The next trade war? GM products, the Cartagena Protocol and the WTO

The next trade war?GM products, the CartagenaProtocol and the WTOBy Duncan Brack, Robert Falkner and Judith Goll

On 20 May 2003 the United States

initiated a dispute under the World Trade

Organization (WTO) about the European

Union’s de facto moratorium on the

approval of new uses of genetically

modified (GM) products. Following the

failure of the consultation stage of the

WTO’s dispute settlement procedure, a

dispute panel was established at the end

of August, signalling the long-expected

opening shots in what may turn out to be

a serious and long-running trade conflict

between the US and the EU.

The dispute settlement process, if pursued

through all its stages, including the final

Appellate Body ruling, normally takes

between twelve and eighteen months to complete. Whatever its outcome, it is

quite likely that further disputes may be initiated, given the rapid evolution of

national regulatory regimes for GM products, and also the entry into force of the

Cartagena Protocol, the multilateral environmental agreement regulating trade in

GM products, on 11 September.

As commercial GM products have only been deployed since the mid-1990s, there is

still considerable debate and uncertainty over their impacts on health, the

environment, industrial structures and market power. Given the deep-seated

cultural differences towards science, technology and government regulation

between US and EU consumers, trade disputes centring on GM products will be

particularly difficult to resolve. This briefing paper aims to provide the background

to the likelihood of many years of ongoing argument and dispute.

BR

IEFIN

G P

AP

ER Briefing Paper No. 8

S E P T E M B E R 2 0 0 3

THE ROYAL INSTITUTE OF INTERNATIONAL AFFAIRS

Sustainable Development Programme

Administrateur

Text Box

http://www.riia.org/pdf/research/sdp/Next%20trade%20war%20GM%20%20CP%20&%20WTO%20Brack%20et%20al%20Sept%2003.pdf

2 The next trade war? GM products, the Cartagena Protocol and the WTO

Regulating GM products

Crop varieties derived from biotechnology were firstintroduced for commercial use in the United States in1996, though the scientific and popular debate abouttheir impacts originated in the 1970s, when thetechnologies first began to be developed. Issuessurrounding genetically modified organisms (GMOs)include the impacts of commercial growing, marketingand trade of GM seeds, food, animal feed and thepatenting of food genes. At the heart of the debate iswhether the technology will have negativeconsequences for human and animal health and theenvironment, as well as socio-economic implications. In1998 the Scientists’ Working Group on Biosafetyidentified four associated human or environmentalrisks of GMO release:1

• changes in ecological roles or functions; • changes in genetic relationships; • indirect effects upon community and ecosystem functions; and • changes in allergenicity, toxicity, or the nutritional composition of foods.

The lack of scientific certainty over whether and howthese risks will transpire has prompted majordisagreement over the appropriate course of action,with North American and European populationsdisplaying widely diverging responses. The gulfseparating the opinions of the US and the EU haslargely been brought about by circumstancessurrounding food production. The US, as perhaps themost advanced innovator in food technology, has notshied away from implementing GM technology, and isnow the world’s leading producer and exporter of GMproducts, accounting for 66 per cent of total world-wide planted hectares in 2002. Canada (6 per cent) andArgentina (23 per cent) have also proved relativelyenthusiastic adopters of the technology, along withChina (4 per cent). These four countries togetheraccounted for 99 per cent of world-wide GMOproduction in 2002.2 Total GM crop production hasgrown explosively over the past six years, with a 35-foldincrease from 1.7 million hectares in 1996 to 58.7million hectares in 2002 (see Figure 1).

The European approach

European consumers have demonstrated a muchhigher level of suspicion of GM products –‘Frankenstein foods’ as the British tabloid press dubbedthem – and the history of food scares within the EU,including over BSE and foot-and-mouth disease, hasled to a widespread public demand for governmentregulatory action.

EU legislation relating to GMOs has been in placesince 1990, when Directive 90/22/EEC, on the deliberaterelease of GMOs into the environment, was agreed; itallowed a member state to refuse the release of GMOsin its territory, even if overall consent had been givenunder the Directive, provided the country had‘justifiable reasons’ to believe that an approvedproduct constituted a risk to human health or theenvironment. In 1997, Regulation (EC)258/97, on novelfoods and novel food ingredients, established a similarprocess for authorizing novel foods, including foodproducts containing, consisting of or produced fromGMOs.

A revised version of the 1990 Directive, 2001/18/EC,entered into force in October 2002; this required amore stringent risk assessment process for the releaseof GMOs into the environment, and general rules onmandatory labelling and traceability at every stage ofthe process of placing GM products on the market,including mandatory monitoring requirements forlong-term effects. As with the 1990 Directive,applications for the release of GMOs into theenvironment were assessed by the member state wherethe product was first placed on the market. Ifapproved and if no objections were raised by othermember states, the product could be marketedthroughout the EU; if objections were raised, thedecision was taken at the EU level. The revisedDirective also made it possible for the Council ofMinisters to adopt or reject a Commission proposal forGMO authorization by qualified majority. In contrast tothe 1990 Directive, approval was granted for only tenyears, after which period authorizations wererenewable.

In July 2003, two new regulations,3 on GM food andfeed, and on traceability and labelling of GMOs andproducts produced from GMOs, were adopted.4 Thenew arrangements include a simplified authorizationprocess for GMOs for release into the environment,

0

10

20

30

40

50

60

1996 1998 2000 2002

Global area ofGM crops (inmillionhectares)

FIGURE 1: GROWTH IN COMMERCIALPRODUCTION OF GM CROPS

Source: ISAAA: www.isaaa.org

and GM food or feed, with a ‘one-door-one-key’procedure, requiring only a single risk assessment anda single application to obtain approval for thedeliberate release of GMOs into the environment andfor use in food or feed. Scientific risk assessments willbe conducted by the newly established European FoodAuthority, and the European Commission will thendraft a proposal for granting or refusing authorization,which will be submitted for approval by a regulatorycommittee of member states.

