This dispute concerns the following four measures that Panama adopted between January 2019 and June 2020:

• Restriction on the importation of fresh strawberries (Measure 1): In January 2020, Panama disallowed the phytosanitary requirements that govern the importation of strawberries from Costa Rica, preventing their importation. According to Panama, this measure was adopted in response to the detection of a contaminant (pesticide Oxamyl) in levels exceeding Panama's Maximum Residue Limits (MRL) in two shipments of strawberries from the same Costa Rican exporter.
• Restriction on the importation of dairy and meat products (Measure 2): Since June 2020, Panama prevents the importation of such products from 16 Costa Rican establishments because it did not renew their sanitary approvals.
• Restriction on the importation of fresh pineapples (Measure 3): In January 2019, Panama disallowed the phytosanitary requirements that govern the importation of pineapples from Costa Rica, preventing their importation. According to Panama, this measure was adopted due to the presence of pink hibiscus mealybug (Maconellicoccus hirsutus) in Costa Rica.
• Restriction on the importation of fresh bananas and plantains from Costa Rica (Measure 4): In October 2019, Panama disallowed the phytosanitary requirements that govern the importation of bananas and plantains from Costa Rica, preventing their importation. According to Panama, this measure was adopted due to the review of those requirements to address the risks associated with the presence of the Fusarium oxysporum f. sp. cubense tropical race 4 (Foc TR4) pest in the region.

Costa Rica raised claims under 16 different provisions of the SPS Agreement, two provisions of the GATT 1994, and one provision of the Agreement on Agriculture. Panama's main defence is that Measures 1, 3 and 4 constitute provisional measures under Article 5.7 of the SPS Agreement. Regarding Measure 2, Panama claims that it constitutes approval procedures falling under Article 8 and Annex C of the SPS Agreement, therefore only subject to procedural obligations in the SPS Agreement.

Panels terms of reference

Panama requested the Panel to rule on a preliminary basis on two issues: (a) the incompatibility of Costa Rica's panel request with the requirements of Article 6.2 of the DSU on the grounds that it did not provide a brief summary of the legal basis of the complaint, and (b) the inadmissibility of Costa Rica's claims under Annexes B(5)(b) and B(6)(a) of the SPS Agreement because they were not included in the panel request.

The Panel issued a single preliminary ruling: (a) rejecting Panama's claim under Article 6.2 of the DSU, because Costa Rica's Panel request clearly connected the measures at issue with the legal basis of the agreements, and (b) agreed with Panama that Costa Rica's claims under Annex B(5)(b) and B(6)(a) of the SPS Agreement were not included in the panel request and, therefore, fell outside the scope of the Panel's terms of reference.

The Panel also found that the approval procedures that Costa Rica challenged under Article 8 and Annex C of the SPS Agreement with respect to Measures 1, 3, and 4 had not been properly identified in Costa Rica's panel request and, therefore, fell outside the Panel's terms of reference.

Order of analysis

The Panel decided to organize its analysis by measure, since this approach would enable it to address the aspects particular to each measure at issue in a clearer and more structured manner. The Panel began its analysis with the SPS Agreement.

Claims under the SPS Agreement

Restriction on the importation of fresh strawberries (Measure 1)

The Panel found that Measure 1 constitutes an SPS measure under Article 1.1 and Annex A(1)(b) because: (i) it had the objective to protect human life or health from risks arising from contaminants (Oxamyl pesticide) and (ii) it directly affected international trade, to the extent that it constituted an import prohibition in the form of a “temporary disallowance”.

The Panel found that Measure 1 was not a provisional SPS measure covered by Article 5.7 because: (a) it was not adopted in a situation of insufficient relevant scientific evidence, since Panama had sufficient information to assess the risk arising from the presence of Oxamyl in strawberries from Costa Rica; and (b) it was not based on pertinent available information (including Codex Guidelines, measures from other Members concerning non-compliance with MRLs, the fact that the measure was triggered by two shipments, and Costa Rica's prohibition on the use of Oxamyl in strawberry crops), since the import prohibition imposed by Panama bore no rational and objective relationship to the pertinent available information. Because the four requirements for a provisional measure to be covered by Article 5.7 are cumulative, the Panel did not consider it necessary to address the other two requirements contained in the second sentence of Article 5.7, related to the maintenance of the provisional measure, to resolve the dispute.

