From Montreal To Miami: Greg Conko Speech on Trade and Biotech Food

From Montreal To Miami: Greg Conko Speech on Trade and Biotech Food

October 10, 2000

TALKING POINTS FOR CABC LUNCHEON – MARCH 16, 2000

 

From Montreal To Miami: Trade In Genetically Modified Organisms After The Biosafety Protocol

Remarks of Gregory Conko, Director of Food Safety Policy at the Competitive Enterprise Institute

Before the Institute of Economic Affairs, London, UK

October 10, 2000

As all of you here know, biotechnology, gene-splicing, and Genetically Modified Organisms have become an increasingly important issue over the last few years–both in the UK and around the world. What you may not know, is that how our governments handle this particular issue will have major ramifications on international trade, and the institutions we’ve established to help bring about a freer, more prosperous world.

 

Let me begin with a note about the title of my talk: from Montreal to Miami. A couple of weeks ago, when I was asked what the title of would be, so it could be included in the invitation, I naturally tried to come up with something snappy and attention-grabbing. I knew I wanted to talk about recent developments in international agricultural trade, and trade in GMOs in particular. The most significant development this year, of course, was the Biosafety Protocol agreed to in Montreal, Canada this past January. That’s the Montreal part of the title. The Miami part comes from the group of six major agricultural exporting nations collectively known as the Miami Group–Argentina, Australia, Canada, Chile, Uruguay, and the United States–that represented the primary defense of agricultural biotechnology at the Montreal negotiations, and that will be the best hope–such as it is–for free trade and technological progress in the near term future.

 

Although we normally expect that agreement on a major international treaty should come after completion of debate on it, that’s not the case with the Biosafety Protocol. There are still a few, but very significant unresolved issues that will be officially negotiated over the next two years. The resolution of those issues will determine exactly how good or how bad the Protocol will actually be.

 

Additionally, there are a number of related issues that still need to be resolved outside the framework of the Biosafety Protocol. So, it occurred to me a few days ago–when I really began to think about my talk–that a better title would be “from Marrakesh to Montreal,” inasmuch as the protocol and a few other recent events seem to presage a real clash, not just over GMOs specifically, but more generally between the advocates of precautionary regulation on the one hand, and the free trade imperatives of the Marrakesh agreement establishing the World Trade Organization on the other.

 

Let me first talk briefly about the WTO and the GATT.

 

For nearly 50 years, tariff and quota barriers to international trade were slowly being reduced under the auspices of the general agreement on tariffs and trade. In 1994, though, in Marrakesh, GATT members began a new era in agricultural trade with their completion of the Uruguay Round negotiations and agreement on the WTO.

 

The fundamental goal of the Uruguay Round was to put some teeth behind the GATT, in the form of a dispute settlement body and the creation of a penalty mechanism. The GATT had also begun a serious effort to bring agricultural trade into the existing framework that previously was focused primarily on manufactured goods. Uruguay Round negotiators made a concerted effort to reduce both tariff and non-tariff barriers on world agriculture trade–the later of which included then, and still does, many spurious restrictions on imported food products in the name of public health.

 

Of course, Article XX of the GATT does permit WTO members to restrict imports on several specific grounds, including for “public health and safety” as well as for environmental sustainability. But to define trade rights and member obligations more clearly, and to prevent Article XX from simply being used to mask trade protectionism, two other agreements–the Agreement on Sanitary and Phyto-Sanitary Measures and the Uruguay Round Agreement on Agriculture were negotiated concurrently with the WTO in an attempt to prevent countries from ratcheting up their health and environmental standards for strictly protectionist intent while the rest of the world was reducing or eliminating more clear import barriers such as tariffs and quotas.

 

The prime intent of these agreements was to ensure nondiscriminatory treatment in regulation among imports compared to domestic products and to ensure nondiscrimination on the basis of production methods. As a consequence, regulations now have to be based upon whether or not a specific item is reasonably judged to be unsafe, using tangible scientific evidence. Judgments can not simply be based upon speculation about potential health hazards, nor can they be based upon the process through which a product was created.

 

One of the mechanisms established under GATT to promote this goal is to place the burden of proof on regulators, who must demonstrate that their rules are based upon a scientific assessment of risk. The complaining party initially bears the burden of making a prima facie case that a restriction violates the SPS, but once that case is made, the burden of proof shifts to the respondent to show that the rule is scientifically justified.

 

A related mechanism is that GATT and the SPS agreement stipulate that measures taken to protect human health or the environment be limited to the least restrictive means of achieving a particular safeguard.

 

When scientific information is insufficient to make a clear judgment of risk, SPS permits intermediate regulatory action–but only when it is accompanied by as full a risk assessment as possible and a concerted search for additional information. Furthermore, these intermediate measures must be changed immediately upon discovery of sufficient scientific information to make a judgment about safety.