The new regulations extend the current labellingrequirements to all GM food or feed, including foodsproduced from GMOs, irrespective of whether there isactually DNA or protein of GM origin in the finalproduct. All products consisting of or containing GMOsmust be labelled as ‘containing GMOs’ or ‘producedfrom GMOs’. Exceptions are allowed for conventionalfood or feed contaminated by minute traces of GMOs(below 0.9 per cent), which may occur duringcultivation, harvest, transport or processing. Thetraceability requirements provide the means to trackthe movement of GM products through the productionand distribution chains, and will facilitate monitoringof any effects on the environment, accurate labellingand the withdrawal of products if unexpected adverseeffects arise. The new regulations will enter into forcetwenty days after their publication (expected inSeptember or October 2003), with a six-monthcompliance period. The EU legislative framework (thetwo regulations plus the 2001 Directive) haveestablished what Health and Consumer ProtectionCommissioner David Byrne described as the ‘mostrigorous pre-marketing assessment in the world’5 forGM products.

After the 1990 Directive entered into force, a totalof eighteen GMOs were authorized for commercialrelease into the environment in the EU, and fifteen GMfood products were approved for marketing. Asconcern grew over the possible impacts of GMproducts, and consumer resistance mounted, however,in June 1999 five member states (Denmark, Greece,France, Italy and Luxembourg) called for thesuspension of all new authorizations pending theadoption of rules to ensure labelling and traceability,while a further seven states (Austria, Belgium, Finland,Germany, the Netherlands, Spain and Sweden) declaredtheir intention to take a precautionary approach, andnot to authorize any GMOs until it could bedemonstrated that there was no adverse effect on theenvironment or human health. As a result, no newGMOs have been approved in the EU since October1998, while thirteen applications for release and tenapplications for food products were frozen.

This de facto moratorium clearly constrained importsof GM products into the EU. As the largest exporter,the US was particularly affected, losing an estimated

$300 million worth of agricultural sales to Europeannually. It was this situation that led to the USdecision, in May 2003, to challenge the moratoriumthrough the WTO dispute settlement process. Eventhough the adoption of the new regulations will allowthe moratorium to be lifted, the US shows no sign ofbacking down.

Before turning to the possible outcomes of the USchallenge, however, we look at the other majorinternational policy development of 2003: the entryinto force of the Cartagena Protocol.

The Cartagena Protocol onBiosafety6

The Cartagena Protocol on biosafety is the firstinternational treaty dealing with the transboundarymovement of genetically modified organisms. Signedin January 2000, after nearly four years of increasinglyarduous negotiations, the Protocol entered into forceon 11 September 2003. By chance, the treaty becamelegally binding just at the time when WTO memberstates were meeting in Cancun, Mexico, at thesupposed mid-point of the Doha Development Roundof trade negotiations.7 The coincidence of the twoevents only serves to draw attention to the closeconnections between international biosafetyregulation and the global trading system.

As a legal instrument dealing with environmentaland health aspects of trade in GMOs and GM food, theCartagena Protocol has a direct bearing on WTOmembers’ rights and obligations. Some see the twolegal texts as potentially clashing. The US challenge tothe EU moratorium does not directly involve theProtocol, as the EU legislation predates its entry intoforce (and not all EU member states have yet ratifiedit, though the European Community itself has); but itspassing into international law has set the scene forpotential future disputes over the relationshipbetween international biosafety rules and the WTO. (Infact, the Protocol has been cited by the EU in itsdefence, and may yet prove relevant to the dispute –see further below.)

The main objective of the Cartagena Protocol is tocontribute to ensuring an adequate level of protectionin the field of the safe transfer, handling and use ofliving modified organisms (LMOs). (The Protocol speaksof LMOs instead of the more commonly used terms‘genetically modified organisms’ or ‘transgenicorganisms’, which are often used interchangeably.) TheProtocol applies only to those LMOs that have resultedfrom modern biotechnology, which allows the targetedchange of an organism’s genetic make-up by so-calledrecombinant nucleic acid techniques or by direct

The next trade war? GM products, the Cartagena Protocol and the WTO 3

injection of nucleic acids, thus going beyondtraditional methods of selective breeding.

Although the Protocol covers the human health- andbiodiversity-related safety aspects of the transfer,handling and use of LMOs, the emphasis is clearly onensuring safety in the transboundary movement ofLMOs. In a sense, the Protocol is a mixedenvironmental and trade agreement that explicitlyregulates the international trade in geneticallymodified material and products. The domestic use ofLMOs remains largely in the hands of domesticregulatory authorities, although the Protocol providesguidance and assistance in this area, particularly fordeveloping countries.

The Protocol’s key regulatory mechanism is the so-called advance informed agreement (AIA) procedure,which requires GMO exporters to provide detailedinformation on the organism in question and to seekthe importing nation’s prior approval for certain GMOsbefore any transboundary movement takes place.Importing nations are to carry out risk assessmentsbefore reaching a decision, and in doing so can invokethe precautionary approach. The inclusion ofprecautionary language in the operational text of theagreement marks a significant advance in internationalenvironmental law towards a more formal recognitionof the precautionary principle. It also serves tostrengthen the prerogative of importing nations todecide on whether or not to allow GMO imports intotheir territory.

