Biotech Products WTO Panel Report
Introduction
On February 7, 2006, a panel of the World Trade Organization (WTO) circulated its draft report on the high-profile dispute European Communities ? Measures Affecting the Approval and Marketing of Biotech Products to the parties. In May 2003, Argentina, Canada and the United States (US) had requested the establishment of a Panel because consultations with the EC on an amicable solution had failed.
The panel was constituted on March 4, 2004. It was unable to conclude its task within the usual six month period for WTO procedures. It repeatedly postponed the circulation of the report and anticipated in its last communication that the report would be released by the end of March 2006.[1]
Dispute settlement procedures at the WTO are composed of two stages. In the first step, a panel of three experts reviews a case and issues a report on both its factual and legal issues. That report can then be appealed to the Appellate Body which conducts a review of the legal findings of the panel. Before issuing its report, the panel circulates a confidential interim report to the parties, who may request it to review certain aspects. These interim reports frequently find their way to the general public. In the EC ? Biotech Case, hundreds of comments on the report have appeared on the internet and in papers all around the world.
This Insight is based solely on the publicly available documents published by the parties to the dispute.[2]
The EC?s Approval Regime for Modern Biotech Products
This is not a case based on consumers? perceptions of the safety of products produced with the help of modern biotechnology (hereinafter GM-products) or the labeling of such products. The dispute arose because between October 1998 and May 2003, when the parties requested the establishment of a panel, no GM-products had been approved for marketing or release into the environment in the EC.
The EC?s legal regime regulating GM-products gradually evolved into a complicated conglomeration of horizontal and area-specific regulations and directives. The EC first started regulating GM-products in 1990, when the Council agreed on Directives 90/219[3] and 90/220[4] regulating the contained use of genetically modified micro-organisms and deliberate release into the environment of genetically modified organisms (hereinafter GMOs) respectively.[5] At that time the legislation applied only to ?biological entities capable of replication or of transferring genetic material?.[6] Products which are no longer capable of transferring genetic material, for example corn once it is processed into flour or animal products produced from GM-fed animals, were not covered by the legislation.
Of the two directives, only Directive 90/220 is relevant to the case. It was replaced on October 17, 2002, with Directive 2001/18 on the deliberate release into the environment of GMOs.[7] Also, in 1997 the EC enacted Regulation 258/97 on novel foods[8] that ?carved out? a special legal regime for the placing on the market of food containing or consisting of GMOs or produced from GMOs.[9] This regulation also widened the range of products that have to be approved before they are brought onto the market, to include food ?produced from, but not containing, genetically modified organisms?.[10] The approval regime also applies to food in which ?material from the genetically modified source material is present?.[11] This ?GM-products legislation? includes products such as flour produced from genetically modified corn (still containing DNA-fragments), corn-starch produced from genetically modified corn (not containing any DNA-fragments), but not animal products from animals fed with GM-feed or food products produced with the help of GM-processing aides (e.g. cheese produced with the help of chymosin produced from GM-microorganisms).[12]
The general objective of the legislation is to avoid adverse effects on human health and the environment arising from the deliberate release into the environment or the placing on the market of GMOs.[13] GM-products may only be approved if, after a risk assessment, the competent authorities conclude that no such risks arise. They have to observe the precautionary principle when assessing the products.
The approval procedures are important. It is not generally the European Commission which has to approve a GM-product. Individuals who want to release or place on the market a GMO have to submit a notification (application) to the competent authority in the Member State in which the GM-product will be first released/placed on the market. The Member State prepares an initial assessment of the product on the basis of a scientific risk assessment by a national food assessment body.[14] Any Member State or the Commission could then present reasoned objections to the initial assessment. If the Member State and the Commission failed to settle their differences, a European Community procedure would be initiated. The Commission prepares a draft decision recommending approval or non-approval of the GM-product on the basis of an additional assessment by an EC scientific committee. The draft decision is forwarded to a regulatory committee composed of Member States? representatives. The committee?s composition and its voting rules mirror those of the European Council: each Member State delegates one Member to the committee. Decisions are adopted by weighed voting in which a qualified majority must be reached. If the committee fails to reach a qualified majority, the Commission has to submit the decision to the Council which then has three months to decide on the draft decision. After that period the Commission can approve the decision if the Council has failed to reach an agreement. Finally, once the product is approved, the national authority has to give its written consent to the applicant for the release/placement on the market. There is no maximum duration for the entire procedure.