The Panel found that because Measure 1 was not based on a risk assessment, it was inconsistent with: (a) Article 5.1, because it was not based on an assessment of the risks to human health, taking into account risk assessment techniques developed by the relevant international organizations; (b) Article 5.2, because Panama did not take into account the elements listed in this provision in the assessment of risks; and (c) Article 2.2, because it was not based on scientific principles and was maintained without sufficient scientific evidence.

The Panel found that Measure 1 was more trade-restrictive than required to achieve Panama's ALOP, being inconsistent with Article 5.6. The Panel based this conclusion on its finding that the alternative measures proposed by Costa Rica: (a) were technically and economically feasible for Panamanian authorities, and, therefore, were reasonably available to Panama; (b) achieved Panama's appropriate level of protection (ALOP), and (c) were less trade-restrictive than Measure 1 to the extent that they would allow imports, albeit with conditions, instead of preventing the importation of strawberries. The Panel also found that, because a finding that a measure is more trade-restrictive than required to achieve the Member's ALOP leads to a rebuttable presumption of inconsistency with Article 2.2, and considering that Panama did not present arguments to rebut this presumption of inconsistency, Measure 1 was also inconsistent with Article 2.2, as it was not applied only to the extent necessary to protect human life and health.

The Panel found that Costa Rica failed to demonstrate that Measure 1 was inconsistent with Article 7 and Annex B(1), because it did not submit arguments in support of its claims under these provisions.

The Panel found that Measure 1 was inconsistent with Articles 1.1 and 2.1 because it was inconsistent with Articles 5.1, 5.2, 2.2 and 5.6.

The Panel exercised judicial economy with respect to Costa Rica's claims under Article 3.1 (that Measure 1 was not adopted on the basis of Codex Guidelines) because its findings under Articles 2.2, 5.1, 5.2, 5.6, and 5.7 were sufficient to allow the DSB to make sufficiently precise recommendations and rulings to ensure the effective resolution of this dispute.

Restriction on the importation of dairy and meat products from 16 Costa Rican establishments (Measure 2)

The Panel found that Costa Rica (a) demonstrated that Measure 2 constituted an import ban on dairy and meat products from Costa Rica maintained by virtue of the non-renewal of the sanitary approvals of 16 out of the 18 establishments, because there was no evidence in the record indicating that Panama responded to these 16 establishments' sanitary approval requests; and (b) failed to demonstrate that Measure 2 constitutes an import ban on dairy and meat products from Costa Rica maintained by virtue of Panama's decision to revoke or annul Costa Rica's sanitary/animal health eligibility for the products at issue, due to absence of evidence in the record indicating such revocation.

The Panel found that Measure 2 constitutes an SPS measure as defined in Article 1.1 and Annex A(1)(b) and (c), because: (a) it was taken to protect (i) human life or health within the territory of the Member from risks arising from diseases carried by animals or products thereof, and (ii) human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs; and (b) it directly affects international trade, to the extent that Measure 2 comprised administrative procedures that could delay or deny the entry of the products at issue.

Having found that Measure 2 constitutes an approval procedure for purposes of Annex C, the Panel found that Measure 2 was inconsistent with Annex C(1)(a) because: (a) Panama incurred delays in the process of renewing the sanitary approvals of the 16 Costa Rican establishments, by delaying to clarify the information that was required to process the renewals, failing to conduct on-site audits, and failing to issue rulings on the renewal requests; and (b) the delays were undue because Panama did not provide reasons not to have informed Costa Rica of the missing information it needed and there was no legitimate justification not to have carried out on-site audits or fulfil the deadlines for administrative procedures during the periods that were not affected by limitations stemming from the COVID-19 pandemic. The Panel also found that Measure 2 was inconsistent with Annex C(1)(c) because Panama required more information than necessary to complete the sanitary approval procedures of 16 Costa Rican establishments, considering that the Panamanian authority requested more detailed information than usually required for that type of procedure and did not explain the reason why it needed such information. Finally, considering that Measure 2 was found to be inconsistent with Annex C(1)(a) and (c), the Panel also found it to be inconsistent with Article 8.

The Panel found that Measure 2 was inconsistent with the first sentence of Article 2.3 because (a) the conditions prevailing in Peru and New Zealand were similar to the conditions prevailing in Costa Rica, (b) Measure 2 discriminated the 16 establishments from Costa Rica vis-à-visthe establishments from Peru and New Zealand by granting extensions to the sanitary approval of the establishments of these two countries based on an initial documentary review, which were not granted to Costa Rican establishments, and (c) the discrimination was arbitrary and unjustifiable. The Panel found that because Costa Rica did not advance any arguments with respect to Article 2.3 second sentence, Costa Rica failed to demonstrate that Measure 2 constitutes a disguised restriction on international trade inconsistent with the second sentence of Article 2.3.

