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Interaction of cicivil criminal
vil and cr iminal
penalties f farm
or f prog
arm pr ogr
og ram violations
The Eleventh Circuit recently considered the character of civil penalties under the
tobacco marketing program administered by the Department of Agriculture (USDA).
Cole v. USDA, 133 F.3d 803 (11th Cir. 1998). At issue was the whether the
assessment of civil penalties after an acquittal on criminal charges constituted a
violation of the Double Jeopardy Clause and whether the penalty violated the

INSIDE Excessive Fines Clause of the United States Constitution. In reaching its decision,
the court integrated the most recent Supreme Court opinion on this issue into its
analysis, Hudson v. United States, 118 S.Ct. 488, 491, (1997). In Hudson, the
Supreme Court modified the test for determining whether a sanction is criminal or
civil for the purposes of double jeopardy analysis, rejecting, in part, the analysis it
• The SPS Agreement applied in its earlier decision of United States v. Halper, 490 U.S. 435 (1989).
The plaintiff, Mr. Graham Cole, was a tobacco dealer who sold 315,612 more
and international pounds of tobacco than he reported purchasing, in violation of the program rules. Mr.
organizations Cole was prosecuted and acquitted of criminal charges in connection with this
discrepancy, including conspiracy to defraud the government, fraud, and mail fraud.
• Federal Register After he was acquitted of the criminal charges, the USDA assessed civil penalties
in brief of almost $400,000 against Mr. Cole pursuant to 7 U.S.C. § 1314(a), which imposes
a penalty of seventy-five percent on the marketing of tobacco in excess of a farm’s
marketing quota. Mr. Cole challenged the administrative penalty, and the district
court found that the assessment violated both the Double Jeopardy Clause and the
Excessive Fines Clause. The USDA appealed to the Eleventh Circuit, which
The Double Jeopardy Clause provides that no “person [shall] be subject for the
same offense to be twice put in jeopardy of life or limb.” U.S. Const., amend. V. The
court in Cole noted that the Supreme Court has held that this clause “protects
against three distinct abuses: a second prosecution for the same offense after
Solicitation of articles: All AALA acquittal; a second prosecution for the same offense after conviction; and multiple
members are invited to submit punishments for the same offense.” Cole, 133 F.3d at 804 (quoting United States v.
articles to the Update. Please in- Halper, 490 U.S. 435, 440 (1989)). Mr. Cole alleged the first type of violation by
arguing that he had already been acquitted of criminal charges in connection with
clude copies of decisions and leg-
islation with the article. To avoid Continued on page 2
duplication of effort, please notify
the Editor of your proposed ar-
ticle. Internet tips
USDA annoucements are easy to access via the Internet. Go to
releases/index.htm for an easy to follow menu. You may select to have these announcements

IN FUTURE automatically delivered to you as e-mail. These announcements include department press
releases, notices, and other information regarding USDA programs and policies.
The Farm Service Agency also has a lot of information available via the Internet. Their

I SSUES web site is located at There, you can
access FSA announcements, program information, and even download some FSA forms. A
recent addition to this web site is access to “Current FSA Temporary Directives.” These
directives are some of the administrative and procedural notices issued by the FSA.
It is now even easier to review the daily Table of Contents of the Federal Register online
• FSA Emergency Loans on the Internet. Simply go to Scroll
and FSA disaster down the page to where it says “Browse the Table of Contents of the current issue of the
Federal Register.”
set-aside ASCII PDF.” Click on either ASCII or PDF. The PDF setting requires Adobe Acrobat
software; it allows the Federal Register pages to appear on the computer screen just as they
• Citizen suits: do in the printed booklet. If you have not downloaded Adobe Acrobat, or if you just want to
reform needed view the text of the Table of Contents and do not care how it looks, click on ASCII. The Table
of Contents will appear in regular courier font.
—Susan A. Schneider, Hastings, MN

marketing over-quota tobacco and that tion were requisite elements. Id. (citing tended for the over-quota marketing pen-
the civil penalties were a second attempt 18 U.S.C. §§ 371, 1001, 1341). With re- alty to be civil, the court turned to the
at punishment for the same conduct. gard to the civil penalty, the USDA did Kennedy factors to determine whether
The court held that Mr. Cole’s chal- not need to prove intent, but only needed the penalties are “so punitive in form and
lenge hinged on two questions: 1) whether to prove that Cole failed to remit a pen- effect as to render them criminal despite
the second sanction (the civil penalty) alty to the government. Id. (citing 7 U.S.C. Congress’s intent to the contrary.” Cole,
dealt with the same offense as the first; § 1314(a)). This latter requirement is not 133 F3d. at 806 (citing United States v.
and 2) whether the second sanction was, an element required for the criminal of- Ursery, 518 U.S. 267, ——, 116 S.Ct.
in fact, a punishment. The court stated fense. Under the “same elements” test, 2135, 2138 (1996)). First, the court found
that if the answer to either of these the criminal and civil offenses require that the penalty did not involve an “affir-
questions was negative, the penalty could proof of different elements and, there- mative restraint,” such as imprisonment.
not be found to violate the Double Jeop- fore, the court held that the imposition of Second, considering the historical view
ardy Clause. the civil penalty did not violate the Double of the punishment, the court relied upon
Addressing the first question, whether Jeopardy Clause. Hudson for the proposition that money
the civil penalty assessed against Mr. Addressing the second question, penalties have not historically been
Cole dealt with the same offense as the whether the civil penalty constituted a viewed as punishment Cole, 133 F3d. at
criminal charges, the court noted that “punishment,” the court turned first to 806 (citing Hudson, 118 S.Ct. at 495).