Individual Member States do not have to wait for EC action to adopt emergency measures if new risks become known. Article 12 of Regulation 258/97 and Article 23 of Directive 2001/18 authorize a Member State to provisionally restrict or prohibit the use of a GM-product on its territory if ?as a result of new information? or a ?reassessment of existing information on the basis of new or additional scientific knowledge?[15] it has grounds to believe that the GM-product endangers human health or the environment. The Member State must immediately inform the Commission, which then has to consult the competent scientific committee. The Commission prepares a draft decision that has to be adopted according to the Community decision procedure mentioned above.
The ?Moratorium?
The question naturally arises: why were no GM-Products approved under this Community decisions process between 1998 and 2003?
In the early 1990s, several Member States raised concerns regarding the existing legal framework for GM-products in the EC. As a result, the EC started revising its GM-legislation. Regulation 258/97 was adopted in 1997, but it was only at the Environment Council of June 24/25, 1999, that the Member States reached a political agreement on the amendment of Directive 90/220.[16] However, Denmark, Greece, France, Italy and Luxembourg declared that the compromise did not adequately respond to concerns on environmental and health risks, and stated that they would ?take steps to have any new authorisation for growing and placing on the market suspended? pending the adoption of ?full draft rules ensuring labeling and traceability of GMOs and GMO-derived products.?[17] The new Directive was adopted in 2001, but additional legislation on labeling and traceability, as well as on GM-food and feed, was not in place until late 2003.[18]
The last GMO was adopted in October 1998.[19] From that time until the establishment of the Panel, no new GM-product was approved in the EC.[20] Product applications got stuck at various stages of the procedure. Even the EC concedes these delays.[21] In most cases several Member States repeatedly asked the applicants for additional information at various stages of the approval procedures. For GMOs submitted for approval under Directive 90/220, in view of the change to Directive 2001/18, many applicants voluntarily agreed to implement some of the additional requirements imposed by Directive 2001/18 before it had entered into force. After Directive 2001/18 entered into force, applicants had to prepare updated product notifications, which had to be re-assessed. Repeated discussions took place between Member States and applicants. Finally, in some cases where the product had made it through the entire procedure, the competent national authority simply refrained from giving its consent to the marketing or release of that product.[23]
Since the Panel was established the EC has started approving GM-products again. However, the Council still regularly fails to achieve the necessary majority to either approve or deny the approval of a GM-product. Since 2003, GM-products have only been approved by the Commission.[24]
Publicly, this situation has become known as a ?moratorium? while the EC officially rejects the term.[24] Claimants in their submissions to the WTO Panel distinguished between two categories of moratoria. They not only complained about the general suspension of approvals in the EC (the ?general moratorium?). They also argued that a ?product-specific moratorium? existed with regard to each of the 27 GM-products notified for approval.
Finally, the claimants attacked a third category of measures in their submissions. Austria, France, Germany, Greece, Italy and Luxemburg have enacted a total of nine product bans for individual GM-products that had already been approved under the safeguard clauses outlined above. In each case, the review of the notification by the Commission and the competent EC scientific committee failed to find that the national measure was justified.[25] Nevertheless, the Member States did not withdraw the safeguards. This failure to withdraw the safeguard measures could also constitute a violation of EC law. Yet, the Commission did not use its powers under the EC Treaty to initiate a community law violation procedure against the individual Member States.
A Violation of the SPS Agreement?
Of the WTO Agreements, the Agreement on the Application of Sanitary and Photosanitary Measures (the SPS Agreement) and the Agreement on Technical Barriers to Trade (the TBT Agreement), as well as the GATT (General Agreement on Tariffs and Trade), might be relevant in the determination of the legality of the EC?s measure. In particular the claimants have an interest that the tight disciplines of the SPS Agreement apply as widely as possible. In its initial submission, the US has almost exclusively made arguments under this agreement. Canada and Australia made arguments relating to other agreements only in the alternative, i.e. if the SPS Agreement did not apply. The parties agreed that it would apply at least in part. The conformity with the SPS Agreement will probably be the most important question the Panel will have to answer. The following paragraphs give a brief account of the most important issues that might arise under the SPS Agreement.
