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The Significance of the WTO Biotech Ruling for LAC
By Keith R | March 5, 2007
Topics: Biodiversity, Biotechnology, Economics & the Environment, Environmental Protection | No Comments »
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When the World Trade Organization (WTO) dispute panel on biotech products involving Argentina, Canada, and the US vs. the European Union (EU) released its report at the end of September, I sat down to start this entry with an outline and list of possible points, thoughts, items to check on, etc. — my usual brainstorming.
I downloaded the panel report and tried to wade through it, but quickly gave up (it’s hundreds of pages of interesting topics made to be as bland and boring as humanly possible). Then I checked the “quick and dirty” analyses done by many law offices, and got frustrated with the excessive legalese lawyers like to employ to make their writings unreadable and ponderous.
When I finally realized that the EU had been given a period to appeal, I shelved the entry until it was clear whether the EU would fight it and on what basis. That happened in late November when the EU let the deadline for appeal lapse, but at that time I was up to my chin in work and blog articles such as the examination of the Stern Review. Time now to catch up!
If you live, breath and obsess on biotechnology, or on biotech applications in agriculture, then this doubtless is not news to you. But many of us don’t. The press was not very good about covering the issue, and where they did, they tended to focus almost exclusively on the US-EU dimension. As you well know by now, at The Temas Blog we have a different focus!
Why It Matters
I am not discussing this issue here simply because Argentina was one of the parties to the dispute. It matters to most, if not all, of the nations of Latin America and the Caribbean (LAC) for several reasons:
- many LAC nations are major exporters of agricultural goods — Argentina and Brazil are the largest, but they are far from alone — and many have pinned the future exports of some of their crops on genetically engineered crops;
- a number of LAC nations are currently formulating their regulatory regimes for market approval of biotech products (for examples, see here, here and here), and now must take into account adjustments to avoid a similar trade law challenge;
- the ruling may affect the use of the precautionary principle (see the Temas glossary for definition) in environmental regulation when the issue might involve a trade dimension;
- the ruling may have broader implications for multilateral environment agreements (MEAs), whose provisions/ principles may be ignored when not all parties in the trade dispute have ratified the MEA in question.
It also should be noted that early on in the dispute panel process several WTO members, including the LAC nations Brazil, Chile, Colombia, Mexico and Peru, reserved their rights as third parties to benefit from the eventual ruling.
The Essence of the Dispute
The “biotech case” is actually three trade related dispute settlement filings rolled into one to be heard by a single WTO panel. In May 2003, Argentina, Canada and the US filed against the EU alleging that a de facto EU moratorium on approvals of biotech products from 1999 to 2003, as well as the existence of individual EU Member State (Austria, Italy, Luxembourg) marketing and import prohibitions (“safeguard measures”) on previously approved biotech products, violated four different trade agreements overseen by the WTO. The panel basically threw out (“did not need to rule”) charges related to three of these trade agreements, but decided to examine those related to the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS).
In its defense the EU argued that (1) it did not operate a de facto moratorium, pointing out that there was never an official communication to that effect; (2) there was no “undue delay” in approving products for commercial use; (3) measures were based on the “an expression of the precautionary principle” called for in the Biosafety Protocol to the Biodiversity Convention and utilizing SPS Article 5.7, allowing temporary action where there is felt to be there is insufficient scientific information on which to base a risk assessment (as the SPS usually requires for measures).
The dispute panel focused on three basic issues: (1) “undue delay”; (2) the SPS requirement that trade measures be based on a scientific risk assessment; (3) the precautionary principal/Article 5.7 defense. After many hearings, filings and amicus briefs, it:
- found that the EU had in fact conducted a a de facto moratorium (one of the world’s worst-kept “secrets”!) by not acting on affirmative risk assessments from its own scientific panels regarding 24 products during the 1999-2003 period.
- determined that the EU had not shown “insufficient scientific evidence” actually existed to justify the member state safeguard measures.
- accepted Canada’s argument that the Biosafety Protocol was not relevant to the case, since none of the plaintiffs were party to the Protocol.
- disallowed the use of the precautionary principle in this case, as it remains “unsettled” in international public law, and instead required that WTO member states stick to the SPS requirement of basing trade measures on “sufficiently warranted or reasonably supported by a risk assessment” as defined by the SPS.
So What Does This All Mean?
Beyond “compensation” to Argentina, Canada and the US (possibly as well for the other aforementioned nations that filed their interest in the outcome) for their claimed trade injuries as the result of the EU’s actions found by the panel to be in violation of the SPS, this panel judgment has several very important policy impacts:
- precautionary principle: the ruling calls into question the use of a “precautionary principle” defense in trade disputes involving environment- or health-justified product decisions. The ruling does not preclude its use sometime in the future when it better defined under agreements or jurisprudence, but for now will make governments think twice about making it a cornerstone of their decisions.
- de facto moratoriums: EU officials had hoped to avoid trade difficulties by never making their biotech product approval moratorium “official.” This was always a dubious tactic, particularly since in public records their own scientific risk assessment panels usually recommended product approval. Future governments wanting to avoid trade sanctions but wishing to delay or halt product approval based on popular pressure will have to become more subtle and creative, or else choose who they fear most: their trading partners or an upset consumers/voters.
- scientific risk assessment: following on the prior point, if NGOs wish to block biotech product approvals in WTO contracting parties, they will probably have to work harder to call into question the scientific validity of the risk assessments presently used to decide such approvals.
- Biosafety Protocol: many developing nations, particularly those in LAC, have based or are formulating their biosafety and biotech product approval regimes on the principles and directives of the Protocol. While this ruling does not preclude them doing so per se, it does suggest that WTO member nations (which includes all of LAC except the Bahamas) might run the risk of trade sanctions if their biotech regime does not adhere to a strict interpretation of the SPS as well. This is particularly a concern as long as major agricultural exporters such as Argentina, Australia, Canada and the US remain outside the Biosafety Protocol. [Note: among LAC nations, Argentina, Chile, Guyana, Haiti, Honduras, Jamaica, Suriname and Uruguay remain outside the Protocol.]
- MEAs and the WTO: the enforceability of MEAs is now up in the air. Where nearly every WTO member is already a party to a MEA, as is the case of the Montreal Protocol on Substances that Deplete the Ozone Layer or CITES (trade in endangered species), then this is not so much a problem. But in the case of existing MEAs where many or key states have delayed or been “fence-sitting” about joining [say, the Basel Convention on hazardous wastes, or the Stockholm Convention on persistent organic pollutants (POPs)], or for new MEAs contemplating trade-based safeguards, some less scrupulous governments now might perceive a trade advantage to not ratifying certain MEAs. This makes it all the important that the current “Doha Round” trade talks squarely address the balance between environment and trade priorities.
Tags: Argentina, Austria, Basel Convention, biosafety, Biosafety Protocol, bioseguridad, biotech products, Biotechnology, biotecnologia, Brazil, Canada, Chile, CITES, Colombia, dispute panel, European Union, genetic engineering, Italy, jurisprudence, Luxembourg, MEAs, Mexico, Montreal Protocol, moratorium, OMC, Peru, precautionary principle, principio de precaución, risk assessments, safeguard measures, SPS, Stockholm Convention, União Europea, Unión Europea, WTO
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