“two offenses are different for the pur- the statute creating the penalty, asking Third, the court found that penalties did
poses of double jeopardy analysis if each whether the legislature indicated whether not require a finding of scienter; “they
‘requires proof of an additional fact which the penalty was to be considered civil or are imposed whenever a producer over-
the other does not.’” Cole, 133 F.3d at 805 criminal. Even in those cases where the sells his quota, regardless of his state of
(quoting Blockburger v. United States, legislature indicated an intention to es- mind.” Cole, 133 F3d. at 806.
284 U.S. 299, 304 (1932). With regard to tablish a civil penalty, however, the court Considering the fourth factor, whether
the criminal charges against Mr. Cole, found that further inquiry was appropri- the penalty promotes the traditional aims
conspiracy to defraud the government, ate to determine if the penalty was so of punishment—retribution and deter-
fraud, and mail fraud, the court found punitive so as to transform it into a rence, the court again relied on Hudson.
that proof of intent and misrepresenta- criminal penalty. Id. at 806. There, the Supreme Court recognized
In making this determination, the court that all civil penalties will have some
relied upon the factors listed in Kennedy deterrent effect and that deterance may
v. Mendoza-Martinez, 372 U.S. 144, 168- serve civil as well as criminal goals. Id.
169 (1963): (1) “[w]hether the sanction (citing Hudson, 118 S.Ct. at 493.). Apply-
involves an affirmative disability or re- ing this to the tobacco program, the court
straint;” (2) “whether it has historically found that the over-quota marketing pen-
been regarded as a punishment;” (3) alty was intended to deter producers
VOL. 15, NO. 5, WHOLE NO. 174 March 1998 “whether it comes into play only on a from exceeding their quotas and that the
AALA Editor..........................Linda Grim McCormick
finding of scienter;” (4) “whether its op- legislative purpose of discouraging the
Rt. 2, Box 292A, 2816 C.R. 163 eration will promote the traditional aims sale of over-quota tobacco was merely a
Alvin, TX 77511 of punishment—retribution and deter- regulatory goal, not a criminal goal. Fur-
Phone/FAX: (281) 388-0155
E-mail: rence;” (5) “whether the behavior to which ther, the court found that the penalty
it applies is already a crime;” (6) “whether promoted the stability of the tobacco price
Contributing Editors: Terence P. Stewart, Stewart and
Stewart, Washington, D.C.; David S. Johanson, Stewart an alternative purpose to which it may supports and funded the government’s
and Stewart, Washington, D.C.; Christopher R. Kelley, rationally be connected is assignable for enforcement efforts. Cole, 133 F3d. at
Hastings, MN; Susan A. Schneider, Hastings, MN;
Linda Grim McCormick, Alvin, TX.
it;” and (7) “whether it appears excessive 806.
in relation to the alternative purpose Considering the fifth Kennedy factor,
For AALA membership information, contact assigned.” Cole, 133 F.3d at 806 (quoting the court held that “the behavior which
William P. Babione, Office of the Executive Director,
Robert A. Leflar Law Center, University of Arkansas, Kennedy, 372 U.S. at 168-169). triggers the penalty, overselling a to-
Fayetteville, AR 72701. The court held that these factors were bacco quota, is not a crime.” Id. With
Agricultural Law Update is published by the to be considered in relation to the “stat- respect to the sixth factor, the court found
American Agricultural Law Association, Publication ute on its face,” and not to the facts of Mr. the penalty to be “rationally related to an
office: Maynard Printing, Inc., 219 New York Ave., Des
Moines, IA 50313. All rights reserved. First class
Cole’s particular case. Id . See also , alternative, nonpunitive purpose.” Fi-
postage paid at Des Moines, IA 50313. Hudson, 118 S.Ct. at 494). nally, with respect to the seventh factor,
Applying these factors to the civil pen- the court found that the penalty was “not
This publication is designed to provide accurate and
authoritative information in regard to the subject alty under the tobacco program, the court excessive in relation to this alternative
matter covered. It is sold with the understanding that found that there was not a violation of the purpose.” Id.
the publisher is not engaged in rendering legal,
accounting, or other professional service. If legal advice Double Jeopardy Clause. The court found Next, the court addressed the second
or other expert assistance is required, the services of it evident that “Congress intended the constitutional claim of the plaintiff, that
a competent professional should be sought.
