TradeWatch Weekly Bulletin May 2022

Costa Rica — Measures Concerning the Importation of

Fresh Avocados from Mexico

TRADE UPDATE – MAY 2, 2022

NR-ARP-PO-01_M-01 (the Manual), which served as a

Background
guidance on the conducting of a pest risk analysis.
On April 13, 2022, a WTO Panel issued its report in the
Mexico alleged that the two Resolutions, Risk
dispute Costa Rica — Measures Concerning the
Assessment Reports and Manual violated the WTO
Importation of Fresh Avocados from Mexico (DS524).
Agreement on the Application of Sanitary and
The dispute was initiated by Mexico against certain
Phytosanitary Measures (SPS Agreement) as well as the
import restrictions imposed by Costa Rica aimed at
General Agreement on Tariffs and Trade 1994 (GATT).2
mitigating the risk posed by Mexican avocados infected
with avocado sunblotch viroid (ASBVd), a disease Legal Issues before the Panel
affecting avocado trees and fruit.1
a. Whether the measures constituted sanitary or
Factual Background & Measures at issue phytosanitary measures covered by the SPS
Agreement?
In April 2015, Costa Rica temporarily halted the import
of avocados from various countries, prescribing a pest The Panel concluded that the Resolutions were SPS
risk analysis for the ASBVd, which Costa Rica asserted measures as they (i) aimed at achieving the objective of
was not present in Costa Rican territory. protecting plant life or health from disease in line with
paragraph 1(a) of Annex A to the SPS Agreement3 and
In July 2015, through Resolution DSFE-002-2018, Costa
(ii) they may affect international trade within the
Rica, imposed import obligations specific to Mexico,
meaning of Article 1.14 of the SPS Agreement.5
requiring certification that the product originated from
However, the Panel found that the Risk Assessment
an ASBVd-free production site previously recognized by
Reports and manual contained technical and scientific
the State Phytosanitary Service of Costa Rica.
information and guidance on phytosanitary
Thereafter, in January 2018, through Resolution DSFE-
requirements to be applied but did not in themselves
003-2018 imposed similar requirements on the import
impose such requirements.6 Hence, these were not SPS
of avocados from any other country in which ASBVd is
measures.
prevalent (collectively, Resolutions). Both Resolutions
were based on a pest risk analysis conducted by the b. Whether Costa Rica complied with its risk
Costa Rican State Phytosanitary Service (through assessment obligations under the SPS
Reports ARP-002-2017 and ARP-006-2016, hereinafter Agreement?
Risk Assessment Reports) and also based on a Manual

1 3
WTO Panel Report on Costa Rica – Measures Concerning the Paragraph 1(a), Annex A to the SPS Agreement; para 7.91, Panel
Importation of Fresh Avocados from Mexico, WT/DS524/R, available Report, available at:
at: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds524_e.h
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds524_e.h tm
4
tm Article 1.1, SPS Agreement
5
2
SPS Agreement, available at: para 7.104, Panel Report
6
https://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm para 7.132 & 7.216, Panel Report

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TradeWatch Weekly Bulletin May 2022

The Panel stated that an assessment of the compliance The Panel acknowledged that WTO Members may
of such risk assessment obligations will encompass the define their own appropriate level of protection (ALOP)
satisfaction of legal standards under Articles 5.17, 5.28, and that Costa Rica had specified its ALOP prior to the
5.39 and 2.210 of the SPS Agreement.11 Further, Articles adoption of the SPS measures, with sufficient
5.2 and 5.3 are specific provisions under the general precision.18 It further stated that Mexico failed to
mandate of Article 5.1 of the SPS Agreement.12 demonstrate that its suggested alternatives achieved
Costa Rica's ALOP.19 The Panel, therefore concluded
The Panel noted that Costa Rica failed to consider, in its
that Costa Rica has not acted inconsistently with Article
assessment, the available scientific evidence or the
5.6 of the SPS Agreement.20
prevalence of specific diseases or pests for a variety of
reasons, including focusing only on main areas of d. Whether Costa Rica’s levels of protection exhibit
production, insufficient surveillance of ASBVd in Costa arbitrary or unjustifiable discrimination or
Rica, deficiencies in sampling methodology, insufficient disguised trade restrictions?
evidence to support the probability of spread of ASBVd
Mexico contended that Costa Rica adopted different
in Costa Rica, etc., and thus acted inconsistently with
levels of phytosanitary protection in at least three
Articles 5.1 and 5.2 of the SPS Agreement.13
different but comparable situations:21
Further, the Panel found that Costa Rica acted
▪ Fresh avocados imported for consumption from
inconsistently with Article 5.3 of the SPS Agreement by
countries where ASBVd is present vis-à-vis
failing to take into account the relevant biological and
domestic Costa Rican avocados in which ASBVd is
economic consequences of the measure.14
likely to be present.
Lastly, the Panel held that since Articles 5.1 and 5.2 of ▪ Fresh avocados imported from Mexico vis-à-vis
the SPS Agreement constitute a specific application or a avocados imported from certificate-issuing
more specific elaboration of the basic obligation set out countries where ASBVd is present.
in Article 2.2, which mandates the imposition of SPS ▪ Fresh avocados imported for consumption in which
measures only to the extent necessary and based on ASBVd is present vis-à-vis avocado plants for
scientific principles, and found that hence, Costa Rica planting.
acted inconsistently with Article 2.2 of the SPS
Mexico thus alleged violation of Articles 5.522 and 2.323
Agreement by failing to ensure that its measures are
of the SPS Agreement by creating arbitrary or
based on scientific principles.15
unjustifiable distinctions in the levels of protection that
c. Whether Costa Rica has complied with its Costa Rica considers to be appropriate in different
obligations under Article 5.6 of the SPS situations. Further the Panel found the other two
Agreement concerning trade restrictiveness? situations to be discriminatory as well.24
Mexico alleged that there were alternative measures e. Whether Costa Rica has acted inconsistently with
that were reasonably available to Costa Rica, and the its obligations under the SPS Agreement
measures selected were more trade-restrictive than regarding adaptation to regional conditions?
required to achieve Costa Rica’s appropriate level of
Mexico alleged that the measures imposed by Costa
protection (ALOP), thereby violating Article 5.616 of the
Rica are inconsistent with Article 6.125 of the SPS
SPS Agreement.17
Agreement as these were not sufficiently adapted to
the sanitary or phytosanitary characteristics of both the

