GMOs in Multilateral Trade
Published on November 19, 2001

Overview

Every World Trade Organization (WTO) member maintains a large degree of autonomy with respect to the application of its domestic trade policy. Therefore, a member is certainly free to outlaw the domestic production of GM products or to require domestic manufacturers to label GM products for domestic sale. However, imposing such requirements on imported GM products may give rise to a trade issue under the WTO Agreement.

The International Food System

GMOs and food safety are regulated by a number of international bodies.

The Cartagena Protocol to the Convention on Biological Diversity will cover trans-boundary movement, transit, handling and use of all sustainable use of biological diversity and GMOs, also taking into account risks to human health once 50 countries ratify the agreement. It could be ratified as soon as 2002, however, to date the agreement is still awaiting official endorsement.

Two bodies of the United Nations (U.N.), the Food and Agricultural Organization (FAO) and World Health Organization (WTO) govern Codex Alimentarius, which is the chief food safety regulating body. Codex Alimentarius has established standards for food safety risk assessment. In addition, it is responsible for the food safety aspects of GMOs. Its regulations and standards are recognized in the WTO under the Agreement on Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT).

The WTO is comprised of 140 member countries. The organization works to develop a liberalized world trading system. The WTO's top-level decision-making body is the Ministerial Conference, which meets at least once every two years. A lesser regulatory body is the General Council (normally ambassadors and heads of delegations in Geneva, but sometimes officials sent from members' capitals), which meets several times a year at the Geneva headquarters. The WTO is the most influential body in world trade affairs.

With regards to multilateral trade of GMOs, questions rise about the role of the WTO-based trading system and whether this system provides the right framework for addressing such important policy issues. However, in an international trade dispute over the legality of GMO schemes, resolution can only be found in the framework of the SPS Agreement and TBT Agreement due to their sophisticated nature.

The SPS Agreement

The SPS Agreement grants flexibility to individual countries to set and enforce safety requirements that are crucial to protecting human, animal or plant health, on the basis of scientific information. This right is granted to members as long as the measures adopted have minimal negative effects on trade.

Harmonization, equivalence, consistency and transparency are the foundations of SPS enforcement. Harmonization stresses the need for common international heath, safety and inspection standards for the food and agriculture industry. Equivalence encourages countries to accept different nations' standards as long as they are enacted and enforced with the same goals. Consistency is maintained through a defined order of operations, scientific method and scientific procedures, which must be followed in order to ensure that the international trade of goods does not pose threats to society. Finally, all decisions under the SPS Agreement affecting international trade must be based on and supported by consistent scientific evidence, thereby ensuring transparency.

Details specifically relevant to GMOs found in the SPS Agreement:

The SPS Agreement relies heavily on scientific criteria. If a risk is to serve as the basis for a restriction on trade, it must be ascertainable. Furthermore, any restriction of trade must be proven "necessary" to protect human animal or plant life or health in order to be presumed to be consistent with both the SPS Agreement and GATT 1994.

TBT

The TBT Agreement explicitly covers mandatory and voluntary labeling requirements not falling within the SPS Agreement. The TBT Agreement ensures national security requirements, prevention of deceptive trade practices, protection of human health or safety and animal or plant life or health, or the environment.

The main difference between SPS and TBT

Under SPS, the only justifications a member may use for not using international standards are scientific arguments resulting from an assessment of potential health risks. However, agreement on TBT allows governments to decide that international standards are not appropriate for their reasons, including fundamental technological problems or geographical factors.

Details specifically relevant to GMOs found in the TBT Agreement:

Article 2.1 and 2.2 govern "technical regulations", including certain mandatory GMO labeling measures. Products imported from the territory of any member shall be accorded treatment no less favorable than that accorded to like products of national origin and to like products originating in any other country and are applicable to "like products". Unless the production processes are detectable in the final product these products cannot be discriminated against. Previously GMOs could not be easily detected. However, advances in technology have made GMOs increasingly detectable in many finished products.

Labeling schemes are also covered under article 2.2 of the TBT Agreement. Under this article it states that labeling schemes, "not be more trade-restrictive than necessary to fulfill a legitimate objective taking account of the risks non-fulfillment would create".

To instate a technical barrier to trade, such as GM labeling, there must be a "legitimate objective" to satisfy the TBT, such as "national security requirements; the prevention of deceptive practices; the protection of human health or safety, animal or plant life or health, or the environment". This non-exclusive list of legitimate objectives does not explicitly protect a consumer's right to know, nor does it account for many of the moral, ethical, and religious considerations often cited in support of GMO labeling.

The Issue

Questions arise when the goal of labeling is not protection against known health risks but protection against unknown risks, including environmental risks. The WTO does not have any regulations that allow trade protection against unknown risks. This is the main dispute currently between the U.S. and the E.U.

The U.S. government is unaware of any evidence that would demonstrate that genetically modified varieties, such as soybeans and corn, as a class differ from conventional varieties in composition, nutritional value or nutritional effects. The U.S. government further has stated that it had "questions about what the E.U.'s legitimate objectives are with respect to providing 'proper information to the final consumer' " and was "concerned that, in fact, the labeling requirements imposed by the regulation could contribute to consumer deception.

The U.S. has numerously threatened to take the GMO dispute with the E.U. to the WTO. The trade and economic implications for the E.U. are astronomical if the U.S. can prove that the E.U. has set GMO regulations in an attempt to distort trade. Even the E.U. Commission admits there is a serious dilemma, as it believes that blocking of new GM strains, which have been scenically tested, cannot be justified under international law.

The European Commission fears that a legal suit from the biotech firms which, it believes, could force it to overrule national governments and approve the GM crops for use anywhere in the E.U. The E.U. Environmental Commissioner Margot Wallstrom told ministers, "This is problematic and I don't know how to solve it. We are in an illegal situation."

Conclusion

Aurthor E. Appleton, in his report, The Labeling of GMO Products Pursuant to the International Trade Rules, wrote, "The WTO's members are probably not capable, at this time, of reaching consensus on how to apply WTO rules to the GMO issue." However, the WTO have attested their capability to balance social and legal factors in order to reach politically acceptable solutions. The Shrimp/Turtle case, in which the US was allowed to prohibit the importation of certain shrimp and shrimp products from countries that allowed turtles caught in shrimp nets to be wasted, is evidence of this.

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