Views expressed herein are those of the individual
penalty for violations of 7 U.S.C. § 1314(a) the civil penalty imposed against him
authors and should not be interpreted as statements of to be civil in nature . . . [because] [t]he violated the Excessive Fines Clause of
policy by the American Agricultural Law Association. authority to issue and collect over-quota the Eighth Amendment. The Supreme
Letters and editorial contributions are welcome and marketing penalties is conferred upon Court has not articulated a comprehen-
should be directed to Linda Grim McCormick, Editor, the Secretary of the Department of Agri- sive test to use in making this determina-
Rt. 2, Box 292A, 2816 C.R. 163, Alvin, TX 77511.
culture.” Cole, 133 F.3d at 806 (referenc- tion. Cole, 133 F.3d at 807. It has, how-
Copyright 1998 by American Agricultural Law ing 7 U.S.C. § 1314(b)). The Supreme ever articulated a “bright line rule in one
Association. No part of this newsletter may be
reproduced or transmitted in any form or by any means,
Court in Hudson held that when this category of cases: ‘[A] fine that serves
electronic or mechanical, including photocopying, authority is conferred upon an adminis- purely remedial purposes cannot be con-
recording, or by any information storage or retrieval trative agency, it constitutes “prima fa- sidered ‘excessive’ in any event.’” Id.(cit-
system, without permission in writing from the
publisher. cie evidence that Congress intended to ing Austin v.United States, 509 U.S. 602,
provide for a civil sanction.” Hudson, 118 621 n. 14 (1993)).
S.Ct. at 495 (citations omitted). Applying this to the statute that im-
Having determined that Congress in- C ontinued on page 3

Farm program violations/Cont. from p. 2 perspective, the penalty is totally reme- eliminate excessive production of to-
poses the tobacco marketing penalty, the dial— i.e., the dealer is required to pay to bacco.” (Id. citing 7 U.S.C. § 1311(a)). In
court held that, as applied to a tobacco the government only the precise amount addition, it serves to prevent the “disor-
dealer like Mr. Cole, the seventy-five which the dealer is authorized to with- derly marketing” of tobacco, which Con-
percent penalty is “purely remedial, and hold from the producer.” Cole, 133 F.3d gress found adversely “affects, burdens,
thus is not excessive.” Cole, 133 F.3d at at 808. and obstructs interstate and foreign com-
807. The court reached this conclusion by The court then analyzed the penalty merce.” (Id. quoting 7 U.S.C. § 1311(b).)
reveiwing the statutory penalty provi- from the perspective of a producer and Thus, the court found that “the obvious
sions at issue. Quoting from the statute, held that even from that perspective, the purpose of the statutory scheme, and in
the court explained: penalty did not violate the Excessive particular the penalty at issue, is to dis-
The marketing of...any kind of tobacco Fines Clause. Id. In reaching this conclu- courage introducing over-quota tobacco
in excess of the marketing quota for the sion, the court applied a proportionality into the market.” With this goal in mind,
farm on which the tobacco is produced... test that originated in the case of United the court held that a 75% penalty is
shall be subject to a penalty of 75 per States v. One Parcel Property, 74 F.3d proportional to the legitimate govern-
centum of the average market price...for 1165 (11th Cir.1996). Under this test, the ment purpose of discouraging over-quota
such kind of tobacco for the immedi- court compares the seriousness of the sales. The court added that “[o]nly if the
ately preceding marketing year. Such offense to the severity of the fine. Id. at penalty exceeded 100% of the price of the
penalty shall be paid by the person who 808-09. Applying this to the tobacco pen- over-quota tobacco introduced into the
acquired such tobacco from the pro- alty, the question is “whether it is exces- market would there even begin to be a
ducer but an amount equivalent to the sive to impose a penalty on a producer question of excessiveness.”
penalty may be deducted by the buyer who sells more than its quota of tobacco, For these reasons, the court concluded
from the price paid to the producer. ... in the amount of 75% of the price of the that there had been no violation of either
Id. (quoting 7 U.S.C. § 1314(a)). Thus, over-quota tobacco.” Id. at 809. The court the Double Jeopardy Clause or the Ex-
under the statute, a dealer who pur- held that it was not. cessive Fines Clause. The judgment of
chases over-quota tobacco must pay the To support its holding, the court relied the district court in favor of Mr. Cole was
penalty, but then the dealer may deduct upon the purpose of the tobacco program. reversed.
the amount of the penalty from the pur- According to the statutory language, its —Christopher R. Kelley, Susan A.
chase price paid to the producer. Thus, purpose is “to establish national produc- Schneider, Hastings,MN
the court held that “from the dealer’s tion quotas in order to control and/or

SPS Agreement/Cont. from p. 7
system. The SPS Agreement encourages Conference Calendar
WTO members to base their SPS mea- ederal
F eder Register
al Register
sures upon the standards of these organi-
zations. The Codex and OIE are cur-
Kansas State University-Southern
Plains Agricultural Law
in br ief
rently well situated to perform the roles Symposium The following selection of items were
provided for them in the SPS Agreement, May 14-15, 1998. published in the Federal Register from
Although the IPPC in its present form is Plaza Inn, Garden City, Kansas. Jan. 21, 1998 to Feb. 20, 1998.
capable of fulfilling the responsibilities Topics include: farm business plan- 1.Farm Service Agency; Tree Assis-
given to it in the SPS Agreement, the ning (Prof. Neil E. Harl); agricultural tance Program; final rule; effective date
IPPC’s proposed revisions, if approved, law update (Prof. Roger McEowen); 1/26/98. 63 Fed. Reg. 3791.
would facilitate the IPPC’s ability to sup- farm law: law by exceptions (Prof. 2.CCC; Announcement of the Market
port the WTO system. James Wadley); mortgage foreclosure Access Program for FY 1998. 63 Fed. Reg.