The Panel concluded that Measure 2 was more trade-restrictive than required to achieve Panama's ALOP, being inconsistent with Article 5.6. The Panel reached this conclusion after finding that the alternative measure proposed by Costa Rica: (a) was technically and economically feasible for Panamanian authorities, and, therefore, reasonably available to Panama; (b) achieved Panama's ALOP, and (c) was less trade-restrictive than Measure 2 to the extent that it would allow imports instead of preventing the importation of dairy and meat products. In light of the presumption arising from its finding under Article 5.6, and absent refutation from Panama, the Panel found that Measure 2 was also inconsistent with Article 2.2.

The Panel found that Costa Rica failed to demonstrate that Measure 2 was inconsistent with Article 7 and Annex B(1), because it did not submit arguments in support of its claims under these provisions.

The Panel found that Measure 2 was inconsistent with Articles 1.1 and 2.1 because it was inconsistent with Articles 2.2, 2.3 (first sentence), 5.6, 8, and Annex C(1)(a) and (c).

The Panel decided to exercise judicial economy with respect to Costa Rica's claims under Article 5.5 (that Panama applied different ALOP with respect to different but comparable situations, resulting in an arbitrary or unjustifiable distinction that constitutes discrimination or a disguised restriction on international trade), because the Panel considered its findings under Article 2.3 (first sentence) to be sufficient to allow the DSB to make sufficiently precise recommendations and rulings in order to ensure the effective resolution of this dispute.

Restriction on the importation of fresh pineapples (Measure 3)

The Panel found that Measure 3 constitutes an SPS measure as defined in Article 1.1 and Annex A(1)(a) of the SPS Agreement, because (a) it was taken to protect plant life or health from risks arising from the entry, establishment or spread of pests (pink hibiscus mealybug), and (b) it directly affects international trade, to the extent that it constitutes an import prohibition in the form of a “temporary disallowance”.

The Panel found that Measure 3 was not a provisional SPS measure covered by Article 5.7 because: (a) it was not adopted in a situation of insufficient relevant scientific evidence, since Panama had sufficient information to assess the risk arising from the entry, establishment or spread of the pink hibiscus mealybug pest through the importation of pineapples from Costa Rica; and (b) Measure 3 was not based on pertinent available information (including general information on the pink mealybug pest; information on the phytosanitary status of Costa Rica with respect to that pest; international standards for phytosanitary measures; and measures from Peru and Panama itself), since the import prohibition imposed by Panama bore no rational and objective relationship to the pertinent available information. As for Measure 1, the Panel decided no to examine the two other requirements in Article 5.7.

The Panel found that because Measure 3 was not based on a risk assessment, it was inconsistent with: (a) Article 5.1, because it was not based on an assessment of the risks to human health, taking into account risk assessment techniques developed by the relevant international organizations; (b) Article 5.2, because Panama did not take into account the elements listed in this provision in the assessment of risks; (c) Article 5.3, because Panama did not take into account the economic factors listed in this provision in the assessment of the risks; and (d) Article 2.2, because it was not based on scientific principles and was maintained without sufficient scientific evidence.

The Panel found that Measure 3 was inconsistent with Article 2.3, first sentence, because (a) the conditions prevailing in Colombia concerning the pink hibiscus mealybug were similar to the conditions prevailing in Costa Rica, (b) Measure 3 discriminated pineapples from Costa Rica vis-à-vis avocados from Colombia, to the extent that it allowed the imposition of a mitigation measure to the products of the latter, while it did not do so for the products of Costa Rica, and (c) the discrimination was arbitrary and unjustifiable. The Panel also found that Measure 3 is inconsistent with the second sentence of Article 2.3 because it is applied in a manner that constitutes a disguised restriction on international trade.

The Panel found that Measure 3 was more trade-restrictive than required to achieve Panama's ALOP, being inconsistent with Article 5.6. The Panel based this conclusion on its finding that the alternative measures proposed by Costa Rica (the reinstatement of the phytosanitary requirements for the importation of pineapples from Costa Rica suspended by the adoption of Measure 3; and the application of specific phytosanitary requirements on the importation of pineapples from Costa Rica): (a) were technically and economically feasible for Panamanian authorities, and, therefore, reasonably available to Panama; (b) achieved Panama's ALOP, and (c) were less trade-restrictive than Measure 3 to the extent that they would allow imports, albeit with conditions, instead of preventing the importation of pineapples from Costa Rica. In light of the presumption arising from its finding under Article 5.6, and absent refutation from Panama, the Panel found that Measure 3 was also inconsistent with Article 2.2.