7 17
Article 5.1, SPS Agreement para 7.1738, Panel Report
8 18
Article 5.2, SPS Agreement para 7.1792, Panel Report
9 19
Article 5.3, SPS Agreement para 7.1892, Panel Report
10 20
Article 2.2, SPS Agreement para 7.1938, Panel Report
11 21
para 7.391, Panel Report para 7.1940, Panel Report
12 22
para 7.395, Panel Report Article 5.5, SPS Agreement
13 23
para 7.1687 (q), Panel Report Article 2.3, SPS Agreement
14 24
para 7.1687 (r), Panel Report paras 7.2178 & 7.2179, Panel Report
15 25
para 7.1734, Panel Report Article 6.1, SPS Agreement
16
Article 5.6, SPS Agreement

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TradeWatch Weekly Bulletin May 2022

countries of origin and the country of destination. In Agreement, on the basis of its analysis above, as the
order to assess such characteristics of a region, it is same relate to general conformity with the SPS
important to consider factors such as the level of Agreement.34
prevalence of specific diseases or pests, the existence
Concluding Remarks
of eradication or control programmes, and appropriate
criteria or guidelines which may be developed by the The Panel Report shows that the WTO is continuing its
relevant international organizations.26 trend of treating SPS Agreement as a shield rather than
a sword. This simply means that the measures under
The Panel however concluded that Mexico failed to
SPS Agreement must be defended on an affirmative
demonstrate that Costa Rica did not take into account
basis and that they are not simply an elaboration of
regional factors to assess the sanitary or phytosanitary
Article XX(b) of GATT, wherein the burden of proof to
characteristics of a region and therefore its measures
show that the measures do not fall under any of the
are not inconsistent with Article 6.1 of the SPS
exceptions is on the respondent.35 Indeed, India too has
Agreement.27
experienced a similar outcome in the case of India —
f. Whether Costa Rica has acted inconsistently with Agricultural Products, wherein its SPS measures were
its obligations under GATT 1994? struck down under many of the same provisions of the
Mexico alleged violation of Article XI:128 of the GATT SPS Agreement. Countries applying SPS measures in the
1994 which prohibits quantitative restrictions. Apart future hence must be mindful of the high threshold that
from this, Mexico also alleged violation of the National needs to be met with respect to the requirements of
Treatment principle under Article III:4 of the GATT basis evidence and scientific analysis.
that the Resolutions accorded a less favourable With respect to next steps, while both Mexico and
treatment to imported avocados than that accorded to Costa Rica are party to the Multi-Party Arbitral
the like product of national origin.29 Costa Rica however Provisional Appeal Procedure36, Costa Rica decided not
asserted that the said Resolutions don’t constitute a to appeal the report. Costa Rica’s decision not to appeal
violation under the provisions of GATT 1994 and even if provides glimmers of hope for the continuity of an
they do, the same will fall under the exceptions covered enforceable multilateral dispute settlement system,
by Article XX(b)30 of GATT 1994, as the measures are however the degree of compliance remains to be seen.
necessary to protect human, animal or plant life or
health and do not unjustifiably discriminate or
constitute a disguised restriction on international
trade.31

The Panel noted that since it has already found the

measures imposed by Costa Rica to be inconsistent with
the provisions of the SPS Agreement, it is not necessary
for it to now make any findings under the GATT 1994 to
resolve the dispute.32
Further, the Panel held that Costa Rica acted
inconsistently with Article 1.1 and 2.133 of the SPS