As demonstrated in the beef hormone and redemption issues (Mr. William 7746.
decisions of the WTO, the settlement of Zimmerman, Jr.); criminal law re- 3.Foreign Agricultural Service; An-
major international trade disputes can fresher (Mr. Michael Kearns); ethics nouncement of the Foreign Market De-
turn at least in part upon the standards (Mr. Philip Ridenour). velopment Cooperator Program for FY
of the Codex, IPPC, and OIE, as these Sponsored by Kansas State Univer- 99. 63 Fed. Reg. 7750.
organizations’ standards are viewed as sity. For more information, call 785- 4.Foreign Agricultural Service; Notice
international benchmark standards un- 532-1501. of FY Emerging Markets Program and
der the SPS Agreement. With the height- solicitaiton of private sector proposals.
ened importance of international stan- tion of numerous scienficially question- 63 Fed. Reg. 8424.
dards, the standard-setting process of the able standards. In addition, although —Linda Grim McCormick, Alvin, TX
Codex has become more controversial, and delegates to these organizations are gov-
consensus on its new standards can no ernment officials, they are scientists as
longer be assumed. The establishment of well, and their professional integrity as dards. Therefore, one can expect that
standards by the IPPC and OIE in the well as the goodwill that has developed many governments, to the extent they
future might also become more political, among them when working together can, will try to protect their existing or
and possibly less scientific, as an indirect might also limit the potential of the Co- possible future SPS measures. This will
result of the SPS Agreement. Such a trend dex, IPPC, and OIE to create standards likely lead to less consensus within the
might ultimately damage the credibility of that are scientifically unsound. Codex, IPPC, and OIE than during the
the Codex, IPPC, and OIE. Although the possible increased time prior to the implementation of the
It is unclear how great a role the spe- politicization of the standard-setting pro- SPS Agreement. If lack of consensus be-
cific trade agendas of member countries, cesses of these organizations is regret- comes the norm, the harmonization ob-
as opposed to scientific evidence, might table, it is perhaps inevitable. Under the jective will likely be harmed. Such a
affect the development of future stan- SPS Agreement, the outcome of interna- development may lead to increased calls
dards. All three organizations have tional trade disputes can be influenced for consensus standard-setting within
lengthy approval processes for new stan- by the conformity of a WTO member’s the three entities.
dards, which should prevent the adop- SPS measures with international stan-

T he SPS A g ganizations©
reement and international or
By Terence P. Stewart and David S. international bodies. As the final panel taining to the roles of the Codex, IPPC,
Johanson reports of the WTO beef hormone dis- and OIE. It states that SPS measures of
putes show, the adjudication of major WTO members that are in conformity
One of the objectives of the drafters of the international trade conflicts can now turn with international standards, guidelines,
Agreement on the Application of Sani- at least in part upon the standards of the or recommendations shall be “presumed
tary and Phytosanitary Measures (SPS Codex, IPPC, and OIE. Following the to be consistent with the relevant provi-
Agreement) was to harmonize the sani- beef hormone decisions, some even con- sions of this Agreement.” Therefore, in
tary and phytosanitary (SPS) measures tend that the SPS Agreement can in an SPS dispute adjudicated through the
of the World Trade Organization (WTO). effect transform the non-binding stan- WTO’s dispute settlement process, if a
To achieve this goal, the SPS Agreement dards of the Codex, IPPC, and OIE into member adopts measures that are iden-
encourages WTO members when creat- binding standards for WTO members. tical or similar to the standards promul-
ing or maintaining SPS measures to rely Even if these standards remain solely gated by the Codex, IPPC, or OIE, the
upon the SPS standards established by advisory, the stakes for WTO members member’s measures will presumably be
three international organizations: the in international SPS standards have be- found consistent with its obligations un-
Codex Alimentarius Commission (Codex), come higher, and the potential exists for der the SPS Agreement. The member
the International Plant Protection Con- increased political pressure to be put would thus likely prevail in its dispute.
vention (IPPC), and the International upon the Codex, IPPC, and OIE when Article 3.4 states that WTO members
Office of Epizootics (OIE). These organi- they set new standards. Questions have must participate “within the limits of
zations address, respectively, issues con- also arisen within these organizations as their resources” in the relevant interna-
cerning human, plant, and animal life to their structural capabilities to fulfill tional bodies, and “in particular” the
and health. their new roles. Codex, IPPC, and OIE. Accordingly, mem-
These treeh organizations are recog- bers are expected to promote the develop-
nized by the world’s food and agricultural The SPS Agreement ment of standards within these interna-
communities as the premier international References to the Codex, IPPC, and tional organizations. Under Article 3.5,
organizations for the establishment of OIE are made directly and indirectly in the WTO Committee on Sanitary and
SPS standards and for the coordination various articles located throughout the Phytosanitary Measures (SPS Commit-
of information concerning SPS issues. SPS Agreement. These three bodies are tee) will monitor international harmoni-
The standards they set are voted upon by the only international organizations men- zation activities and will coordinate this
the delegates of each member country; tioned by name in the SPS Agreement. effort with the “relevant international
these delegates are generally scientists Accordingly, whenever the SPS Agree- organizations,” which presumably include
employed by their respective national ment refers to the “relevant” or “appro- the Codex, IPPC, and OIE.
