a justified trade restriction. Concerning the suspension of poultry imports from Tyson, the question is whether the suspension is a valid SPS measure. For this, the measure must meet certain conditions: it could be based on or conform with an international standard according to Art. 3, whereby it automatically is considered to be in compliance with the SPS Agreement, or, if Art. 3 is not applicable, it must comply with Art. 2 and its further specifications. As there is no international standard which recommends the ban of imports of foods from countries with COVID cases (rather to the contrary, as has been evaluated by the International Commission on Microbiological Specifications for Foods), the suspension cannot be based on, or, for the same reason, does not conform to an international standard, and hereby cannot fulfil Art.3. The relevant criteria are therefore those of Art. 2.

Art.2.2. prescribes that SPS measures shall be (1) based on scientific principles and not maintained without sufficient scientific evidence, which includes the assessment of Art.5.1 and 5.2, as a violation of those articles leads to the (rebuttable) presumption of a violation of Art.2.2, (2) do not arbitrarily or unjustifiably discriminate, which shall be assessed in light of Art.5.5 and 2.3, and (3) are not more trade restrictive than necessary, which is to be assessed in light of Art.5.6.

Based on Scientific Principles

China could prove that its suspension is based on scientific principles by conducting and providing a risk assessment compliant with Art.5.1,5.2. A risk assessment according to Annex A(4) is (in the relevant part) “the evaluation of the potential for adverse effects on human or animal health arising from the presence [..] contaminants, [..] or disease-causing organisms in food [..]”.

The appropriate test for this definition was set in US/Canada-Continued Suspension: the member state must (i) identify the additives, contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs at issue; (ii) identify any possible adverse effect on human or animal health; and (iii) evaluate the potential for that adverse effect to arise from the presence of the identified substance. While the first two requirements are undoubtedly fulfilled in the case of COVID-19, the potential of its adverse effect to arise from the imported poultry would need evaluation. Generally, COVID-19 is considered to spread “mostly” through air. Most scientists agree that there is little risk that it would spread by food imports. However, that risk is not zero. Member states are not obliged to base their assessment on the majority opinion; in EC-Hormones the Appellate Body found that states may base their measure on a (qualified) minority or divergent opinion if they do so in good faith, especially when the risk is of a life-threatening character. As China had, by the time of suspension, eradicated almost all transitions of COVID-19 within its territory and aimed at preventing any further risks to a renewed outbreak, and there were indeed findings of the virus in food imports, China might have conducted a risk assessment. However, even if China conducted such an assessment, the suspension cannot be considered to be based on it: in US-Poultry, the Panel found that the US import ban was not based on a risk assessment as the US itself did not provide evidence that, in fact, it was. As China has yet to provide a risk assessment, the same situation applies here.

Arbitrary or Unjustifiable Discrimination

Even if one accepts that the suspension was based on a risk assessment, the SPS measure must not arbitrarily or unjustifiably discriminate. In India-Agricultural Products the Panel considered two requirements: (i) whether the measure arbitrarily or unjustifiably discriminates between Members where similar conditions prevail, including between the own territory and that of other Members and (ii) whether the measures are applied in a manner that constitutes a disguised restriction on international trade. In the case of China’s suspension vis-á-vis Tyson, two considerations are of interest: one, the regulation is only valid for a specific factory within the US. No other WTO member state is affected by this specific measure. Two, China itself was, by the time it implemented the suspension, facing an outbreak in a wholesale market in Beijing. The suspension, however, does not address domestic products; consequently, it treats poultry from the US not only different to other members but also to its domestic market, even though similar conditions apply between China and other countries, especially because every country is currently facing COVID-19. Yet, a discriminating measure can still be valid if it is not arbitrary or unjustifiable. Here considerations of the cause or rationale underlying the discriminatory measure must be made. Arbitrariness or unjustifiability may be shown by the lack of a risk assessment, which would be the case at hand. However, even when disregarding the missing risk assessment, the rationale underlying the measure shows the measure’s arbitrariness. Aimed at preventing the spread of the virus, there is no reasonable explanation as to why China singled out one specific plant instead of regulating the relevant industries in all states, including its own, with comparably high numbers. Finally, the suspension must constitute a discrimination or a disguised restriction on trade. This is the case when a measure is not actually concerned with the SPS purpose but rather is a trade restrictive measure hidden under the veil of an SPS measure. What should be considered is that China and the US have a rather troublesome past when it comes to trade in poultry, manifested inter alia in a years-long ban, which only recently was lifted by China. Also, China and the US were recently working on a trade deal which would oblige China to buy agricultural products at $36.5 billion; any more problems with food exporters could lead to a dissolution of renegotiation of the deal. Such a dissolution would not be unfavorable for China: it appears that it will not be able to fulfil its part of the bargain. Taking this into account, it is reasonable to conclude that the (arbitrary and discriminating) SPS measure in fact constitutes a disguised restriction on international trade.

Not More Trade Restrictive than Necessary

Lastly, an SPS measure shall not be more trade restrictive than necessary. The conditions that must be met are that there is a trade measure that (1) is reasonably available taking into account technical and economic feasibility; (2) achieves the Member’s appropriate level of sanitary or phytosanitary protection; and (3) is significantly less restrictive to trade than the contested SPS measure (US-Poultry; Australia-Salmon). Here, one could argue that testing the products upon import to the country would provide a reasonably available and feasible alternative, which would still achieve the appropriate level of health by upholding the aim to stop the spread of the virus and would be significantly less restrictive to trade. It also is and has been already used by China in other instances. The only obstacle for the implementation of testing would also be the lack of a risk assessment. 

Conclusion: Non-Compliance on Many Levels

As has been shown in the foregoing assessment, the suspension of poultry imports from Tyson Foods Inc. does not comply with any of the conditions for a valid SPS measure. Most of the arguments would also be applicable to other measures imposed by China; however, the currently most severe argument against the measures is the apparent lack of a risk assessment, which, in any case, is substantial to prove the validity of an SPS measure. As long as China does not provide a scientific basis for its measures it continues to be in violation of its obligations under the SPS Agreement.