26 35
para 7.2180, Panel Report The Rules that Swallowed the Exceptions: The WTO SPS Agreement
27
para 7.2258, Panel Report and its relationship to GATT
28
Article XI:1, GATT 1994, available at: Articles XX And XXI, Hal S. Shapiro, Arizona Journal of International
https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#arti and Comparative Law, Vol. 24, No. 1 2007, available at:
cleXI http://arizonajournal.org/wp-content/uploads/2015/11/Shapiro-
29
paras 7.2310 & 7.2311, Panel Report article.pdf
30 36
Article XX(b), GATT 1994 WTO Understanding on rules and procedures governing the
31
para 7.2315, Panel Report settlement of disputes, available at:
32
para 7.2319, Panel Report https://www.wto.org/english/tratop_e/dispu_e/dsu_e.htm#25
33
Article 2.1, SPS Agreement
34
para 7.2304, Panel Report

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TradeWatch Weekly Bulletin May 2022

KEY TRADE REMEDIAL UPDATES

Product Subject countries Investigation Particulars

DGTR (Directorate General of Trade Remedies)

Anti-dumping Duty (AD) Anti-dumping Duty Anti-dumping Duty (AD) Sunset Initiation of Circumvention
Sunset Review (SSR) (AD) Sunset Review Review (SSR) Inquiry of the AD & CVD
(SSR) orders

USA (Department of Commerce/International Tarde Commission)

Glycine China AD SSR Final determination of

likelihood of continuation or
recurrence of dumping

Preserved Mushrooms France, Netherlands, AD Initiation of AD investigation

Poland & Spain

White Grape Juice Argentina AD & Countervailing Duty (CVD) Initiation of AD & CVD
Concentrate investigation

Seamless Refined China & Mexico Injury Determination Determination of likelihood

Copper Pipe and Tube of continuation or recurrence
of material injury

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 TradeWatch Weekly Bulletin May 2022

WTO, FTAs Entrepreneurs and Very Small Businesses through

the State Small Business Credit Initiative
▪ WTO’s 12th Ministerial Conference (MC12) to take
place on 12-15 June 2022 at WTO headquarters in CUSTOMS
Geneva
▪ Amendment of Appendix 2B (List of Agencies
▪ WTO dispute panel issues report regarding EU
Authorised to issue Certificate of Origin
safeguard measures on steel imports
(Preferential)) of Foreign Trade Policy, 2015 2020
▪ Turkey informs WTO members that it has initiated
▪ Amendment in import policy of ITC (HS) Codes
arbitration proceedings under Article 25 DSU to
71123000, 71129100, 71129200, 71129910,
review the findings of a WTO dispute panel in
71129920, and 71129990 under Chapter 71 of
“Turkey — Certain Measures concerning the
Schedule I (Import Policy) of ITC (HS), 2022.
Production, Importation and Marketing of
▪ Notification providing concessional rates for goods
Pharmaceutical Products” (DS583) on a complaint
imported from UAE under the CEPA agreement
by the European Union (EU)
issued
India
▪ Customs Tariff (Determination of Origin of Goods
▪ India, EU agree to launch Trade and Technology under the Comprehensive Economic Partnership
Council to push nexus of trade, trusted technology Agreement between India and the United Arab
and security Emirates) Rules, 2022 notified.
▪ India, EU to hold talks on FTA in June, set 2023-2024 ▪ Amendments to various exemption notifications,
target made in furtherance of amendments introduced in
▪ The USTR again places India on the ‘Priority Watch First Schedule of Custom Tariff Act, 1975 vide Third
List’ along with China, Russia and four others, for Schedule of Finance Act, 2022.
ack of adequate IPR protection and enforcement Amendments in tariff value of palm oil, gold, silver,
UK and other items.

▪ UK kickstarts work on new trade deal with SANCTIONS AND EXPORT CONTROL
Switzerland
USA
NON-TARIFF BARRIERS
▪ US State Department imposes visa restrictions &
▪ Ministry of Chemicals & Fertilizers notifies Quality sanctions on Russia & Belarus
control orders on Phenylenediamine, Lauric Acid,
Acid Oil, Palm Fatty Acids, Rice Bran Fatty Acids, EU
Coconut Fatty Acids, Rubberseed Fatty Acids and ▪ EU adds 2 more individuals to its Russia sanctions
Hydrogenated Rice Bran Fatty Acids on 27 April list
2022 ▪ EU court upholds Democratic Republic of the Congo
▪ Ministry of Steel notifies extension of Quality (DRC) sanctions challenge & dismisses 9 others
control orders on Ferrosilicon and Ferronickel by 6
months. The revised date of enforcement shall be UK
23rd October 2022 ▪ The UK announced that it would impose import
bans on an extended list of Russian goods, including
TRADE POLICY
silver, wood products and high-end products such
USA as caviar.
▪ US Treasury Announces Plans to Deploy $300 ▪ Russia sanctions 287 UK MPs
Million in Technical Assistance to Underserved ▪ UK introduces internet-related Russia trade
sanctions

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