governments. While the participation of priate” international organizations, it is
their numerous members have ensured presumably referring to the Codex, IPPC, Risk assessment
that these organizations have never been and OIE among possibly others. Article 5 of the SPS Agreement, which
immune to politics, the Codex, IPPC, and requires risk assessments for the estab-
OIE are scientific bodies whose decisions Harmonization lishment and maintenance of SPS mea-
have traditionally not been the subject of The Codex, IPPC, and OIE are desig- sures, creates a role for the Codex, IPPC,
great political concern. The standards nated to play a major role in the harmo- and OIE. Article 5.1 states that in devel-
they promulgate are advisory and thus nization process of SPS measures envi- oping risk assessments for SPS mea-
not legally binding, so their standards sioned in the SPS Agreement. Article 3.1 sures, members must take into consider-
rarely receive significant attention out- obligates members to base their SPS ation the risk assessment processes de-
side of scientific circles. measures on international standards, veloped by the “relevant international
The Codex, IPPC, and OIC were cre- guidelines, and recommendations “where organizations,” which can be assumed to
ated well prior to the adoption of the they exist.” The Agreement at Annex A include the Codex, IPPC, and OIE. If
Uruguay Round Agreements, and they specifically defines “international stan- scientific evidence is lacking concerning
are now adjusting to the new role in the dards, guidelines or recommendations” an SPS measures, Article 5.7 provides
international trading system that was as the standards, guidelines, or recom- that members are permitted to adopt
established for them through the SPS mendations established by the Codex, provisional measures based upon avail-
Agreement. The reliance on these three IPPC, or OIE. able information, such as that developed
organizations within the SPS Agreement However, Article 3.3. permits mem- by the “relevant international organiza-
has already brought changes to these bers to maintain higher standards than tions.” Under Article 5.8, in situations
the international norm as established by where a member believes that a measure
international standards, guidelines, and of another member does not conform with
This article first appeared in the January recommendations if a member’s mea- the “relevant international standards,
1998 edition of the Agricultural Sanitary sures are based upon science or if such guidelines or recommendations,” and the
& Phytosanitary Standards Report, a measures are the “consequence of the measure either interferes with or has the
publication of the law offices of Stewart level of sanitary or phytosanitary protec- potential to interfere with that country’s
and Stewart, Washington, D.C. tion a Member determines to be appro- exports, that member can request that
Terence P. Stewart is the managing priate in accordance with paragraphs 1 the other member provide it with expla-
partner and David S. Johanson is an through 8 of Article 5.” Article 5 requires nations for the measure, and the other
associate attorney at the law offices of WTO members to base their SPS mea- member will be obligated to respond.
Stewart and Stewart, which focuses on sures upon risk assessments.
international trade, including interna- In regard to disputes arising under the Differing regional conditions
tional trade and multilateral trade agree- SPS Agreement, Article 3.2 provides per- Article 6 requires WTO members to
ments. haps the most important provision per- recognize that pests and diseases occur

in distinct regions and do not necessarily heavily upon the Codex, IPPC, and OIE. and currently only WTO panel reports
inflict all areas of a country. For ex- Article 12.2 states that the SPS Commit- concerning disputes arising under the
ample, a member would most likely vio- tee is required to encourage WTO mem- SPS Agreement. The decisions of the
late its WTO obligations if it prevented bers to base their measures upon inter- panels in the beef hormone disputes in-
imports of all fruit from the United States national standards, guidelines, or rec- volving Canada and the European Com-
due to the presence of the Mediterranean ommendations. The Committee under munities (EC)(WT/DS48) and the United
fruit fly in only one state, Hawaii. Ac- Article 12.3 should discuss scientific and States and the EC (WT/DS26), as well as
cording to Article 6.1, members should technical matters with international SPS the report of the WTO Appellate Body
take into consideration the guidelines of organizations, and in particular the Co- (WT/DS26/AB/R);WT/DS48/AB/$) re-
the “relevant international organizations” dex, IPPC, and OIE, with the aim of garding the appeals of these decisions,
in determining pest- and disease-free obtaining the best scientific information. provide examples of the importance given
areas. Article 12.6 provides that the Committee to the standards established by the Co-
may also ask these organizations to ex- dex, IPPC, and OIE in resolving disputes
Dispute settlement amine matters concerning certain SPS that come from the WTO.
Article 11.3 states that the SPS Agree- standards. In 1988, the EC prohibited the use of
ment does not impair the rights of mem- Article 12.4 requires the SPS Commit- growth-promoting hormones in beef pro-
bers to utilize the dispute settlement tee to establish a procedure to follow the duction, and an import ban on hormone-
procedures of other international organi- progress of international harmonization treated meat was implemented in 1989.
zation. For example, two members of the efforts and the utilization of interna- The United States and Canada claimed
both the WTO and IPPC could choose to tional standards, guidelines, and recom- that the use of hormones for growth pro-
settle a dispute through either the Un- mendations. The SPS Committee is ex- motion purposes in beef cattle is safe and
derstanding on Rules and Procedures pected to work with the “relevant inter- poses no threat to human health. They
Governing the Settlement of Disputes national organizations” to develop a list contended that the EC’s policy was scien-
(Dispute Settlement Understanding) of of international standards, guidelines, tifically unfounded and was designed to
the WTO or through the non-binding and and recommendations that affect inter- protect EC beef producers from competi-
seldom used dispute settlement mecha- national trade. Members should indicate tion. The EC countered by stating that
nism of the IPPC. Under Article 11.2 of which of these standards they require for beef hormones threaten human health
the SPS Agreement, dispute settlement the importation of products. If a member and claimed that science supported its
panels should in disputes involving tech- does not use an international standard, policy.