 

So, where are we now?

 

Over the last few years, a growing European hysteria over genetically modified food products has all but eliminated them from grocery store shelves. And while farmers in the US, Argentina, and Canada, find much to like in GM seeds, you can’t blame them for worrying about whether or not they’ll be able to sell their crops at the end of the coming growing seasons. And if that wasn’t enough, the Biosafety Protocol adds an entirely new dimension to the debate.

 

Coming out of Montreal, both the European union and the Miami Group were claiming victory. Both said that they had gotten almost everything they wanted from the negotiations. So what’s the truth, and what’s just spin?

 

The biotech industry presumed ahead of time that a well-written protocol could provide uniformity and regulatory certainty to a world that now has a great variety of regulation. And they now believe they’ve gotten that. Both industry and Miami Group government representatives say–publicly at least–that the Biosafety Protocol establishes a uniform international framework under which they can operate; that it requires all regulatory action to begin with a full risk assessment; and that it gives importing nations no more right to exclude biotech crops than they had before Montreal.

 

Next, the Miami Group countries were able to get a carve-out exemption from the burdensome advanced informed agreement procedures for commodities and an easy-to-tolerate labeling requirement only for bulk shipments. These provide at least temporary protection for their current trading practices.

 

Furthermore, the Miami Group believe they’ve ensured that the Biosafety Protocol will not take precedence over other international agreements–in particular, the WTO. But this last point is not clear–the language is vague and may not be interpreted as the industry and Miami Group governments hope. I’ll touch on that again in just a moment.

 

The EU, on the other hand, was able to write the precautionary principle into the protocol text. I should note that the protocol specifically says “precautionary approach,” not “precautionary principle.” There was some haggling over the specific terminology, which was resolved in favor of precautionary “approach” because that term is written into other multilateral agreements and is beginning to develop a “precedential” definition. Though it may seem like a purely semantic debate, the difference could actually prove important.

 

The US government is on record as claiming that the precautionary principle and the precautionary approach are in fact different. In part, this is because the description of the “precautionary approach” included in the Biosafety Protocol reads: “where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost effective measures to prevent environmental degradation” [emphasis added]. While this is almost identical to the language used to describe the precautionary principle by the European Union and in the environmental movement’s Wingspread Statement, it does include the qualification, “cost effective,” which the US government believes will pose some limit to what governments can get away with.

 

Since he is editor of the new book, Rethinking Risk and the Precautionary Principle, just published here in London by Butterworth-Heinemann, Julian Morris is the resident expert on the precautionary principle. I won’t go on at length about why it’s a poor basis for health and safety regulation. But for the purposes of this talk, I should note that under the precautionary principle, the burden of proof falls on the innovator to demonstrate to the satisfaction of the regulator that a given new product is safe. A very real problem here, is that the acceptable level of safety is left undefined.

 

While advocates, such as the European Commission, argue that the precautionary principle is not intended to be used as a cover for trade protectionism, there is no procedural safeguard written into the Biosafety Protocol, or any other document that incorporates the precautionary principle, that would prevent it from being used in that way. There are no apparent evidentiary standards that would clearly satisfy a test for “safety.” And there are no procedural stopping points requiring an approval at any point in time, no matter how much evidence has been mustered. Even leaving aside the impossibility of proving the absence of risk (because one cannot prove a negative, and because no product is totally safe), the precautionary principle opens up an entirely new avenue for overcautious or politically-motivated regulators to drag out the approval process indefinitely by asking for more and more testing.

 

In February, for example, the German government blocked approval for a genetically modified Bt corn variety the day before approval was expected to be granted by the German Ministry of Agriculture. In announcing its decision, the government specifically cited the precautionary principle, saying that more–but unspecified–testing needed to be done. But the German Central Commission for Biological Safety, a scientific group advising the government on genetic modification, announced that the government had ignored the commission’s recommendation for approval and stated that the commission “could perceive no scientific basis for the decision.”

 

Which brings us back to GMOs and the Biosafety Protocol.

 

Although the Miami Group lost on most of the major negotiating points, those countries still believe they’ve won because the Protocol includes what’s called a “savings clause,” holding that the treaty does not take precedence over other international agreements. The Miami Group’s argument is that, regardless of what the Biosafety Protocol allows governments to get away with, regulations not based on a valid scientific assessment of a legitimate risk are still not permissible under the WTO or the SPS.

 

Take the US-EU beef hormone dispute as an example. In that case, the EU argued that under the precautionary principle, they were justified in restricting trade in us beef. In its decision, the WTO Appellate Body acknowledged that the general concept of caution is reflected within the language of the SPS. However, it held that such language does not negate the provisions of the SPS requiring that any regulatory action begin with, and be based upon, the findings of a full risk assessment. Nearly all the evidence gathered by even the EU in pursuing that case found no reason to believe that beef hormone residues had any negative health consequences. Thus, the ruling in favor of the US.

