Free to trade or forced to trade?

Established in 1995, with around one hundred and fifty members, and a 2011 budget of A$178.5M, the World Trade Organization (WTO) is the watchdog of world trade practises. Its aim is to ensure that trade between member nations flows as smoothly, predictably and freely as possible.

Members are signatories to an Agreement that obligates them to abide by the decision of the referee. The referee is the Appellate Body, consisting of seven members with no affiliation to any Government, no conflict of interest and an obligation to a code of conduct. Nevertheless, some resumes on the WTO website reveal a career history suggesting otherwise.

On this world stage, Australia is not an example of righteousness, but a villainous serial offender, guilty of several trade practice breaches based on Australia's economic and social need to retain the disease free status that has benefited home industries.

Unfortunately the referee seems unable to differentiate between the effect of a decision to free up trade for a T-shirt and an unprocessed food consumable. The first dispute, DS18, initiated in 1995 by Canada and resolved in its favour in 2000, removed phyto-sanitary regulations enacted from 1975 to protect the fledgling Tasmanian salmon industry from imported disease.

Australia was found obstructive; the over the top regulations to thwart entry of disease, breached Australia's responsibility to another member nation to allow trade to flow smoothly, freely and predictably. Australia was at fault in not basing her regulations on a risk-based assessment that agreed with global visionaries, determined at all costs, to remove barriers to trade.

In the 2002 to 2005 apple dispute DS245, initiated by the US against Japan, the issue was again entry of a disease. This time it was fire blight, having originated in North America had spreading to England in 1958 and then to Europe, Africa, the Middle East and New Zealand, but not to Japan or Australia. Japan's concern was well founded and therefore valid. Once introduced, this disease can never be eradicated, merely controlled by another expensive chemical.

In the USA, management of fire blight includes chemical costs of around $1000 per hectare and $275 per hectare for pruning annually. A study by Adamson (2006) estimated each previously profitable hectare in Australia would run at a net loss of $11,000 to $18,000 if fire blight management was required. Once established, outbreaks and the degree of devastation of fire blight are unpredictable so Australians have much to lose if the referee is wrong.

Japan complied with the US trade request, subject to specific protective methods to maintain Japan's disease free status. However, the US filed a dispute and achieved the right to export without the panel imposing any of the key protective measures sought by Japan. Japan argued that its method of risk assessment included, "the historical facts of trans-oceanic spread (of fire blight), the rapid growth of international trade, and the lack of knowledge on the pathways of transmission of fire blight."

Japan's argument that its requirements were a reasonable and prudent precaution, failed to persuade the panel. Of 150 member nations, Australia was the only defender of Japan's right to protect its borders from the introduction of disease. Perhaps Australian bureaucrats read the tealeaves when New Zealand enthusiastically supported the panel's decision.

Encouraged by both decisions, New Zealand initiated dispute DS367, against Australia in 2007. The dispute settled in 2011 with the door open to New Zealand apples and fire blight. The reaction from the Chairman of Apple and Pear Australia Ltd., John Lawrenson, in 'The Chronicle' says it all: 'Once New Zealand Apples start coming into Australia, farmers . . . will be wondering if today is the day they discover fire blight in their orchard.'

His concern is reasonable. In 2006, a Government media release from Tim Mulherin, Qld Minister for Primary Industries, expressed concern about the extreme susceptibility of Stanthorpe's $40M industry to fire blight. "Mr Mulherin said new research showed that imported apples could be carrying the disease fire blight, yet display no symptoms."

On the other hand, New Zealand claimed that "Australian quarantine measures applied to New Zealand were neither based on an appropriate risk assessment nor supported by scientific evidence, since all sixteen of Australia's measures were found to be inconsistent with its obligations under Act 5.1,5.2, and 2.2 of the SPS Agreement."