nical or scientific issues consult with guideline, or recommendation, the mem- WTO dispute settlement panels were
experts in the relevant fields. In doing so, ber should explain why its policies vary formed, and final reports were released
a panel may create a technical experts from the international standard. When a in August 1997. Included among their
group or consult with the “relevant inter- member ceases using an international arguments before the panels, the United
national organizations.” standard, guideline, or recommendation, States and Canada contended that the b
The Dispute Settlement Understand- it should either explain its action to the EC’s prohibition on the importation of
ing (DSU), which is a separate instru- Secretariat of the WTO and to the “rel- hormone-treated beef violated the EC’s
ment from the SPS Agreement, restates evant international organizations” or obligations under Article 3.1 of the SPS
in Article 13 the provisions of the SPS through the procedures elaborated in Agreement as the EC failed to base its
Agreement that dispute settlement pan- Annex B of the SPS Agreement, which measures concerning the relevant hor-
els can obtain information from experts concerns transparency. mones upon international standards. The
in the relevant fields. Article 13.2 of the The SPS Committee is beginning the Codex standards consist of maximum
DSU goes on to provide that “a panel may process of monitoring the international residue levels for five of the six hormones m
request an advisory report in writing harmonization of SPS measures, and it under dispute. According to the Codex,
from an expert review group.” Appendix implemented a provisional procedure for these five hormones, when used accord-
4 of the DSU elaborates upon the estab- this purpose at its meeting in October ing to sound veterinary practices for pur-
lishment and functions of expert review 1997. The Committee plans to review the poses of growth promotion in beef cattle,
groups. success of this provisional procedure eigh- do not pose risks to human health. The
The panels in the beef hormone dis- teen months after the procedure’s adop- panels determined that the EC’s mea-
putes declined to form an expert review tion. sures varied from the international stan-
group. The panels expressed concerns dards of the Codex and thus were not in
that expert review groups would have to Transparency conformity with Article 3.1
find consensus on certain matters, which Annex B of the SPS Agreement states Article 3.3 makes it clear that a WTO
would complicate the groups’ processes. that if a member’s proposed SPS mea- member is not required to base its SPS
Instead, the panels sought scientific in- sure deviates from an international stan- measures upon international standards.
formation from individual experts. The dard, guideline, or recommendation, or if Article 3.3 provides that a member may
Codex provided the panels with names of no such international standard exists, maintain higher standards than the in-
possible nominees to serve as experts, and if the measure has a major impact on ternational norm, but only if such mea-
and a scientist from the Secretariat of the trade, the member must notify other sures are based upon science or if they
Codex, whose nationality was not given, countries of this proposed measure “at an operate “as a consequence of the level of
became an expert for the panel. Whether early stage.” If requested, the member sanitary or phytosanitary protection a
or not future panels establish expert re- must explain to other members how the Member determines to be appropriate in
view groups, the Codex, IPPC, and OIE proposed measure varies from interna- accordance with the relevant provisions
will likely be substantially involved in tional standards, guidelines, or recom- of paragraphs 1 through 8 of Article 5.”
providing scientific assistance to panels. mendations. Article 5 requires that members base
their measures upon risk assessments.
The SPS Committee The beef hormone decisions The EC claimed that risk assessments
The functioning of the SPS Committee, The existence of international SPS stan- supported its position. The panels deter-
which is established in Article 12, relies dards shaped the decisions of the first Continued on page 6

SPS Agreement/Continued from page 2
mined, however, that the EC failed to approval of maximum residue levels for lands, a vote was held to postpone the
demonstrate that its measures were in- five growth-promoting hormones, which consideration of the adoption of the pro-
deed based upon risk assessment as re- would become the focus of the beef hor- posed BST maximum residue level pend-
quired in Article 3.3. Therefore, the pan- mone disputes at the WTO, at the Twenty- ing the reevaluation of the scientific in-
els held that the EC’s policy on beef First Session of the Codex in July 1995, formation and an examination of other
hormones contravened the EC’s obliga- just seven months after the implementa- factors, most likely including consumer
tions under the SPS Agreement. The EC tion of the SPS Agreement. At the re- preferences. This resolution passed with
appealed the findings of the panels. While quest of the United States, a secret vote 38 members voting for it, 21 delegations
the Appellate Body’s decision rejects a was held on these standards, and they against it, and 13 countries abstaining.
number of arguments put forward by the were approved with 33 delegates favor- The member states of the EU, as well as
panels, it affirms the panels’ conclusions ing their adoption, 29 opposing them, most countries seeking admission to the
that the EC’s policy was not supported by and 7 delegates abstaining from the vote. EU, voted in favor of the resolution while
science. Following the vote, the Observer of the the United States, Canada, Australia,
EC stated that the secret vote was unfor- and New Zealand were amoung the coun-
The Codex Alimentarius Commission tunate as it deviated from the Codex’s tries opposing its adoption.
