The Agreement on the Application of Sanitary and Phytosanitary Measures (hereafter, the SPS Agreement) imposes science-based disciplines on quarantine risk management. Article 2.2 of the SPS Agreement provides a basic obligation that SPS measures be applied only to the extent necessary to protect human, animal or plant life or health, be based on scientific principles and are not maintained without sufficient scientific evidence. This is given specific application by Article 5.1 which requires that measures be based on a scientific risk assessment. Given its “science-based” focus, to what extent can economic considerations be incorporated into quarantine decision-making under the SPS Agreement?
In this chapter we show that the SPS Agreement, as interpreted by WTO panels and the Appellate Body in the disputes EC – Hormones, Japan – Varietals and Australia – Salmon, permits and indeed requires economic analysis in quarantine decision-making. Any risk assessment must evaluate the likelihood of entry, establishment or spread of the pest or disease, as well as the associated potential biological and economic consequences. Moreover, a Member's appropriate level of protection reflects its optimal balance between the economic benefits of trade and the potential biological and economic impact of pest or disease establishment.
Economic considerations are also relevant to the capacity of Members to adopt WTO-consistent measures. Under Article 5.6, Members are only required to take less trade-restrictive alternative measures where these are demonstrated to be technically and economically feasible.