1. U.S. V.

E-C BIOTECH CASE

The case was examined by the Panel at the very moment when developing countries were
struggling to develop a mutual supportive relationship between their trade, food safety, and
environmental rules and policy. Developing country regulation and policy were often referred to
by the countries involved in the dispute and can hence be regarded as the “tip of the iceberg” of a
long-standing divergence of views and interests among countries on agro-biotechnology,

In this case, three nations that produce and export genetically modified seed products (“GMOs”)
– the United States, Canada, and Argentina– challenged two EC directives and an EC regulation
establishing a pre-marketing approval process for GMOs in the EC. The directives provided a
multi-step process involving member state and community officials for approval, of GMOs
before they could be imported or marketed in the EU. EC Regulation provides approval
procedures relating to “novel foods and novel food ingredients.” Though, parties did not dispute
that the EC did not approve any biotech product applications, they pointed to statements by
several EC officials declaring a “moratorium” on the approval of applications until the EC had
updated its labeling and traceability regulations. The complaining parties alleged that this
moratorium, both in general and as applied to specific product approval applications, constituted
a sanitary or phytosanitary (“SPS”) measure that failed to observe the following requirements for
SPS measures under the Agreement on Sanitary and Phytosanitary Measures (“SPS Agreement”)
In addition to challenging the moratorium, the complaining parties also challenged the
“safeguard measures” instituted by six EC member states – Austria, France, Germany, Greece,
Italy, and Luxembourg. Under the safeguard measures, permitted by EC regulations, the EC
member states limited the importation or marketing of certain biotech products already approved
by the EC.

 The WTO Proceedings and the 2006 Panel Report

In the 2006 report, the Panel addressed the various categories of challenged EC and EC Member
State measures and found that each of these types of measures was inconsistent with WTO rules
– in particular the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). The
Panel held that the EC did in fact institute a moratorium on deciding GMO applications from
October 1998 until August 2003 and held against the same owing to the corresponding violations
of the WTO rule and the SPS provisions. It emphasized that Members could adopt SPS measures
only “where relevant scientific evidence is insufficient,” and that the inadequate risk assessments
conducted by the EC did not support the imposition of SPS measures

The Panel also observed that the needs of exporting developing nations need not be weighed
more heavily than environmental priorities of importing developed nations in response to the
Argentina’s argument that the moratoria related to Argentine product applications violated
considerations relating to the interests of developing countries in establishing SPS measures.

In its recommendations, the Panel did not require any action on the general moratorium since it
held that the moratorium had already been lifted in 2003. The Panel recommended the product-
specific moratoria be lifted and the approval process be completed for any pending applications.
The Panel also recommended that the member state bans be brought into conformity with WTO
law, either by revoking them or by justifying them based on an SPS-compliant risk assessment.

 The Mutually Agreed Solution

At its meeting on 21 November 2006, the DSB adopted the panel reports and on 19 December
2006, the European Communities announced its intention to implement the recommendations
and rulings of the DSB in a manner consistent with its WTO obligations. However, due to the
complexity and sensitivity of the issues involved, the European Communities would need a
reasonable period of time for implementation. On 19 March 2010, the parties notified the DSB
of a mutually agreed solution under Article 3.6 of the DSU.  The parties have agreed to establish
a bilateral dialogue on issues related to the application of biotechnology to agriculture.

 The Impact of the Case on the GMO Trade

The Report does not, take any position or effect any decision with respect to numerous
controversial issues in the case and with respect to GMO import regulation generally. First, the
Panel did not take a position on whether GMOs are safe. Second, the complaining parties did not
challenge, and therefore the Panel did not decide, whether the EC pre-marketing approval
measures are compliant with WTO rules. Third, the Panel did not conclude that the moratorium
itself should have been based on a scientific risk assessment. Finally, the Panel observed that
Members might still block GMO imports, specifically or generally, by justifying them with
adequate risk assessments, by granting time-limited or conditional approvals pending further
scientific assessment, or by delaying decisions for some period in the event of new scientific
evidence that conflicted with existing evidence.