Of the standards established by the goal to operate transparently. The Ob-
three international organizations named server also said that the vote brought Future Codex standards
in the SPS Agreement, those of the Codex into question the validity of the Codex’s It is likely that non-consensus deci-
have perhaps the greatest potential to standards and that the EC might recon- sions will become more common in the
lead to conflicts among WTO members. sider its participation in this body. The standard-setting process of the Codex.
delegations of the Netherlands, Sweden, With the heightened importance of Co-
Background on the Codex Finland, Spain, and the United Kingdom dex standards, the circle of those who
The Codex establishes standards re- dissociated themselves from parts or all follow this body closely has grown beyond
lating to human health, and its stan- of the remarks made by the EC Observer scientists and selected government offi-
dards can concern additives, contami- after the vote. cials and now includes others, most nota-
nants, and veterinary drug and pesticide The EC would later argue before the bly environmentalists and consumer ad-
residues in foods. The Codex was founded WTO panels in the beef hormone dis- vocates. The Codex is in the process of
in 1962 by the Food and Agricultural putes that the failure of the Codex to formulating draft standards on geneti-
Organization (FAO) of the United Na- adopt the beef hormone maximum resi- cally modified organisms (GMOs), and
tions and the World Health Organization due levels through consensus demon- GMOs will almost certainly become one
(WHO). It currently has 158 member strated the very controversy of using of the next areas of controversy in the
countries and is based in Rome. The these standards. The EC also stated that Codex.
stated goal of the Codex is “to guide and Codex members were accustomed to
promote the elaboration and establish- adopting non-binding measures and were The International Plant Protection
ment of definitions and requirements for unaware that these standards for beef Convention
foods, to assist in their harmonization hormones would in effect become manda- While the Codex has experienced con-
and, in doing so, to facilitate interna- tory for the member states of the EC troversy surrounding the adoption of some
tional trade.” through the operation of the SPS Agree- of its standards since the implementa-
Most of the work of the Codex is con- ment and the Dispute Settlement Under- tion of the SPS Agreement, the IPPC is
ducted through its various committees, standing of the WTO. The panels held, undergoing a major structural change to
which consist of delegates from its mem- however, that nothing in the SPS Agree- prepare it for its new responsibilities in
ber states. Examples of these commit- ment requires that votes on the mea- the world’s trading system as a result of
tees are the Committee on Food Addi- sures of the relevant international orga- the SPS Agreement.
tives and Contaminants and the Com- nizations be by consensus, so the EC’s
mittee on Processed Fruits and Veg- argument was irrelevant. Background on the IPPC
etables. Standards of the Codex are es- The IPPC came into force in 1952, and
tablished through a lengthy eight step Twenty-Second Session of the some 105 countries were contracting par-
process that provides members with the Codex ties to it as of 1997. According to Article
opportunity to comment on the proposed The Twenty-Second Session of the Co- I of the IPPC, the purpose of this organi-
standards. Throughout the Codex’s his- dex was held in Geneva in June 1997 and zation is to secure “common and effective
tory, most of its standards have been provided further examples of disagree- action to prevent the spread and intro-
adopted by consensus. ments over the adoption of new stan- duction of pests of plants and plant prod-
dards. The release of the interim panel ucts and to promote measures for their
Recent controversial Codex decisions reports in the beef hormone disputes only control.” The IPPC was amended in 1979,
Beef hormones one month before this session most likely and the amended text became operative
As the standards established by the influenced the decisions that were made in 1991.
Codex relate to human health, they have there. A Secretariat was established for the
caused more concerns for the popula- Bovine somatotropin IPPC in 1989 by the FAO Conference, but
tions of members of the WTO than have At the Twenty-Second Session of Co- the Secretariat did not begin functioning
the standards of the IPPC and OIE, which dex in June 1997, a vote was held on a until 1993 during the Uruguay Round.
deal respectively with plant and animal draft standard for maximum residue lev- The function of the Secretariat is to coor-
health. Controversy increasingly sur- els for BST. The delegations opposing the dinate international efforts concerning
rounds the establishment of certain Co- adoption of the standard claimed that plant quarantine issues, to compile infor-
dex standards, and the adoption of Codex new evidence demonstrated that the ad- mation concerning plant pest outbreaks,
standards through consensus can no ministration of BST can increase the and to provide technical assistance to
longer be assumed. likelihood of viral and bacterial infec- members on phytosanitary issues. Like
The first indication of such controversy tions and mastitis in cattle, which could the Codex, the IPPC Secretariat is lo-
following the conclusion of the Uruquay lead to the further usage of antibiotics in cated in Rome and operates under the
Round occurred with the non-consensus dairy cattle. Upon motion of the Nether- C ontinued on page 7

SPS AGREEMENT/Continued from page 6
aegis of the FAO. be made by a two-thirds majority, not by nizations since the implementation of
a simple majority. the SPS Agreement, the importance of
Revision of the IPPC the OIE in the WTO system will most
Of the three international organiza- The International Office of likely become apparent during the near
tions named in the SPS Agreement, the Epizootics future. Bovine spongiform encephalopa-
IPPC is currently the least prepared to Unlike the Codex and IPPC, the OIE thy (BSE), also known as “mad cow dis-
fulfill the role envisioned by the WTO. has not experienced major changes in ease,” has significantly impacted the in-
Recognizing this, the FAO Conference either its standard-setting process or its ternational trade of live cattle and beef
decided in 1995 to amend the IPPC to structure since the implementation of products, and this disease could lead to
adapt it to the new responsibilities an- the SPS Agreement in 1995. disputes before the WTO. Any BSE dis-
ticipated for it in the SPS Agreement. In putes would probably involve OIE stan-
1996, an Expert Consultation proposed a Background on the OIE dards on BSE and the OIE’s interna-
revised draft of the IPPC, which was The OIE coordinates studies of animal tional monitoring of this disease.