 

Things are different now, though, and the future gets a little cloudy. In the wake of the Biosafety Protocol, an important question arises: Will the WTO, in fact, uphold the SPS and overrule regulatory decisions based on the Biosafety Protocol’s inclusion of the precautionary principle? At this point, nobody really knows for sure, but there are reasons to be skeptical.

 

First: The SPS encourages WTO members to harmonize their health and environmental measures by adopting international standards whenever possible. Here, the agreement specifically cites the standards set by the International Office for Epizootics, the International Plant Protection Convention, and the Codex Alimentarius Commission. Codex Alimentarius is a set of non-binding, international food safety standards jointly administered by the UN’s Food and Agriculture Organization and World Health Organization. Members are permitted to enact more strict rules than are embodied in these standards, if there is scientific justification to do so, or if such rules are generally recognized among the international community. Enter the Biosafety Protocol.

 

It was informally endorsed by about 130 nations in Montreal, and as of September 15, it has been ratified and signed by 75 of them. Even though the Biosafety Protocol is not clearly a set of regulatory standards–in the usual sense of that term–an endorsement by 130 nations, or even 75, sounds suspiciously like a consensus of the international community. This means that there is a good chance the WTO will find that any regulatory action taken under the auspices of the Biosafety Protocol should be permissible.

 

Second: As I discussed earlier, the WTO specifically gives countries lee-way in enacting regulatory measures intended to protect the environment, provided that they do not improperly discriminate against imported goods vis-à-vis domestic goods. Consider one example.

 

In the recent Shrimp-Turtle case (where the WTO overruled a US ban on shrimp imported from certain developing countries because the fishermen there don’t use turtle-excluder devices in their nets) the WTO review mechanism and Appellate Board specifically ruled that the goal of protecting endangered sea turtles was a valid one under Article XX of the GATT. They only found the US restriction invalid because it would have forced fishermen in the exporting countries to use a specific technology (a process-based regulation) to achieve that goal and would have precluded all imports from those countries even if only some fishermen were found not to be using the devices.

 

Most scientific experts on GMOs believe that the process of gene-splicing does not itself give rise to unique safety concerns. So regulation that singles out GMOs for heightened scrutiny may be subject to challenge on process grounds. But given that the Biosafety Protocol itself discriminates between advanced biotechnologies and more conventional techniques, and the growing international obsession for all things green, it’s not entirely clear, ex ante, that the WTO will overrule all but the most blatant abuses of precautionary regulation, so long as they’re enacted under the auspices of the Biosafety Protocol.

 

Not willing to leave anything to chance, however, the EU and environmental activists are trying to undermine the WTO more directly by writing the precautionary principle into the SPS and the Codex Alimentarius. The EU has already gotten the precautionary principle on the agenda for a number of Codex meetings. And, given the Miami Group’s inability or unwillingness to fight its inclusion in the Biosafety Protocol, there is little hope that they’ll be able to keep it out of Codex either.

 

Unfortunately, the Miami Group’s negotiating position of choice–that the precautionary approach is different from the precautionary principle–doesn’t appear to be a sound one. At best, they may be able to insist upon some minimal level of evidentiary standards, but the SPS may be dying before out eyes.

 

So, what does this all mean?

 

Ultimately, if the precautionary principle is incorporated into additional agreements and precautionary regulation is permitted by the WTO, the international market for GMOs will probably look much different in just a few years than it does today.

 

Given the tremendous advantages that GM crop plants provide to farmers in the US, Canada, Argentina, and Australia, they are likely to remain a major market for GM seeds, despite farmers’ very real concerns about the marketability of GM crops at harvest time.

 

Advanced biotechnology research is not cheap. To date, almost all of the agricultural biotech products that have been brought to market, have proven to be relatively modest advances in major industrial crops. But the products themselves can reap a profit for their developers. There is quite a bit of really impressive and very interesting research going on in corporate labs, and at university, public sector, and charitable research institutions. But most of these projects rely quite heavily on discoveries that have come out of one corporate laboratory or another. The real tragedy is that the reduced profitability that is surely to result from slowing down world trade in GMOs could substantially slow the rate at which the technology is able to be adapted to less profitable endeavors in the developing world. And the Biosafety Protocol itself will undoubtedly make it more difficult to field test this next generation of GM crop plants and significantly delay their entry into the market.

 

Because technological progress is an absolute necessity for the developing world to break out of the seemingly endless cycle of hunger and poverty, and for the industrialized world to continue improving, it would shortsighted for us to allow infant technologies, like genetic modification, to be regulated out of existence.

 

A more appropriate regulatory framework has to recognize that there are risks both in introducing new products too quickly and in introducing new products too slowly. We can hope that, in time, regulators and politicians, both here and abroad, will come to realize this.

###