The final Panel report will not include any findings on the approval regime as such. However, the complainants claimed that both the general moratorium and the product-specific moratoria constitute SPS measures that violate the SPS agreement.[26] The EC disagreed by stating that nothing more than a slow-down of approvals had occurred. In other words, only the approval procedures as such should be seen as SPS measures.[27] The difference between these two views is considerable when looking at the legal claims made. Should the Panel side with the claimants, it would have to examine whether the suspensions were based on a risk assessment (Art. 5.1 of the SPS Agreement).[28] When scrutinizing the general moratorium, the Panel would almost certainly be bound to look at the product category of GMOs as such and whether it justified special, more stringent SPS measures than the EC applies to conventional products. However, should the Panel side with the EC?s interpretation, the claimants would basically be stuck with their procedural claims, including a claim that there was undue delay in the approval of GM-products (Para. 1(a) Annex C of the SPS Agreement).
The adoption of the claimant?s perspective would almost certainly lead to a (politically) more controversial decision. The Panel would have to weigh in on the general debate on ?whether GMOs are safe or not.? Indeed, the parties have provided the Panel with extensive information on their views on whether GMOs are safe or not. Furthermore, the Panel consulted scientific experts to support its task.
As the general moratorium applied to all GMOs, under Article 5.1 SPS Agreement the EC would have to provide a risk assessment that shows
- a ?potential for adverse effects on human or animal health?[29] from GMOs in food and feed as well as
- a ?likelihood of [?] spread of a pest or disease within the territory of an importing Member [?] and of the associated potential biological and economic consequences.?[30]
To justify a general moratorium, the risk assessments would have to cover GM-products as a single group. In order for the suspension to be based on these risk assessments, there would also have to be a rational relationship between the risk assessment and the moratorium.[31] The Panel might find that the scientific evidence the EC relied on in its risk assessments need not show that all GM-products bore such potential risks. Nevertheless, scientific evidence of risks would have to support the EC?s treating all GM-products identically under its legal regime. The clearer the evidence for such risks, the lesser the magnitude of the risks would have to be, as the Appellate Body held in EC - Hormones.[32]
While the same legal issues under Art. 5.1 of the SPS Agreement could come up with regard to the examination of the individual non-approvals, their limited scope probably would make the Panel?s finding less controversial. As outlined above, these products remained in the approval procedures due to repeated discussions between Member States, requests for additional information or a need for amending the applications. The Panel would have to look at each of the individual procedures to determine whether there was an adequate risk assessment and whether the risks were sufficient to justify the non-approval of the specific GM-product.
A Cause for Precautionary Measures?
The Panel might find that the scientific evidence for the EC?s risk assessment was insufficient to support a rational relationship between the risk assessment and the moratoria. The EC would then refer to Art. 5.7 of the SPS Agreement that allows WTO Members to adopt temporary SPS Measures on the basis of ?available pertinent information? on potential risks.[33] Regardless of whether the precautionary principle has become a principle of customary international law, it ?finds reflection?[34] in Art. 5.7 of the SPS Agreement. If the Panel decides whether there is ?available pertinent information? on which a WTO Member could base an SPS measure, the Panel would implicitly decide on the extent of precaution WTO Members may use under the SPS Agreement. Ultimately, the question might arise whether the Cartagena Protocol, despite not being ratified by any of the complainants, can inform the interpretation of the SPS Agreement. This is an issue on which the parties disagree as well.[35]
Finally, Art. 5.7 of the SPS Agreement is important for the assessment of the safeguard measures taken by individual Member States. The EC agrees with the claimants that the safeguard measures, unlike the moratoria, fall within the scope of the SPS Agreement.[36] However, the EC put forward the view that the safeguard measures were adopted in accordance with Art. 5.7 of the SPS Agreement.[37] As has been outlined above, the European Commission?s review has not in all cases led to a finding of additional scientific evidence that would warrant such measures. However, the EC claimed that there was pertinent information for all cases that pointed to potential risks to either human health or the environment. Furthermore, the EC was in the process of seeking additional information as required by Art. 5.7 of the SPS Agreement with the goal of bringing the temporary measures to an end.
An issue to watch under Art. 5.7 of the SPS Agreement is whether for a measure to be adopted provisionally, a WTO member nevertheless has to base it on a risk assessment.[38] That would mean that despite insufficient scientific evidence, there still has to be a rational relationship between the risk assessment and the measure adopted. In that case, the pertinent information available would still have to provide some credible indication of major risks to human health or the environment. Again, in answering this question the Panel might lay down important findings for the extent of precaution WTO Members are allowed to use under the SPS Agreement.