The Panel decision also included several decisions favorable to the complaining parties and
future GMO exporters. First, the Panel held that it was not required to (and did not) consider the
international environmental norms embodied in the CBD or the Biosafety Protocol. Second, the
Panel held that a Member could not unduly delay a substantive decision on pre-marketing
approval applications of GMOs by means of procedural roadblocks. Third, the Panel somewhat
restricted the ability of Members to impose SPS measures based on a perceived inadequacy of
the scientific evidence available, thus limiting the precautionary principle to cases where the
scientific evidence in a particular risk assessment is internally inconsistent or where there is
insufficient evidence even to conduct a risk assessment.

2. A COMMENT ON THE TRENDS AND THE WAYFORWARD

While the relationship between the WTO Agreements and biotechnological issues is still unclear,
the WTO Agreements do allow some bio-safety measures to be taken, as long as certain criteria
are met, i.e.

 The measures are based on scientific evidence (with risk assessment);

 Are not discriminatory; and
 Are not more trade-restrictive than necessary.

Where scientific evidence is insufficient, provisional bio-safety measures may be taken on the
basis of available pertinent information, provided additional information is subsequently sought
for a ‘more objective assessment of risk’ and the measures are reviewed ‘within a reasonable
time’. Standards or phytosanitary measures which conform to international standards, guidelines
or recommendations set by the relevant international standard setting bodies (such as Codex,
IPPC, OIE) are presumed to be consistent with the SPS Agreement and GATT 1994.

The provision of consumer information through labelling of GM products is WTO-consistent if it

serves to prevent deceptive practices and, in the case of undetectable GM products, if consumers
perceive such products as being different from the conventional counterparts. Any country faces
challenges at the national level when implementing a wide range of international instruments,
which may sometimes seem competing. It is important that countries understand what the WTO
Agreements say, what their obligations are, what exceptions are available and what the
opportunities for biosafety are.

Equally important is an understanding of the rights of a sovereign country, including those as

afforded under the Cartagena Protocol on Biosafety. This will help to avoid the WTO’s ‘chilling
effect’, whereby Members are reluctant to act strongly for environment and health for fear of
allegations of being ‘WTO-inconsistent’ and the WTO’s binding dispute settlement mechanism.
Countries would also have to coordinate their internal mechanisms to meet their obligations, not
just under the Cartagena Protocol on Biosafety but also under the international standard setting
bodies that are dealing with biosafety, such as the Codex Alimentarius, IPPC and OIE, which are
given a prominent role in the WTO and which actively shape national responses.

At the international level, the political landscape is also important. The adoption of the Cartagena
Protocol represents a significant milestone in reconciling trade and environmental interests.
However, the Cartagena Protocol does not establish a global standard by which to judge the
environmental impact of agricultural biotechnology as such. Recognizing that modern
biotechnology has 'great potential for human well-being', the Protocol instead aims to empower
nation-states and regional organizations with internationally sanctioned regulatory instruments
for assessing the biosafety of GM trade. Importing nations may choose to promote biotech trade
or to err on the side of caution, and these decisions have in many ases provedto be conflict
generating. Moreover, the Protocol's exemptions for pharmaceuticals have given rise to criticism
by environmentalists that they do not reflect the rapidly changing reality of commercial
biotechnology.

The observations regarding the current position on the ‘GMO’ treatment

Another noteworthy observation is the position pertaining to ‘GMO’ trade. Despite rapid
adoption of GMOs by a few exporters, many importers have developed relatively restrictive
procedures for pre-market approval of GMOs, and are introducing mandatory labeling. While
exporters have yet to seek a ruling from the WTO on these regulations, a trade dispute over
GMOs is likely to occur before too long. Exporting countries will likely argue that importing
countries’ regulations are too restrictive, given existing scientific knowledge of the safety of
current GM crops, and that labeling of GM foods is unnecessary due to the fact that they are
typically similar to their conventional counterparts. In response, importing countries will likely
argue that existing scientific knowledge about GMOs is insufficient, and that a precautionary
approach to approval is appropriate. In addition, importers will claim that labeling is necessary
due to the fact that they are not equivalent to their conventional counterparts, and consumers
have a right to choose whether or not consume such foods, be it for religious, ethical or other
reasons.