The biosafety treaty differs from other multilateralenvironmental agreements in two important ways.First, the Protocol does not seek to reduce, oreliminate, the use of the regulated substances, as is thecase in the Montreal Protocol on ozone-depletingsubstances or the Basel Convention on hazardouswaste. In fact, the creators of the Cartagena Protocolwere keen to avoid a close analogy with the BaselConvention, which regulates transboundarymovements of toxic waste, and adopted theConvention’s prior informed consent (PIC) principleunder the new name of ‘advance informedagreement’. While acknowledging concerns over itspotential effects on biodiversity and human health, theCartagena Protocol states that modern biotechnology‘has great potential for human well-being if developedand used with adequate safety measures for theenvironment and human health’.8 Thus, the treaty isbetter understood as a precautionary instrument forinternational risk management that aims atestablishing principles and rules for decision-making ontrade in GMOs.

Second, rather than aiming, like the MontrealProtocol and the Kyoto Protocol on climate change, atan internationally binding assessment of the risks ofthe regulated substances, the biosafety treaty enables

a decentralized form of decision-making thatstrengthens the prerogative of importing nations.While the information provided by GMO exporters ismade available to all parties through the centralmechanism of the biosafety clearing-house, riskassessment and decision-making on imports remain inthe hands of each individual party. The Protocol merelylists principles and methodologies for risk assessmentthat all parties have to apply in reaching a decision.

It is expected that the Cartagena Protocol will proveparticularly useful for developing countries, many ofwhich have so far failed to establish a satisfactorydomestic system of biosafety regulations. The Protocolprovides these nations with a set of guidelines forcarrying out risk assessment, strengthens theirsovereign right to subject international trade in GMOsto such risk assessment and supports the creation ofregulatory institutions through capacity-building andinformation exchange.

The biosafety negotiations

The Cartagena Protocol has its origins in demandsmade by developing countries during the late 1980s foran international regulatory framework for modernbiotechnology. The issue of safety in biotechnology, or‘biosafety’, emerged on the international agenda inthe run-up to the 1992 United Nations Conference onEnvironment and Development (UNCED) – the Rio‘Earth Summit’ – and during the concurrentnegotiations on the Convention on Biological Diversity(CBD). Although the UNCED participants could notagree on specific biosafety regulations, theynevertheless included in Agenda 21 (the programmefor action aimed at achieving sustainable developmentin the 21st century agreed at Rio), and the CBD, amandate to consider the need for a separateinternational biosafety treaty.

The failure to establish a biosafety framework at Riorevealed a significant difference in perspectivebetween developed and developing countries.Whereas the former wanted UNCED to concentrate onbiodiversity conservation and remained unconvinced ofthe need for a biosafety treaty, the latter urged theinternational community to address the developmentneeds of poorer nations and pushed for a bindinginternational biosafety instrument. Many developing-country representatives saw biotechnology as anuntested ‘Northern technology’ that could damage theSouth’s rich biological diversity and socio-economicinterests. It took three more years before a mandatefor biosafety talks was eventually agreed in 1995. TheG77 group of developing countries, which managed tounite behind a common negotiating position on thisissue, succeeded in pushing for a biosafety protocol to


the CBD, which was eventually agreed in January 2000after almost four years of increasingly contentiousnegotiations.

The choice of the negotiating forum was to have asignificant impact on the international process.Framing biosafety as a predominantly environmentalissue left the negotiations in the hands of environmentand health ministers, at least in the early phase. Fromthe start of the talks in 1996 until about 1998, tradeconcerns were relatively marginal, not least since GMcrops only began to enter agricultural trade in thesecond half of the 1990s. By the time agriculturalexporters and trade ministers had started to realize thetrade implications of a future biosafety protocol, thescene was already set for an international treaty thatwas concerned, first and foremost, with theconservation and sustainable use of biological diversity,and that was designed as an essentially precautionaryinstrument.

The negotiations on the Cartagena Protocol lastedfrom 1996 to 2000. What started as a relativelyunnoticed set of meetings of scientific and regulatoryexperts soon developed into a highly politicized andpublic negotiation. By the time of the 1999 conferencein Cartagena, Colombia, which was meant to adopt theProtocol, the growing rift between GMO-exportingnations (known as the ‘Miami Group’), on the onehand, and the European Union and a large coalition ofdeveloping countries (the ‘Like-Minded Group’) on theother, came to dominate the biosafety talks. US-ledopposition to the draft agreement eventually led tothe collapse of the Cartagena meeting in February1999, but the negotiations resumed shortly thereafterand were concluded successfully in January 2000, withboth sides making concessions but leaving some areasof contention unresolved.

Key provisions of the CartagenaProtocol

• Advance informed agreement. The central regulatory element of the biosafety treaty is the AIAprocedure, which applies to the first intentional transboundary movement of LMOs for intentionalintroduction into the environment (Articles 7–10 and12). The procedure seeks to ensure that importingcountries have the opportunity to assess theenvironmental or human health risks associated withthe LMO before agreeing to its import. It obligesexporters to notify importers in advance of the firstshipment and to supply a detailed description of theLMO shipment. After acknowledging receipt of theinformation within 90 days, the importing partymust communicate its decision, which is to be basedon risk assessment, within 270 days: it may either

approve or prohibit the import, request furtherinformation or extend the deadline by a definedperiod of time, stating the reasons for the decision.Both the importing and exporting parties may, atany time, initiate a review and change of thedecision in the light of new scientific information.

• Scope. Although applying to all LMOs in principle,the Cartagena Protocol exempts certain types ofLMOs either from the entire agreement or fromspecific provisions. Article 5 excludes thetransboundary movements of LMOs which arepharmaceuticals for humans from all provisions ofthe agreement. Among the LMOs exempted fromthe AIA procedure are LMOs in transit and LMOsdestined for contained use (Article 6); and LMOsintended for direct use as food or feed or forprocessing (Article 7.3). The latter represent the vastmajority of internationally traded LMOs – so-calledagricultural commodities – and were the subject ofprotracted negotiations in the final stage of thebiosafety talks. The Protocol does not, however,affect the right of any party to regulate any of theseexempted LMOs through domestic legislation.Likewise, parties can inform the biosafety clearing-house that they wish to exempt certain imports ofLMOs from the AIA procedure (Article 13), and theConference of the Parties to the CBD serving as theMeeting of the Parties to the Protocol (COP-MOP,the decision-making body) may in future decide toexempt additional LMOs from application of the AIAprocedure.

• Agricultural commodities. The so-called LMOs fordirect use as food or feed, or for processing (LMOs-FFP) were the subject of intense negotiations.Against the background of a rapidly growingcommercial use of genetically modified crops (seeFigure 1), LMO-exporting nations wanted to ensurethat trade in agricultural commodities was notsubject to the demanding AIA procedure. Theparties agreed on a compromise solution entailing asimplified procedure which obliges a party to informother parties through the biosafety clearing-houseof its decision to authorize domestic use of LMOsthat may be subject to transboundary movement.On the basis of this information, importing partiestake a decision on whether or not to accept theimport of such commodities.

The main difference between this and the AIAprocedure is that, in the case of agriculturalcommodities, exporters do not need to notify andinform importing parties directly and the priorapproval requirement does not automatically apply.However, importing parties may subject agriculturalcommodity imports to a domestic procedure similar


to AIA, including prior notification and approval.Moreover, Article 11.8 allows importing nations toapply the precautionary approach in reaching adecision on LMOs-FFP. It is worth mentioning that,because of the specific focus of the Protocol onliving modified organisms, this procedure does notapply to all categories of what is generally referredto as GM foods. It does not cover trade in foodproducts that are derived from GM products but donot contain an LMO (e.g. processed food made witha refined processed oil derived from GM soya).

• Risk assessment and precaution. The Protocolrequires importing countries to base their decisionon risk assessment, which is to be carried out ‘in ascientifically sound manner’ (Article 15). Specificguidelines for risk assessment are detailed in Article15 and Annex III of the agreement. Developingcountries demanded that they may also take intoaccount socio-economic considerations, which Article26 permits, provided that this is consistent withother international obligations. A hotly contestedquestion in the negotiations was the extent towhich a precautionary approach can be applied indecision-making. The compromise reached allowsimporting nations to take a decision – for exampleto ban LMO imports – where there is a lack ofrelevant scientific information and knowledge.

• Biosafety clearing-house and capacity-building. Thebiosafety clearing-house is the central mechanismfor the exchange of scientific, technical,environmental and legal information on LMOscovered by the Protocol and was established as partof the CBD’s clearing-house mechanism. It isdesigned to assist parties in implementing theProtocol and will provide them with speedy access toall the relevant information they need in order tocarry out risk assessment. The clearing-house willplay a critical role in providing access to informationon agricultural commodities placed on the marketand legislation by importing nations regarding theirimport. The pilot phase of the biosafety clearing-house is accessible through a central portal(bch.biodiv.org).

The Cartagena Protocol andinternational trade rules

Ever since the Cartagena Protocol was adopted inJanuary 2000, a debate has ensued about thecompatibility of the Protocol’s provisions with theWTO’s legal order. Critics of the biosafety regime haveargued that it may give rise to unnecessary, and evenillegal, trade barriers that clash with the norms and

rules of the multilateral trading system. They insist thatthe biosafety rules have to be interpreted andimplemented in a WTO-consistent manner, and thatultimately measures taken under the biosafety regimewould be subordinate to the WTO’s rules and disputesettlement mechanism. Proponents of the Protocolemphasize that the WTO leaves ample scope for trade-restrictive biosafety measures, just as is the case withother multilateral environmental agreements.Moreover, they argue that the Cartagena Protocolrepresents an international standard of the kind thatthe WTO routinely recognizes in its dispute settlementprocedure.

One of the thorniest issues in the biosafetynegotiations was the relationship between theProtocol and the WTO’s trade rules. The US-led groupof GMO-exporting nations had insisted during the talksthat the Protocol should not weaken existingobligations under the WTO. In contrast, the EU and theLike-Minded Group of developing countries sought toinsert language that shielded the Protocol’s tradeprovisions from future legal challenges under WTOjurisdiction. This so-called ‘relationship’ question couldnot be resolved in the end, and an ambiguouspreambular text was agreed at the last minute that leftthe issue open to interpretation:

‘Recognizing that trade and environmentagreements should be mutually supportive with a viewto achieving sustainable development,

Emphasising that this Protocol shall not beinterpreted as implying a change in the rights andobligations of a Party under any existing internationalagreements,

Understanding that the above recital is not intendedto subordinate the Protocol to other internationalagreements, …’ (Preamble)

It does not take much legal expertise to recognize thatthis formulation is less than clear-cut in establishingthe relationship between the Protocol and the WTO.

Several other provisions of the Protocol also give riseto questions and concerns over the compatibility ofbiosafety and trade rules. The Protocol can lead totrade-restrictive measures in a number of forms:

• In the most extreme version, decision-making byimporting nations can lead to an outright import banon certain LMOs, which could fall foul of several WTOdisciplines.• Even if an LMO import is allowed, the importingnation may place special conditions (restrictions on use;mandatory labelling) on the LMO that affect itscompetitiveness in the market, again raising questionsabout WTO-consistency.• Exporters are obliged by the Protocol to comply with


certain notification and identification requirements. Inthe case of agricultural commodities, Article 18requires exporters to identify through accompanyingdocumentation any LMO-FFP that ‘may contain’ LMOs,a provision that was inserted into the treaty text at thelast minute but remains highly controversial.• The application of biosafety rules can also lead todelays in the processing of requests to authorizeimports. This is the case with risk assessment that formsthe basis for any decision by importing nations.

Any of the above trade-related measures couldpotentially lead to a conflict with WTO rules, mostimportantly the General Agreement on Tariffs andTrade (GATT) and the Agreements on Sanitary andPhytosanitary Standards (SPS Agreement) and TechnicalBarriers to Trade (TBT Agreement). While theCartagena Protocol repeatedly states that its provisionsare to be applied in consistence with otherinternational obligations, differences in the rules andprocedures laid down by the Protocol and the WTOagreements may cause some parties to contest suchmeasures.

For example, a dispute may emerge over the use ofprecaution in decision-making. The inclusion of theprecautionary approach in the Cartagena Protocolraises fundamental questions about its compatibilitywith the WTO’s requirement that any risk assessmentmust be science-based. The rules of the SPS Agreement,which are concerned with trade barriers erected forhealth and food safety reasons, allow for protectivemeasures if they meet a number of conditions. Theseinclude the need to base any decision on scientificprinciples and sufficient scientific evidence; to carry outrisk assessment that must find evidence of anascertainable risk; and to base measures oninternational standards. The SPS Agreement doescontain a reference to precaution in Article 5(7): wherescientific evidence is insufficient, governments mayadopt protective measures based on pertinentinformation. Such measures are, however, restricted toa provisional use. The Cartagena Protocol’s use of theprecautionary approach differs from that of the SPSAgreement, in that there is no limitation on theduration of its use and no explicit requirement toreview the scientific basis for the decision. Also, neitherthe CBD nor the Protocol is recognized by the WTO asan international standard-setting body.

Another contentious issue is the use of identificationrequirements in LMO trade. As stated above, theProtocol prescribes identification of agriculturalcommodity shipments that ‘may contain’ LMOs. As amandatory identification scheme, this requirement maybe classified as a technical barrier under the TBTAgreement or as a health and safety-related measureunder the SPS Agreement, depending on the

justification given for the measure. The parties to theCartagena Protocol are called upon to negotiate morespecific rules on identification within two years afterthe Protocol has entered into force. Depending on thedesign and legal context, the identification schememay be challenged for its discriminatory nature, shouldGM products and non-GM products be considered as‘like products’ between which discrimination is notallowed under the GATT (unless it can be ‘saved’ byone of the exceptions in Article XX). A WTO disputepanel would normally carry out a case-by-casedetermination of the products’ properties, their end-use qualities and consumer tastes and preferences. It isimportant to note that the Cartagena Protocol doesnot prescribe any labelling scheme that is designed toinform the consumer about GMO content. Suchschemes are already in place in several countries,including in Europe (see above). They are covered bynational legislation or are based on voluntaryinitiatives, and are not required or authorized by theProtocol.

A further complication arises from the fact that notall parties to the Protocol may be WTO members, andvice versa. WTO members that are not parties to theProtocol, such as the United States, may wish to ensurethat only WTO rules apply to their trade in geneticallymodified organisms, and may at a future pointchallenge biosafety rules and measures. The USchallenge against the European Union’s GMregulations, although not directly aimed at theCartagena Protocol, is indicative of the potential forfuture conflicts once parties have started takingdecisions required or authorized by the Protocol.

The relationship between WTO trade rules and trademeasures in multilateral environmental agreements wasincluded in the agenda for the Doha Round of tradenegotiations agreed in 2001, almost entirely at theinsistence of the EU. The precise wording of the itemconstrains the debate quite sharply, however, and inany case no progress on the issue was made in thespecial sessions of the WTO’s Committee on Trade andEnvironment in the following two years. Along with theother trade and environment components of the Dohaagenda, the topic received almost no attention at theCancun ministerial, and the draft ministerial declaration(which was not in the end adopted) contained astatement simply to ‘reaffirm our commitment to thesenegotiations’.9 It seems quite unlikely that anysignificant progress will be made throughout the rest ofthe Round, and it is probable that the next step in thedevelopment of the relationship between WTO traderules and trade measures in multilateral environmentalagreements will come in the form of an Appellate Bodyruling in a future WTO dispute. The trade measures ofthe Cartagena Protocol are the leading candidate forsuch a dispute.10


As mentioned above, the Protocol itself achieved itsfiftieth ratification in June 2003, and entered intoforce three months later, in September. Its COP-MOPwill meet for the first time in the first quarter of 2004,taking over from the Intergovernmental Committee forthe Cartagena Protocol (ICCP), the interim body whosetask it was to prepare for the Protocol’s entry intoforce.

The US–EU WTO dispute

On 13 May 2003, the US and Canada, joined on 14 Mayby Argentina, requested WTO consultations on the EU’sauthorization system for GMOs and GM foods, and inparticular its de facto moratorium, in place since 1998,on the authorization of new products. EU memberstates’ marketing and import bans were also includedin the request for consultations, the first stage in theWTO’s dispute procedure. In the following month, thethree original countries were joined as third parties byPeru, Colombia, Mexico, New Zealand, Australia, India,Brazil and Chile (even though, slightly bizarrely, anumber of these countries themselves maintainmoratoriums on the approval of GM products11).

Several other countries found themselves under USpressure to join in. In June, for example, Senator ChuckGrassley, Chairman of the Senate Finance Committee,responded to Egypt’s decision not to join the USchallenge to the EU by observing that while he wassupportive of a possible US–Egypt Free TradeAgreement, ‘one of the criteria that ought to be usedto determine with whom the United States negotiatesfuture FTAs is whether a country shares the same visionof the global trading system as does the United States.I certainly would like to be able to include Egypt inthat camp.’12 Following Egypt’s continued refusal tosupport the challenge, the US suspended plans tolaunch formal free-trade talks with the country.13

The European Commission described the USchallenge as ‘legally unwarranted, economicallyunfounded and politically unhelpful’, and TradeCommissioner Pascal Lamy added that ‘the EU’sregulatory system for genetically modified cropauthorization is in line with WTO rules: it is clear,transparent and non-discriminatory. There is thereforeno issue that the WTO needs to examine.’14

Consultations were held in June, but failed toresolve the issue, US Ambassador Linnet Deily declaringthat the EU had not offered ‘any scientific justificationfor its measure’.15 At the 18 August meeting of theWTO Dispute Settlement Body, the US accordinglyrequested the establishment of a panel to rule on itscomplaint; panel requests were also submitted byCanada and Argentina. The EU having blocked the firstrequest, the US resubmitted it to the 29 August

meeting, at which, as a second request, it wasautomatically approved under WTO procedures. Thepanel procedure, which includes written and oralsubmissions, normally takes about twelve months.Whatever the result, the losing party will almostinevitably appeal to the final stage in the disputeprocess, a consideration and ruling by the AppellateBody, which will add another six months or so. Thedispute seems unlikely to be concluded, therefore,until well into 2005.

The almost certain lifting of the EU’s de factomoratorium following the adoption of the newlegislation in July 2003 (see above) means that there isa possibility that the complaint will be withdrawn, aseven if the finding went against the EU, the remedy(an ending of the moratorium) would already havebeen implemented. Whether this in fact happens willdepend on the actions taken by the EU and its memberstates over the next few months. Even if this dispute isended, however, it is quite likely that the US and allieswill launch a complaint about the new Europeanregime, particularly its labelling and traceability rules.It is therefore worth considering the key argumentsthat the WTO dispute settlement process would haveto address.

Key issues in the WTO dispute

In launching its request for consultations, the USargued that the EU’s actions constituted violations ofthe GATT itself and the SPS, TBT and AgricultureAgreements. As noted above, the SPS Agreement,which governs the application of human, animal andplant health measures to international trade, is themost relevant. SPS measures are explicitly excludedfrom the TBT Agreement; although some GMO-relatedproduct requirements may fall under the latter ratherthan the former,16 they are not likely to be ofsignificance in this case. The relationship between theSPS Agreement and the GATT, the original and centralagreement of the WTO system, is less clear and wouldin practice be determined by the panel and AppellateBody; however, as the SPS Agreement was drawn upspecifically to add more detail to the general principlesset out in the GATT, it seems likely that it would indeedbe the primary agreement of relevance.17 What, then,are its key provisions?

Are the EU measures based on internationalstandards?Like other WTO agreements, the SPS Agreement aimsto achieve harmonization in trade rules byencouraging the use of international standards.Domestic SPS measures may either be based on (Article3.1) or conform to (Article 3.2) international standards,


guidelines and regulations where they exist, and threeinternational standard-setting bodies are specificallyreferred to, including the Codex AlimentariusCommission, which deals with food safety. Afterprotracted debate, at its June/July 2003 meeting theCommission approved three risk analysis standards forbiotechnology-related food, including references tothe ‘tracing of products’ and food labelling as riskmanagement tools. This would appear to support theEU’s procedures, although the US, along with much ofthe food industry, has argued that ‘tracing’ (the Codexlanguage) is different from, and more limited than,‘traceability’ (the EU regulation’s language).18

Another possible international standard, alsoreferred to by the EU in its defence, is the CartagenaProtocol (see above), and in particular its precautionaryapproach to international trade in GMOs. Whether theWTO dispute settlement process would recognize therelevance of an agreement that was not in forceduring the period covered by the dispute, and to whichseveral of the countries involved, including all of thethree main complainants, are not parties, is not clear.However, the experience of another WTO dispute, thewell-known shrimp-turtle case involving a US embargoon imports of shrimp caught by fishing methods whichkilled large numbers of endangered sea turtles,suggests that it could. The dispute panel in the secondstage of the case decided that the Inter-AmericanConvention for the Protection and Conservation of SeaTurtles ‘can reasonably be considered as a benchmarkof what can be achieved through multilateralnegotiations in the field of conservation andprotection’19 – even though the case involved anumber of countries in Southeast Asia which were notparties to the agreement. The Appellate Body watereddown this conclusion, finding that while theConvention could not be considered to be a legalstandard, it was reasonable to use it as an example ofappropriate regulation. It should be remembered,however, as pointed out above, that the Protocolapplies less stringent requirements to LMOs for food,feed and processing than it does to LMOs for directrelease into the environment, and therefore it could beused, as a standard or ‘example’, differently fordifferent categories of GM products.

In any case, however, international standards areencouraged rather than required. Article 3.3 of the SPSAgreement allows domestic measures to be higherthan international standards if there is scientificjustification in accordance with the relevant provisionsof Article 5.

Can the EU measures claim scientificjustification?Article 5 of the SPS Agreement specifically addressesthe assessment of risk and determination of the

appropriate level of sanitary and phytosanitaryprotection. Article 5.1 sets out the requirement thatdomestic measures must be based on the assessment ofrisk to human, animal or plant life or health; Article 5.4requires that WTO members ‘take into account theobjective of minimising negative trade effects’; Article5.5 prohibits the use of ‘arbitrary and unjustifiabledistinctions’; and Article 5.7 refers to the use ofprovisional measures ‘on the basis of available pertinentinformation’ with a view to a continuous reassessmentof the measures in line with emerging scientificinformation.

A series of disputes over the past few years haveclarified the interpretation of all of these terms.20 Inthe beef hormones case, an EU ban on imports of USbeef grown with the use of growth hormones was heldto be WTO-inconsistent, primarily because the EU hadfailed to provide adequate scientific justification for theban. However, in an important development, theAppellate Body concluded that the risk assessmentprocess (for either temporary measures taken underArticle 5.7, or permanent measures) could take intoaccount minority or divergent scientific opinion and didnot have to reflect simply the majority or mainstreamthought. This supports the notion of regulating on aprecautionary basis – in many ways the heart of thedebate about GM regulations – even though theAppellate Body did not accept the EU’s contention thatthe precautionary principle itself had become part ofinternational law.

Subsequent disputes – the Australian salmon,Japanese varietals and Japan apples cases – added detailto the interpretation of ‘risk’ and ‘risk assessment’. TheAppellate Body found that the possibility of harm alonewas not enough to justify trade-restrictive measures;there had to be some likelihood or probability ofnegative consequences, though this could be very smallindeed. Similarly, the measures had to be based on somesupporting scientific information. Although the findingswere not completely consistent between the cases, it ispossible to draw the general conclusions thatprecautionary measures based on some scientificevidence and some real level of risk should be allowableunder the SPS Agreement. Once again, this would seemto support the view that the EU legislation on GMOs,and the procedures for risk assessment it incorporates,are WTO-consistent.

Whether the de facto moratorium, in place while thenew legislation was being adopted, could beconsidered to be WTO-consistent raises slightlydifferent questions. For it to be justifiable under Article5.7 of the SPS Agreement, it would need to constitutea provisional measure: the EU would have todemonstrate that it was actively seeking ‘to obtain theadditional information necessary to make a moreobjective assessment of risk’ and review the measure


‘within a reasonable period of time’. If, as expected,the moratorium is lifted once the new traceability andlabelling regulations enter into force, this shouldenable the moratorium to be justified.

Are mandatory traceability and labellingrequirements unnecessarily trade-restrictive?In common with most of the WTO agreements, the SPSAgreement requires measures to be not more trade-restrictive than necessary in order to fulfil theobjectives of the Agreement. Since the US and otherGM exporters do not at present segregate GM fromnon-GM crops for domestic use, they would have tointroduce costly crop identification and segregationsystems or face the closure of export markets; the UShas estimated that up to $4 billion worth of US exportsmight be affected.21 In addition, there are costsassociated with labelling, traceability requirements,and testing of non-GM crops to discover whetheraccidental contamination with GM material hasoccurred. Cost estimates range from $5 to $25 per ton,depending on the products and precise identitysystems adopted.22

This discussion is relevant to Article 5.6 of theSPS Agreement, which states that WTO members ‘shallensure that such measures are not more trade-restrictive than required to achieve their appropriatelevel of sanitary or phytosanitary protection, takinginto account technical and economic feasibility’. Thefootnote to the Article adds that for these purposes, ‘ameasure is not more trade-restrictive than requiredunless there is another measure, reasonably availabletaking into account technical and economic feasibility,that achieves the appropriate level of sanitary orphytosanitary protection and is significantly lessrestrictive to trade’. The panel and Appellate Body maythus be forced into consideration of whether there areany feasible alternatives to the EU regulations,balancing this against the right of WTO members todetermine their own level of sanitary andphytosanitary protection. It should be noted, however,that it is difficult to envisage any level of protection

from GMOs that does not involve segregation of GMand non-GM products; it may well be the case,therefore, that GM exporters will simply have to bearthe costs of segregation. If it is found that these costsare unjustifiable, or should be borne by the importers,this appears to be tantamount to arguing thatmeasures under the SPS Agreement cannot be used atall to exclude, or even to identify, GMOs.

Conclusions

It is, of course, dangerous to speculate as to theoutcome of the US–EU dispute, but it does seem thatthe weight of arguments, and the precedents set byprevious disputes under the SPS Agreement, appear tofavour the EU. This would have significant tradeimpacts, irrespective of how the EU will decide pendingand future applications for the use of GM crops andfoods. With stringent EU rules on labelling andtraceability in place, the US and other GM exporterswill be forced either to introduce segregationstrategies or abandon entirely European and othermarkets hostile to GMOs.

A victory for the US and its allies would equallyhave significant implications, and may prove somethingof a Pyrrhic victory. As EU Commissioner Byrne pointedout in August, it is lack of consumer demand for GMproducts that lies at the root of low GM sales inEurope, and it is highly unlikely that consumers willbecome any more GM-friendly by a WTO findingrequiring their governments to adopt lower levels ofconsumer protection. Such an outcome could possiblyundermine public confidence in the WTO as aninstitution (not particularly high in any case) and leadto a backlash against any imports of US food, whetherGM or not.

Towards the conclusion of the banana disputebetween the US and the EU in the late 1990s, a WTOstaff member was rumoured to have claimed that ‘GMfoods will make bananas look like peanuts’. Whateverthe outcome of the current dispute, he was right.


Endnotes

1 Scientists’ Working Group on Biosafety, Manual for Assessing Ecological and Human Health Effects of GeneticallyEngineered Organisms: www.edmonds-institute.org/manp1os.pdf2 C. James, ‘Preview: Global Status of Commercialised Transgenic Crops: 2002’, International Service for the Acquisitionof Agri-Biotech Applications (ISAAA) Brief 27, 2003.3 An EU directive sets out general principles and procedures for EU member states to adopt, but they are allowed adegree of discretion in incorporating them into national legislation. An EU regulation is applied directly and uniformlythroughout the EU.4 For a summary of the new provisions, see European Commission press release IP/03/1056, 22 July 2003, ‘Europeanlegislative framework for GMOs is now in place’.5 Ibid.


Duncan Brack is Head of the Sustainable Development Programme of the Royal Instituteof International Affairs.

Robert Falkner is an Associate Fellow of the Programme, and Lecturer in InternationalRelations at the London School of Economics.

Judith Goll was a research assistant at the Programme when this paper was written, andis completing a Masters in International Relations at the School of Oriental and AfricanStudies.

6 For a thorough analysis of the Protocol, and the negotiations that led up to it, see Christoph Bail, Robert Falkner andHelen Marquard (eds), The Cartagena Protocol on Biosafety: Reconciling Trade in Biotechnology with Environment andDevelopment? (London: RIIA/Earthscan, 2002).7 In the end, the Cancun ministerial ended without agreement, so the Doha Round will not be completed by 2005, asoriginally planned.8 Cartagena Protocol, preamble.9 Draft Cancun Ministerial Text, Second Revision, 13 September 2003, available at:www.ictsd.org/ministerial/cancun/docs/draft_cancun_minist_text_rev2.pdf10 For a full analysis of the issue, see Duncan Brack and Kevin Gray, Multilateral Environmental Agreements and theWTO (Royal Institute of International Affairs, September 2003), available at www.riia.org/pdf/research/sdp/MEAs andWTO.pdf11 See Heike Baumüller, Domestic Import Regulations for GMOs and their Compatibility with WTO Rules (InternationalCentre for Trade and Sustainable Development / International Institute for Sustainable Development Trade KnowledgeNetwork, August 2003: www.tradeknowledgenetwork/net).12 ‘US announces panel on EU GMO moratorium, as Grassley warns Egypt’, Inside US Trade, 20 June 2003, p. 1.13 Edward Alden, ‘US beats Egypt with trade stick’ The Financial Times, 30 June 2003.14UPI press story, 13 May 2003; ‘EU slams US biotech threat’, available at www.thecampaign.org/News/may03r.php.15 BRIDGES Weekly Trade news Digest, 25 August 2003 (www.ictsd.org).16 For example, measures related to changes in the nutritional value of GM foods (which are not related to food safety)or non-pest-related environmental concerns (e.g. measures to avoid adverse effects of pest-resistant GM crops on non-target species).17 For an analysis of this issue, see Robert Howse and Petros C. Mavroidis, ‘Europe’s Evolving Regulatory Strategy forGMOs – The Issue of Consistency with WTO Law: Of Kine and Brine’, Fordham International Law Journal, Vol. 24,November–December 2000.18 See BRIDGES Trade BioRes, 11 July 2003 (www.ictsd.org).19 United States – Import Prohibition of Certain Shrimp and Shrimp products, Recourse to Article 21.5 by Malaysia,Report of the Panel, WT/DS58/RW, 15 June 2001, para 5.71.20 For a full analysis of these cases, see Howard Mann and Stephen Porter, The State of Trade and Environment Law2003: Implications for Doha and Beyond (International Institute for Sustainable Development and Centre forInternational Environmental Law, 2003), Chapter 5, ‘The precautionary principle, the role of science and the WTOAgreements’.21 R. L. Paarlberg, The US–EU Conflict over GM Foods: Implications for Poor Countries (working paper, WeatherheadCenter for International Affairs, Harvard University, 2002).22 European Commission (DG Agriculture), Economic Impacts of Genetically Modified Crops on the Agri-Food Sector(2000).

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permission of the copyright holder.

Further reading:

Christoph Bail, Robert Falkner and Helen Marquard (eds), The Cartagena Protocol on Biosafety: Reconciling

Trade in Biotechnology with Environment and Development? (London: RIIA/Earthscan, 2002).

Heike Baumüller, Domestic Import Regulations for GMOs and their Compatibility with WTO Rules

((International Centre for Trade and Sustainable Development / International Institute for

Sustainable Development Trade Knowledge Network, August 2003:

www.tradeknowledgenetwork/net).

Duncan Brack, ‘Trade and Environment’, in Brian Hocking and Steven McGuire (eds), Trade Politics (London:

Routledge, 2nd edition, forthcoming, 2004).

Duncan Brack and Kevin Gray, Multilateral Environmental Agreements and the WTO (Royal Institute of

International Affairs, September 2003), available at www.riia.org/pdf/research/sdp/MEAs and

WTO.pdf.

Robert Falkner, ‘Trading Food: The Politics of GMOs’, in Brian Hocking and Steven McGuire (eds), Trade

Politics (London: Routledge, 2nd edition, forthcoming, 2004).

Robert Falkner, ‘Picking the Wrong Fight: Genetically Modified Organisms and the World Trade

Organization’ The World Today, August/September 2003, pp. 33–4.

Aarti Gupta, ‘Governing Trade in Genetically Modified Organisms: The Cartagena Protocol on Biosafety’,

Environment 42(4), 2000, pp. 23–33.

Robert Howse and Petros C. Mavroidis, ‘Europe’s Evolving Regulatory Strategy for GMOs – The Issue of

Consistency with WTO Law: Of Kine and Brine’, Fordham International Law Journal, Vol. 24,

November–December 2000.

Ruth Mackenzie, Francoise Burhenne-Guilmin et al. An Explanatory Guide to the Cartagena Protocol on

Biosafety (Gland, Switzerland: IUCN, 2003).

Howard Mann and Stephen Porter, The State of Trade and Environment Law 2003: Implications for Doha

and Beyond (International Institute for Sustainable Development and Centre for International

Environmental Law, 2003).

Peter W.B. Phillips and William A. Kerr, ‘The WTO Versus the Biosafety Protocol for Trade in Genetically

Modified Organisms’, Journal of World Trade 34(4), 2000, pp. 63–75.

Sabrina Safrin, ‘Treaties in Collision? The Biosafety Protocol and the World Trade Organization Agreements’,

American Journal of International Law 96, 2000, 606.

The next trade war? GM products, the Cartagena Protocol and the WTO

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The next trade war? GM products, the Cartagena Protocol and the WTO