Interpreting risk in international trade

Abstract

After an eight year risk analysis process, Biosecurity Australia released its final import risk analysis (IRA) in 2006, allowing apple imports from New Zealand into Australia, subject to stringent phytosanitary measures. New Zealand apple imports were previously banned due to the risks of transmitting pests and diseases, in particular, fire blight. New Zealand commenced dispute settlement proceedings at the World Trade Organization (WTO) on the grounds that Australia’s risk mitigation measures were scientifically unjustified, thus violating international trade law. The WTO largely ruled in New Zealand’s favour in August 2010, and again in November after Australia unsuccessfully appealed. This paper argues that the cause and nature of this dispute stem largely from the varied risk interpretations in the context of international trade and, by extension, from the non-scientific factors (such as values, interests and politics) shaping these interpretations. It examines the risk analysis, identifying a number of potentially important risk governance issues in the IRA process, derives the judgements and perspectives of the main stakeholders and the factors influencing their position, and finally analyses the case in the context of the WTO dispute settlement system. Despite the intent of the relevant WTO legislation, the dispute may not be appropriately reconciled through scientific considerations alone. The case study is used to explore the challenges accompanying import risk analysis under severe uncertainty.