The Panel found that Costa Rica failed to demonstrate that Measure 3 was inconsistent with Article 7 and Annex B(1), because it did not submit arguments in support of its claims under these provisions.

The Panel found that Measure 3 was inconsistent with Articles 1.1 and 2.1 because it was inconsistent with Articles 5.1, 5.2, 5.3, 2.2, 2.3, and 5.6.

The Panel exercised judicial economy with respect to: (a) Costa Rica's claim under Article 3.1 (that Measure 3 was not adopted on the basis of the international standards for phytosanitary measures), because its findings under Articles 5.7, 5.1, 5.2, 5.3, 2.2, 2.3, and 5.6 were sufficient to allow the DSB to make sufficiently precise recommendations and rulings in order to ensure the effective resolution of this dispute; and (b) Costa Rica's claim under Article 5.5 (that Panama applied different ALOP with respect to different but comparable situations, resulting in an arbitrary or unjustifiable distinction that constitutes discrimination or a disguised restriction on international trade), because its findings under Article 2.3 were considered to be sufficient to allow the DSB to make sufficiently precise recommendations and rulings in order to ensure the effective resolution of this dispute.

Restriction on the importation of fresh bananas and plantains (Measure 4)

The Panel found that Measure 4 constitutes an SPS measure as defined in Article 1.1 and Annex A(1)(a), because (a) it was taken to protect plant life or health arising from risks arising from the entry, establishment or spread of pests (albeit not for the protection of risks associated with Foc TR4, as argued by Panama), and (b) it directly affects international trade, to the extent that it constitutes an import prohibition in the form of a “temporary disallowance”.

The Panel found that Measure 4 was not a provisional SPS measure covered by Article 5.7 because   it was not adopted in a situation of insufficient relevant scientific evidence, since Panama had sufficient information to assess the risks that it sought to address by reviewing the Resolutions setting out the phytosanitary requirements for the importation of bananas and plantains from Costa Rica and the approval of the plantain packing plants.

The Panel found that because Measure 4 was not based on a risk assessment, it was inconsistent with: (a) Article 5.1, because it was not based on an assessment of the risks to human health, taking into account risk assessment techniques developed by the relevant international organizations; (b) Article 5.2, because Panama did not take into account the elements listed in this provision in the assessment of risks; (c) Article 5.3, because Panama did not take into account the economic factors listed in this provision in the assessment of the risks; and (d) Article 2.2, because it was not based on scientific principles and was maintained without sufficient scientific evidence.

The Panel found that Measure 4 was inconsistent with Article 5.6 because it was more trade-restrictive than required to achieve Panama's ALOP, being inconsistent with Article 5.6. The Panel based this conclusion on its finding that the alternative measures proposed by Costa Rica (application of the phytosanitary requirements for the importation of plantains and bananas from Costa Rica set out in certain Panamanian Resolutions): (a) were technically and economically feasible for Panamanian authorities, and, therefore, reasonably available to Panama; (b) achieved Panama's ALOP, and (c) were less trade-restrictive than Measure 4 to the extent that they would allow imports instead of preventing the importation of plantains and bananas from Costa Rica. In light of the presumption arising from its finding under Article 5.6, and absent refutation from Panama, the Panel found that Measure 4 was also inconsistent with Article 2.2.

The Panel found that Costa Rica failed to demonstrate that Measure 3 was inconsistent with Article 7 and Annex B(1), because it did not submit arguments in support of its claims under these provisions.

The Panel found that Measure 4 was inconsistent with Articles 1.1 and 2.1 because it was inconsistent with Articles 2.2, 5.1, 5.2, 5.3, and 5.6.

The Panel exercised judicial economy with respect to Costa Rica's claims under Article 3.1 (that Measure 4 was not adopted on the basis of the international standards for phytosanitary measures) because its findings under Articles 2.2, 5.1, 5.2, 5.3, 5.6 and 5.7 were sufficient to allow the DSB to make sufficiently precise recommendations and rulings in order to ensure the effective resolution of this dispute.

Claims under the GATT 1994 and the Agreement on Agriculture

The Panel decided to exercise judicial economy with respect to Costa Rica's claims under these WTO Agreements with respect to the four measures at issue in light of its findings under the SPS Agreement.