WTO PANEL PROVISIONALLY RULES AGAINST EU MORATORIUM ON BIOTECH APPROVALS

A WTO dispute panel on 7 February issued a preliminary ruling suggesting that several aspects of the way that the EU's approval process for genetically modified organisms (GMOs) was operating were in contravention of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS). It is thus largely favourable to the complaint brought in 2003 by the US, Argentina and Canada against what they alleged was an EU moratorium on the approval of new biotech products.

In the interim ruling, which was confidential and released only to the parties to the dispute, the panel was keen to stress that the challenge did not address the WTO-consistency of the EU biotech regulations, but rather the failure of the EU to properly apply its own procedures.

Interim ruling sides with complainants

The panel is assessing three issues for their compliance with WTO rules: (1) the alleged general EU moratorium on biotech approvals, (2) the EU's failure to approve a number of specific biotech products (referred to as 'product-specific measures'), and (3) national-level bans in several EU member states on the marketing and import of specific biotech products after the products had been approved at the EU level.

According to the interim ruling, the EU had indeed applied a general 'de facto' moratorium on approvals of biotech products between June 1999 and August 2003, thus contradicting Brussels' claim that no such moratorium existed (see BRIDGES Weekly, 18 January 2006). The panel noted that this general 'de facto' moratorium did not constitute an SPS measure in and of itself, but had "resulted in a failure to complete individual procedures without undue delay," thereby violating Article 8 and Annex C of the SPS Agreement, which set out rules for such approval procedures.

Notably, the panel did not side with the complainants on other allegations, including those contending that the de facto moratorium was not based on a risk assessment or on scientific principles.

With regard to the product-specific measures, the panel reached conclusions similar to those on the general de facto moratorium, arguing that the completion of the approval process had been unduly delayed for 24 out of the 27 biotech products.

The 1,050-page report also found that 'safeguard measures' in the form of national bans on the marketing and import of EU-approved biotech products in France, Germany, Austria, Italy, Luxembourg and Greece were WTO-incompliant. The panel stressed that the challenge was not directed at EU laws for approval procedures, which allow individual EU member states to impose SPS measures that differ from EU-wide measures. In fact, the panel actually assessed the prohibitions imposed on the basis of the EU's own legislation. The EU had argued that the national bans were taken as precautionary measures under Article 5.7 of the SPS Agreement, which allows WTO Members to provisionally adopt SPS measures in the absence of sufficient evidence. The interim ruling, however, concludes that available scientific evidence was actually sufficient to permit a risk assessment -- because the EU's scientific committee had already assessed the risks of the biotech products and judged them to be safe. This was its basis for finding that the challenged EU member states had not undertaken risk assessments in line with the requirements of the SPS Agreement that would "reasonably support the prohibition."

Interim recommendations of the panel

The panel did not make recommendations on what the EU should do about the general de facto moratorium since they found that it had already ended with the approval of "a relevant biotech product" in 2004, some months after the establishment of the panel.

On the product-specific measures, the panel requested the EU to bring the measures "into conformity with its obligations under the SPS Agreement," effectively asking the EU to complete the approval process for the outstanding applications.

Similarly, the interim ruling requests the national-level bans to be brought into conformity with WTO law, which would imply revoking them or providing an SPS Agreement-compliant risk assessment to justify the measures. The European Commission had already stepped up pressure on member states in this regard, most recently ordering Greece to end its ban (see BRIDGES Trade BioRes, 20 January 2006).

Moratorium or no moratorium?

In a press release issued the same day as the interim report, the EU stressed the need for strong regulatory oversight of GMOs, and noted that the approvals process it has in place had led to the authorisation of more than 30 biotech products. It argued that it does not have a ban in place, suggesting that the implications of the biotech case for current EU processes are likely to be minimal because the ruling does not apply to the regulatory framework that came into effect in 2004.

The US had argued in a 6 February statement that the moratorium was still in place because only a few, "token" GMOs had been approved since 2004. However, in a footnote to the interim ruling, the panel members explicitly refrained from expressing an opinion on whether an amended de facto moratorium continued to exist or a new general moratorium had been imposed, on the grounds that doing so would be beyond their terms of reference.

Under EU laws, applications for the approval of GMOs go through a lengthy process which includes examination by the European Food Safety Authority (EFSA), as well as by ministers and environment, health, and safety experts from EU states. If the state representatives fail to agree on whether to approve or reject the application for environmental release or commercialisation, the decision reverts back to the European Commission. Nearly two dozen GMO applications are currently in this pipeline.

Parties, civil society weigh in

In a conference call with journalists the night of 7 February, a US official said the US is "pleased with the outcome." In a reference to widespread public scepticism about GM products in the EU, US Trade Representative Rob Portman noted that "public opinion isn't the standard. The standard is a rules-based system in the WTO. That's why we're in the WTO, and as the world's largest trading partner I'm sure the EU would act responsibly."

A number of industry and farmer groups in the US, which is the world leader in the adoption of GM crops, expressed support for the preliminary report. "The WTO's decision makes it clear that biotech regulations must be based on sound science and that the EU's approach to biotech crop approvals is unwarranted," said Sarah Thorn, senior director of international trade at the Grocery Manufacturers Association.

However, many civil society groups sharply criticised the ruling, saying that public opinion in the EU against the release and commercialisation of GMOs should be respected. "US agro-chemical giants will not sell a bushel more of their GM grain as a result of the WTO ruling," Greenpeace International trade adviser Daniel Mittler declared. "European consumers, farmers, and a growing number of governments remain opposed to GMOs, and this will not change -- in Europe or globally." Friends of the Earth International described the overturning of the national bans as 'undemocratic' and an "inappropriate intrusion into decisions about what food people eat," adding that "the WTO is unfit to decide what we eat or what farmers grow. It has no particular competence in environmental or health and safety matters."

Until recently, interim reports in all WTO disputes had largely matched the eventual final rulings. However, the role of these preliminary reports as a barometer of the panel's final decision has been diminished by Korea and Indonesia's dispute over anti-dumping duties on certain Indonesian paper imports, for which the October 2005 final ruling reversed some of the substantive findings in the interim report.

Informed sources expect that the final ruling in the biotech case, which will take into account parties' views on the preliminary report, will be released in April.

The interim conclusions and recommendations of the panel are available at http://www.tradeobservatory.org/library.cfm?refid=78475.

For additional information, including analysis and relevant submissions, visit http://www.trade-environment.org/page/theme/tewto/biotechcase.htm.

ICTSD reporting; "Europe's rules on GMOs and the WTO," EU PRESS RELEASE, 7 February 2006; "WTO condemns EU over GMO moratorium," REUTERS, 8 February 2006; " WTO Backs Key U.S. Claims in Case Against EU GMO Ban; EU Downplays Ruling," WTO REPORTER, 7 Februrary 2006; "GMO Ruling Delights US Farmers but Hurdles Remain," REUTERS, 8 February 2006; "WTO Found EU GMO Moratorium Violated Trade Rule - US," REUTERS, 8 February 2006; "WTO may reject EU biotech policy in 'Bellwether' case," BLOOMBERG, 6 February 2006; "WTO rules against Europe in GM food case," FINANCIAL TIMES, 7 February 2006; " Europe's Biotech-Seed Rules Ruled Illegal by WTO, U.S. Says," BLOOMBERG, 8 February 2006.