In the event a panel will have decide on whether GM and non-GM products are “like goods”,
whether adequate risk assessment was undertaken for any regulation introduced for health
reasons, whether labels constitute the “least trade distorting” way of meeting legitimate
objectives, and whether regulations imply discrimination among suppliers or in favor of
domestic producers. Experience with the SPS and TBT Agreements has not been extensive
enough to indicate how such a panel might rule. But one can also view the issue in broader trade
policy terms, as a balance between market access obligations that need to be adjusted as
domestic regulations on new technologies are developed.

A possible solution is for importing countries with tough GM regulation and mandatory labeling
to offer reciprocal increases in market access for non-GM foods in compensation for any losses
of market access for GM foods. There is a question though of whether such “rebalancing” is
actually practical, and it would certainly add to the costs of dispute settlement in the WTO, but it
may be the only viable solution in the long run if the WTO is not to be dragged in to evaluating
social and ethical bases for regulation of biotechnology.

What needs to be done? - Suggestions for the improvement of biotechnology and the bio-
safety regimes of the WTO

Among the unresolved issues are the labelling of commodities, liability and the provision of aid
for capacity-building and technology transfer, and the parties will need to establish international
rules on these matters. As in the case of other multilateral environmental agreements, the
effectiveness of the biosafety regime will depend on the ability of the parties to broaden the
Protocol's scope and strengthen its control mechanisms in future revisions of the regime. Despite
the progress made in reconciling biotech trade. Moreover, environmentalists fear that rapid
progress in biotechnological innovation will soon call into question some of the Protocol's
exemptions. While the Cartagena Protocol marks a significant step forward in regulating biotech
trade, its effectiveness with regard to protecting biodiversity and human health will depend on its
future ability to adapt to, and catch up with, rapid change in biotechnological research and
commercialization.

There are efforts currently being made by many developing countries to reform the WTO and to
assert their rights under the various Agreements. The debate on biosafety is benefiting from
increasing scientific inputs specifically targeted at biosafety, and international law is being made
and implemented as the debate progresses. As more countries become more knowledgeable on
biosafety and cooperate to implement biosafety measures, this will shape the discourse on
biosafety and the interpretation of the relevant international instrument

With increasing moves towards cross country cooperation, the international community is very
well placed to take forward the technology transfer and cooperation agenda. The following might
help the process:

1. Establishing several clearing houses at regional levels so as to enable information exchange

and mutual coordination and cooperation for dealing with biotechnology related issues

2. Biotechnology hotspots should be identified across the world by taking the assistance of
experts in the said areas. Cautionary measures should be taken with respect to such areas

3. Strengthening of cross national initiatives such as the Cotinental Cooperation Mechanism

4. Special initiatives to set up international cooperation so as to enable the countries countries to

exchange expertise and share experiences

5. Stronger regional and sub-regional (SAARC and ASEAN) representation at the global
platforms and international negotiations – based on “proper preparatory processes and needs
assessments”

6. Development of human resources and institutional infrastructure to tackle biotechnological

problems. Venturing into more and more research initiatives so as to set up a database for
scientific material. This would help in eliminating the need of fresh perusal for scientific
evidence. The committees’ of the panel can simply refer the earlier findings.

7. so as to address the problem of “strict national treatment of GMOs”, the importing countries
can be directed to effect their policies in such a way that in return losses due to lower market
access due to “tough GM regulation and mandatory labeling”, increased market access can be
guaranteed for non-GM products as compensation.

The newly established procedures of international information-sharing within the institutional

framework of the Biosafety Clearing-House may create within limits a tendency towards
convergence of biotechnology standards, particularly in the developing world