Procedural Claims
Should the Panel find that the moratoria do not constitute SPS measures as such, the claimants would only have left the procedural claims under the SPS Agreement. The most important[39] would be the violation of Para. 1 Annex C of the SPS Agreement, which requires WTO Members to ensure that procedures are ?undertaken and completed without undue delay.? No panel has interpreted this phrase so far. Yet, the parties agreed that not only the duration of the delay but also the reasons for the duration of the procedure should be relevant.[40] The EC even seems to acknowledge that there were, in fact, delays although the EC asserts that they were all due to legitimate reasons. According to the EC, requests for additional information from the applicants or the drafting of new legislation constituted legitimate reasons for WTO Members to prolong approval procedures.[41]
The Panel will look both at the general and the product-specific moratoria. Should it come to the conclusion that there was indeed a general suspension of approvals a finding of undue delay would follow from that almost automatically. This might be more difficult to decide for the product-specific moratoria. The Panel would have to look at each individual approval procedure in detail to establish whether there was a delay and whether there are any justifications.
Conclusions
Most likely, the Panel?s report will not contain any finding on whether WTO Members may have special procedures for the approval of GM-products. It probably will not even contain any finding on whether WTO Members may decide to temporarily or permanently prohibit GM-products on their territory as a matter of general policy. The situation in the EC from 1998 to 2003 was paradoxical. A legal regime designed to allow GM-products on the market provided they are safe was in place and no formal decision to suspend approvals was in place. Nevertheless, GM-products got stuck in the procedure. It should be noticed that the EC system leaves much more room to individual Member States than a national system would leave to sub-federal entities.
The Panel cannot be expected to decide issues that are not essential for a ruling on the case. Some of the most controversial questions might remain untouched in the final report. With regard to the moratoria, the claimants might have nothing more than a procedural claim of undue delay. In this case the EC might ?lose? the case but might be able to argue that it has already brought its measures into compliance with WTO law as approvals have started again.
Daniel Wüger is a senior research fellow at the World Trade Institute and lecturer at the University of Berne. At the World Trade Institute he is the assistant director of a research project on biotechnology and international trade. The project is part of a cluster of projects on International Trade Regulation: From Fragmentation to Coherence (www.nccr-trade.org).
Footnotes
[1] Communication from the Chairman of the Panel of December 21, 2005, WTO-Doc. WT/DS291/30.
[2] Only the US (http://www.ustr.gov) and the EC (http://europa.eu.int/comm/trade/issues/respectrules/index_en.htm) publish their submissions; Canada only publishes the panel reports as well as press releases at http://www.dfait-maeci.gc.ca/tna-nac/dispute-en.asp.
[3] Council Directive 90/219/EEC of 23 April 1990 on the contained use of genetically modified micro-organisms, Official Journal (OJ) L 117 (1990), p. 1.
[4] Council Directive 90/220/EEC of 23 April 1990 on the deliberate release into the environment of genetically modified organisms, OJ L 117 (1990), p. 15 (hereinafter Directive 90/220).
[5] Deliberations started as early as 1986, when the Commission drafted a white paper on a Community legal framework on biotechnology. See Communication de la Commission au Conseil ?Un Cadre Communautaire pour la Regulation de la Biotechnologie?, COM(1986) 573. See also First Submisson of the EC, pp. 51-52.
[6] Art. 2.1 of Directive 90/220.
[7] Directive 2001/18 of 12 March 2001 on the deliberate release into the environment of genetically modified organisms and repealing Council Directive 90/220, OJ L 106 (2001), p. 1.
[8] Regulation 258/97 of 27 January 1997 concerning novel foods and novel food ingredients, OJ L 43 (1997), p. 1 (hereinafter Regulation 258/97).
[9] Since April 2004 food containing GMOs or produced from GMOs has been regulated exclusively by Regulation 1829/2003 on genetically modified food and feed, OJ L 268 (2003), p. 1 (hereinafter Regulation 1829/2003); finally Regulation 1830/2003 of 22 September 2003 concerning the traceability and labelling of GMOs and the traceability of food and feed products produced from GMOs and amending Directive 2001/18 (OJ L 268 (2003), p. 24; hereinafter Regulation 1830/2003) supplemented the regime. These two acts are of no relevance to the dispute.
[10] Art. 1.2(b) of Regulation 258/97.
[11] Recital 26 of Regulation 1829/2003.
[12] However, GM-processing aids and GM-feed as such also need to be approved.
[13] See, more specifically, Art. 3.1 of Regulation 258/97.
[14] Today, this is only different in the area of GM-food. Under Directive 1829/2003 the applicant has still to file at the national level. However there is no longer any initial Member State assessment. Risk assessments are prepared centrally by the European Food Safety Authority (EFSA, http://www.efsa.eu.int/). Also, in the case that release is requested for other purposes than placing on the market, the Member State decides without the involvement of any Community authority or other Member States whether it wants to allow such release.
