New Zealand is right to complain to WTO about Australian quarantine procedures that have kept the humble Kiwi apple out of Australian shops for almost a century. The Australian government‚Äîunder presssure from yet another highly protected growers’ group‚Äîhas repeatedly delayed a final decision on “its own assessment”:http://www.affa.gov.au/content/output.cfm?ObjectID=D51B9649-3692–4F76-919200A78D716CA2 in late 2000 that a ban on imports should be dropped and that the risks from pests and disease could be readily handled by a process of ‚Äòregionalization’ and pest control. bq. “The apples are banned because it is feared they would spread fireblight, a bacterial disease common in New Zealand but not found in Australia. The Australian apple and pear industry says the disease could cost it up to A$1bn. New Zealand says research has shown that mature apples do not carry the disease. Its case has been strengthened by a WTO ruling in 2003 that overturned a ban on US apple exports to Japan for similar reasons.”(“Financial Times(link to this excerpt)”:http://news.ft.com/cms/s/ee62a280-dd28-11d9-b590-00000e2511c8, in the risk assessment process has been caused, as is typical in these cases, by a “campaign”:http://www.affa.gov.au/content/output.cfm?ObjectID=D2C48F86-BA1A-11A1-A2200060B0A03943 of legal and administrative harassment led by the protected domestic industry. The current legislation allows them to continue these delays and even injunctive action in the courts almost indefinitely. A recent “decision”:http://www.affa.gov.au/content/output.cfm?ObjectID=22DD9ED3-43E8-4D6C-A55FD79C8D7FF026 by the Federal Court has strengthened the hand of the protected industries by overturning the long-delayed decision to allow imports of unprocessed pork meat. The Judge called the reasoning of the Government in the pork decision ‘bizarre’: bq. 245 It is clear that PMWS [ _a disease of swine ] has had devastating effects on pig herds in many countries. PMWS currently costs the European Union about 600 million Euros per year. It is common ground that, so far, Australia is free of the disease. Yet the undisputed evidence of Professor Morris is that, if permits are granted in accordance with the policy embodied in the IRAR (and with full application of the Panel’s recommended conditions), there is a ‘high’ risk — that is, an over 70% chance — at the 75th and 95th percentiles (‘moderate’ at the 50th percentile) that, within five years, PMWS will have spread to the general population of Australian domestic pigs, including medium-large piggeries … In other words, under the policy that has now been adopted by the Director, an outbreak of PMWS within ten years is a virtual certainty. bq. 246 An assessment that such a risk is ‘acceptably low’ seems to me bizarre, especially having regard to concern expressed by successive Australian governments about maintenance of high quarantine standards. Intuitively, one feels, there must be something wrong with the Panel’s assessment of risk. The claim that the Judge allowed and that formed the basis for overturning the Government’s decision to allow imports was: bq. ‘No reasonable person whose power to make the decision is qualified by an obligation to limit the level of quarantine risk to one that is “acceptably low” could make a decision which has such a risk of the introduction, spread and establishment of a new disease in Australia.’ The Judge determined that the decision made by the Government was not one a reasonable person would make. He agreed with the Pork industry that there was no evidence whatever for the assertion by the Government that its proposed risk abatement strategy would reduce the disease risk from ‘low’ to ‘very low’—the self-proclaimed standard that Biosecurity Australia says is the “appropriate level of protection” in the case of every agricultural industry. Without commenting on the Judge’s reasons for overturning the decision, I consider the Government’s willingness to accept a low risk of infection in the case of fresh pork meat is entirely proportionate (‘reasonable’ in the ordinary sense) and not ‘bizarre’ at all for two reasons: # The exporters whose industries labor under the burden of this disease are the world’s most successful pork producers: USA, Denmark and Canada.
# Protection against the risk of infection in the form of a ban on imports is likely to be very costly to the Australian economy both because it increases consumer costs and reduces consumer choice and because it robs our economy of the gains from specialization in agricultural production It is impossible to believe that those disease-ridden foreigners find even the ‘endemic’ prevalence of PMWS disease truly ‘devastating.’ They have been successful in competitive global markets for decades—while the Australian pork industry survives in its cocooned domestic market only because of a complete ban on import competition in the most lucrative segment of the market (fresh pork). Quarantine must take into account—as the Act requires—not only the degree of risk but also the “probable extent of any harm”. The principal fault in Biosecurity Australia’s elaborate risk assessments, in my view, is that they do not assess that ‘harm’ except in a very narrow sense—to the affected industry—and even then on an very inadequate basis (a view the Court seemed to share). The Judge might have taken a different view of the risk assessment on pork if the government had taken the trouble to investigate and to spell-out the probable level of harm that would arise from infection by PWMS in the context of an import competing industry. Biosecurity Australia might have shown by examples drawn from Europe and North America that commercial producers take adequate measures, of course, to protect their production from the disease, thus reducing the harm to low levels without relying on the dead-hand of protection at the border. In assessing ‘probable harm’ the government should have shown, too, the harmful effects of the import ban on consumers on economic welfare in general. But, despite elaborate science, the risk assessments produced by Biosecurity Australia are economically shallow. Now, having exposed itself to this reversal by the Federal Court the government will probably deal even more timorously with the Apple and Pear Growers at the cost of # Being hauled before a WTO panel by our oldest and closest trading partner
# Another humiliating loss in anything to New Zealand
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher