February 14, 2006
On February 7, 2006, a WTO Dispute Settlement Panel issued its interim report in the EC-Biotech case.1 While the report is not available to the public yet, CIEL has obtained the conclusions of the 1050-page report. This note is based on the EC-Biotech Panel’s conclusions. CIEL lawyers have not yet seen the legal reasoning of the case, so the legal analysis offered here is limited.
CIEL has closely followed the EC-Biotech case, in light of the environmental and public health risks associated to genetically modified organism (GMOs). In June 2004, CIEL and a coalition of environmental, consumer, and farm groups submitted an amicus curiae brief to the EC-Biotech Panel, arguing that WTO rules must give countries wide latitude to regulate GMOs given the significant level of scientific uncertainty concerning the environmental and health impacts of GMOs.
In its report, the Panel addressed the various categories of European Communities (EC) and EC Member State measures challenged, and found inconsistencies with WTO rules – in particular the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). Nevertheless, the Panel emphasized that its report did not examine the safety of biotech products and that it did had not examined the legitimacy of current EC legislation. Thus, the WTO findings are neither a verdict in favor of biotech products, nor a prohibition to regulate the use of biotech products based on precaution. The final report is expected to be released in the next two months.2
European Communities – Measures Affecting the Approval and Marketing of Biotech Products (EC-Biotech)
In August 2003, a panel was established under the World Trade Organization (WTO) Dispute Settlement Understanding to consider the consistency of various measures taken by the EC and EC Member States with WTO rules.
In particular, the claimants -the United States, Canada, and Argentina- challenged three types of measures, all of which were dealt with in theruling:
- An alleged EC moratorium on approvals of biotech products: The claimants did not request the Panel to make findings on the WTO-consistency of the EC regulations on the approval of biotech products, but rather argued that there had been a de facto suspension of such approvals. The EC denied the existence of a general moratorium on the approval of biotech products and submitted that the alleged practice alone, not based on a formal or informal instrument, would not constitute a measure under WTO agreements.
- Various product-specific EC measures related to the approval of biotech products: The claimants argued that the failure of the EC to consider specific applications for approval of biotech products also constituted a violation of WTO rule. In response, the EC argued that failing to deal with product applications within a specified timeframe could not be considered a measure, and thus would only be subject to provisions dealing with the application, rather than development of a measure.
- Various EC member State measures related to the import and/or marketing of specific biotech products: The claimants challenged safeguard measures enacted by some EC Member States, including France, Germany, Italy, and Greece, arguing these measures were not based on scientific evidence, as required by WTO rules. The safeguard measures, permitted by EC regulations, allow EC Member States to limit the importation or marketing of certain biotech products already approved by the EC. The EC, on its part, claimed these measures, given their provisional nature, were in full compliance with relevant WTO disciplines.
In identifying the relevant WTO rules, the claimants focused primarily on the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The SPS Agreement applies to food safety and animal and plant health standards that may, directly or indirectly, affect international trade. The SPS Agreement, while recognizing the right of governments to maintain appropriate
sanitary and phytosanitary protection, aims to restrict the unjustified use of these measures for protectionist purposes. In particular, it seeks to reduce possible arbitrariness of decisions by requiring that “any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence.”3 The EC argued that its regulations should not be considered under the SPS Agreement, because their objective is “environmental protection,” a much broader notion that is better analyzed under the Agreement on Technical Barriers to Trade (TBT Agreement). It affirmed that, even if parts of the measures could be considered sanitary and phytosanitary measures, other parts need to be considered under the TBT Agreement.
The Findings of the Panel
Applicable rules
The panel found that all three categories of measures challenged (de facto moratorium, product-specific EC measures, and EC member State safeguard measures) were SPS measures within the meaning of the SPS Agreement. SPS
measures are defined in Annex A of the SPS Agreement, which sets a list of risks that are protected by SPS measures. According to the Panel, the safety concerns targeted in the challenged measures fell within the scope of the SPS Agreement.
Referring to judicial economy, the Panel also avoided looking at potential violations of other provisions of the SPS Agreement as well of the GATT or the TBT Agreement.
With respect to the alleged moratorium, the panel found that, indeed, the EC had applied a general de facto moratorium between 1999 and 2003. The panel noted that the EC violated the requirement in Annex C of the SPS Agreement on the Control, Inspection and Approval Procedures, which provides in paragraph 1: “Members shall ensure, with respect to any procedure to check and ensure the fulfilment of sanitary or phytosanitary measures, that: (a) such procedures are undertaken and completed without undue delay and in no less favourable manner for imported products than for like domestic products;” [Emphasis added]. As a consequence, the Panel also found a violation of Article 8 of the SPS Agreement, which directs Members to observe the requirements in Annex C.
The panel did not find violations of SPS Article 5.1, which requires WTO Members to base their SPS measures on a risk assessment. It also rejected the allegation that the EC had violated other SPS provisions, such as Article 5.5, which prohibits Members to use ‘arbitrary or unjustifiable distinctions in the levels [of protection] it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade’.
Moreover, the panel did not make recommendations that the EC should come into conformity with the SPS Agreement because it found that the subsequent approval of biotech products by the EC had ended the general de facto moratorium. As a consequence, the EC is not obliged to take any further measures and the US cannot seek retaliation based on this ruling.
The Panel also decided on a number of EC measures related to the approval of specific biotech products. Its decision differed from product to product. With respect to the approval process of some products, the Panel, like for the general de facto moratorium, found violations of obligations under paragraph (1)(a) of Annex C prohibiting undue delay in procedure. With respect to the remaining products, the panel concluded that the complainants had not established that the EC had breached its obligations. With the exception of those measures that have been withdrawn and those measures relating to products that have in the meantime been approved, the panel made recommendations to bring product-specific measures into conformity with the SPS Agreement.
In contrast to the general moratorium and the product-specific moratorium, which were found to violate procedural rules only, the panel found substantive violations of SPS provisions with respect to the safeguard measures enacted by EC member States. The Panel found every challenged national safeguard measure in violation of the SPS Agreements science-related provisions. In particular, the Panel found each measure in violation of Article 5.1, which requires that a measure be based on a risk assessment. It also found that the national safeguard measures were inconsistent with the requirements under Article 5.7, which applies in cases “where relevant scientific evidence is insufficient”, and which allows Members to adopt provisionally sanitary or phytosanitary measures on the basis of available pertinent information. By implication, the Panel also found a violation of the requirement under Article 2.2 of the SPS Agreement, which requires that a measure be based on scientific principles and not maintained without sufficient scientific evidence.
To reach its conclusions with respect to Articles 5.1 and 5.7, the Panel noted that for each of the products affected by a national safeguard measure, the EC had given its EC-wide approval based on an evaluation of the potential
risks to human health and/or the environment. Thus, the Panel considered that sufficient scientific evidence was available to permit a risk assessment as required by the SPS Agreement. As a consequence, the Panel concluded that an EC member state could not justify its SPS measures under Article 5.7, which only applies when relevant scientific evidence is insufficient to conduct an adequate assessment.
Consequences of the Ruling
Although some sweeping interpretations have been made in regards to the Panel’s ruling, it is important to note that it has expressly not dealt with many of the factual and legal issues raised by the Parties. Primarily, the Panel specifically stated that it had not addressed the issue of “whether biotech products in general are safe or not.” Moreover, the Panel avoided addressing a number of legal issues that many expected would be addressed in this case. For example, it explicitly did not find it necessary to address the challenges under the GATT or TBT Agreement and questions such as “whether the biotech products at issue in the dispute are “like” their conventional counterparts.”
In addition, the Panel decision should not affect current EC regulation relating to biotech. Violations found in connection with the approval process relate solely to the procedural requirement not to cause “undue delay”. The Panel did not find other violations of the SPS Agreement in this context. In fact, the panel even stated specifically that it did not address the question whether the EC product-by product approval procedures were consistent with the EC obligations under the WTO agreements. If the approval procedure as such were to be challenged, this would have to be done in a new case.
The Panel decision does affect the national safeguard measures, however. The Panel acknowledged that some of the EC Member States did provide scientific studies, but concluded that none of them had provided an assessment of risk that met the requirements of the SPS Agreement. It is unclear whether it will be possible for EC member States to maintain their current prohibitions and come into conformance with the SPS Agreement (for example, by conducting new risk assessments and basing their measures thereon).
As previously mentioned, these comments are drawn solely from the EC-Biotech Panel’s conclusions, which have been made available at: http://www.tradeobservatory.org/library.cfm?refid=78475
For more information, please contact: Marcos Orellana
1 The interim report is released by the Panel to the Parties to the dispute. It contains all of the elements of a final
report (the revised descriptive part, the findings, the conclusions and the recommendations, and, as the case may be, suggestions for implementation). Although Parties are entitled to make comments and may also request a meeting of the panel to further argue specific points, it is rare for the parties to ask the panel to completely overturn its interim decision. As a result, the content of the report does not generally vary upon finalization.
2 According to the timetable established by Appendix III of the WTO Dispute Settlement Understanding, after the issuance of the interim report, Parties have one week to ask for a review. If so, the period of review must not exceed two weeks, during which time, the Panel may hold additional meetings with the two sides. A final report is then submitted to the two sides and three weeks later, it is circulated to all WTO members.
3 Article 2.2.