[15] Art. 23 of Directive 2001/18; Directive 90/220 contained a similar provision in Art. 16.
[16] See Draft Minutes of the 2194th Council meeting (Environment) held in Luxembourg on 24 and 25 June 1999, Council Document 9433/1/99 REV 1, p. 6, available at http://register.consilium.eu.int/ (hereinafter Environment Council Minutes).
[17] See Environment Council Minutes, p. 14, available at http://register.consilium.eu.int/; furthermore, Denmark, Austria, UK, Belgium, Finland, Germany, Netherlands, Spain, and Sweden also called upon the Commission to prepare draft legislation for a liability regime for damages resulting from the release and marketing of GMOs; see Environment Council Minutes, pp. 14-15, available at http://register.consilium.eu.int/.
[18] Regulation 1829/2003 as well as Regulation 1830/2003.
[19] See First Submission of the US, p. 16.
[20] Thirteen GMOs were approved under the simplified procedure foreseen in Regulation 258/97 for GM-products produced from GMOs but not containing GMOs ?which, on the basis of the scientific evidence available and generally recognized [?], are substantially equivalent to existing foods or food ingredients as regards their composition, nutritional value, metabolism, intended use and the level of undesirable substances contained therein? (Art. 3.4 Regulation 258/97; see First Submission of the EC, p. 163). In these cases the Commission can approve the product.
[21] See First Submission of the EC, p. 118.
[22] For a detailed account of the individual product applications see First Submission of the EC, pp. 68-108; First Submission of the US, pp. 19-24.
[23] For an example, see the last two approvals from January 13, 2006 for placing on the market of foods and food ingredients produced from the genetically modified Roundup Ready maize line GA21, OJ L 34 (2006), p. 29 and from the genetically modified maize line MON 863, OJ L 34 (2006), p. 26; the Community has established a Register of GM food and feed which is available online at: http://europa.eu.int/comm/food/dyna/gm_register/index_en.cfm.
[24] Even various officials of the EC and the Member States have at times referred to the situation as
moratorium. See the extensive references in the First Submission of the US, pp. 15-19.
[25] See a detailed account of the safeguard measures in the First Submission of the US, pp. 24-27; see also First Submission of the EC, pp. 108-115.
[26] First Submission of the US, pp. 33-34, 50.
[27] First Submission of the EC, pp. 118-119.
[28] Other claims included a violation of Art. 5.5 SPS Agreement that requires consistency in levels of protection adopted by WTO Members in comparable situations. The US argued that by not requiring approvals for food products produced with GM processing aides or animal products, the EC violated this provision; see First Submission of the US, pp. 43-48, 55.
[29] Para. 4 Annex A of the SPS Agreement.
[30] Para. 4 Annex A of the SPS Agreement, assuming that GMOs would qualify as or could trigger pests or diseases.
See Appellate Body Report, EC ? Measures concerning Meat and Meat Products (Hormones), WT/DS26/AB,R (hereinafter EC ? Hormones), para. 193.
[32] See EC ? Hormones, para. 194. WTO jurisprudence is still inconclusive on whether there needs to be a proportionality between the (magnitude) of the risks identified and the level of protection (or the resulting trade restrictiveness) adopted by a WTO Member.
[33] See Second Submission of the EC, p. 98. The parties did not agree on the relation of Art. 5.1 and 5.7 though. The EC claimed that they apply only in the alternative. As the claimants did not make any claims under Art. 5.7 and the safeguard measures were provisional measures, according to the EC the Panel was barred from making any findings relating to it (see First Submission of the EC, pp. 171-176. However, the US argued that Art. 5.7 acted as an exemption to Art. 5.1. See Rebuttal Submission of the US, pp. 29-31.
[34] EC ? Hormones, para. 124.
[35] See First Submission of the EC, pp. 139-141; Rebuttal Submission of the US, pp. 6-9.
[36] See First Submission of the EC, pp. 170-171.
[37] See First Submission of the EC, pp. 171-177.
[38] See First Submission of the EC, pp. 177- 181.
[39] The claimants also argued violations of Art. 7 of the SPS Agreement and of Para. 1(b) Annex C of the SPS Agreement; see First Submission of the US, pp. 36-38, 51-53.
[40 First Submission of the US, p. 36; First Submission of the EC, p. 146.
[41] First Submission of the EC, pp. 147-150.