distributed to contracting parties for com- diseases, informs governments of animal One such possible WTO dispute con-
ments. After a review by members of the diseases, and assists in the harmoniza- cerns the EU’s ban on the use of “speci-
IPPC, a proposed revised convention was tion of regulations involving the trade of fied risk materials” (SRMs) related to
presented to the IPPC Conference in Rome animals and animal products. It was transmissible spongiform encephalopa-
in November 1997. The revised IPPC will created in 1924 and is based in Paris. As thies. The EU bases its policy in part
go into effect after two-thirds of the IPPC’s of 1997, some 147 countries were mem- upon OIE standards which state that
contracting parties approve it. Amend- bers of this organization. The OIE differs certain materials, such as bovine brains
ments that are deemed to create new from the Codex and IPPC in that it does and spinal cords, originating from coun-
obligations for members will go into force not operate under the auspices of the tries with cases of BSE, should not be
for each contracting party upon accep- FAO of the United Nations. traded internationally. The EU policy
tance of such amendments. The International Committee of the restricts exports from the United States;
The biggest change proposed in the OIE meets at a minimum once a year. for example many pharmaceutical prod-
amendments is the creation of a new This committee, which is comprised of all ucts produced in the United States are
standard-setting focus for the IPPC. The delegates, approves new standards of the encased in gelatin capsules composed
IPPC itself does not contain provisions OIE. The OIE has five regional commis- partly of SRMs. The United States con-
relating to the establishment of stan- sions that promote cooperation on ani- tends that it should receive a derogation
dards. Instead, an ad hoc standard-set- mal health issues in their respective geo- from the EU’s policy as it is free of BSE.
ting process, which is viewed by many as graphical areas. US officials contend that the EU’s prohi-
unsatisfactory, was developed in 1993 The OIE is the oldest veterinary asso- bition of such products from the United
for the IPPC and was approved by the ciation in the world and is similar to the States is not scientifically justified, and
FAO Conference. Consequently, unlike Codex in that it too has a long history of thus violates the EU’s obligations under
the Codex and the OIE, the IPPC does not establishing advisory international stan- the SPS Agreement, as the United States
have an extensive history of establishing dards. OIE standards are found in the regularly monitors for BSE according to
new standards. The revisions will pro- OIE’s Code, which lists standards for OIE guidelines.
vide the IPPC with the structure and the international trade, and Manual, which European countries might take issue
capability to become a major standard- provides the standard diagnostic proce- with the proposed US policy of restrict-
setting organization like the Codex and dures for animal diseases as well as ing the importation of meat and meat
the OIE. vaccine standards related to international products from European countries where
The amendments propose other no- trade. The Fish Diseases Commission of BSE might be present, yet has not been
table changes to the IPPC. While the the OIE issues a separate Code and detected. The US is considering taking
provisions of the current IPPC do not Manual pertaining to aquatic life. such action as it contends that some
mention a Secretariat, the suggested re- European states either have less restric-
visions do. The proposed revisions also The OIE since implementation of the tive import laws than the United States
codify within the IPPC some of the prin- SPS Agreement or fail to monitor adequately for this
ciples of the SPS Agreement, such as the The OIE has undergone relatively few disease. OIE standards concerning BSE
use of risk assessments, pest free areas, changes since the implementation of the would probably become an issue in such
and harmonization. Both the current and SPS Agreement in 1995. Unlike the Co- a dispute.
proposed amended conventions contain dex, the OIE has not to date experienced In addition, an active panel of the WTO
non-binding dispute settlement mecha- significant controversy when creating is considering allegations of Canada that
nisms. standards. This lack of controversy can Australia’s ban on the importation of
With its new standard-setting focus, be attributed in part to the nature of the North American salmon contravenes
the decisions of the IPPC could possibly risks which the OIE addresses; the es- Australia’s WTO obligations under the
become more controversial as has oc- tablishment of standards for animals SPS Agreement. Australian officials claim
curred with some Codex decisions. In- and animal products does not evoke the that uncooked salmon from North
deed, the Secretariat of the IPPC ex- same concerns for most people as do the America poses threats to its fisheries
pressed concerns during the IPPC revi- standards of the Codex, which relate to through the possible transmission of dis-
sion process that trade matters were human health. And in contrast to the eases. The decision in this dispute will
possibly being viewed as more important IPPC, the OIE prior to the Uruguay Round likely involve OIE standards, and the
than plant health issues. However, block Agreements was well suited to establish panel is expected to release its report in
voting within the revised IPPC might be new standards, so the OIE was not in the spring of 1998.
less effective than within the Codex. need of revision.
Under Article X.5 of the IPPC, if consen- Conclusion
sus cannot be reached on a matter that The OIE and impending disputes The SPS Agreement of the WTO has
comes before the IPPC’s Commission on While the profile of the OIE is possibly expanded the visibility of the Codex, IPPC,
Phytosanitary Measures, decisions will lower than those of the Codex and IPPC and OIE in the international trading
when considering changes to these orga-
C ontinued on page 3

W or processor
d pr changes
ocessor and e-mail changes
The editor’s new e-mail address is: Now is it possible to send an article as an attached file to an
e-mail message. The preferred word processor is now Microsoft Word 6 or 7.