844. The purpose of this Appendix is to describe the potential interaction between the Protocol and the rules and institutions of the World Trade Organization (WTO). It is not the intention of this Guide, by highlighting the relationship between the Protocol and the WTO, to suggest that this interaction will lead to conflicts or to formal legal disputes. Instead, this analysis recognizes that Parties to the Protocol that are also WTO Members will need to take into account aspects of both regimes when regulating the intentional transboundary movement of LMOs. Not all Parties to the Protocol may be WTO Members, and WTO rules will not apply to those Parties. There may be WTO Members that are not Parties to the Protocol. Such countries may view WTO rules as being the only rules that apply to their trade in LMOs with Parties to the Protocol. If Parties to the Protocol are aware of the potential interactions between the Protocol and the WTO they can more effectively endeavour to ensure that their obligations under both regimes are implemented in a “mutually supportive” manner.
845. This analysis also recognizes, however, that there are instances where Protocol provisions either require, authorize, or could provide a justification for, measures that may slow or stop the flow of trade in LMOs between WTO Members. The basic objectives of the two regimes, one to protect biological diversity, taking also into account risks to human health, the other to promote free trade, are not inherently incompatible, but are also not identical. Thus, although there is no immediately identifiable conflict between what each regime requires of countries, the fact that both deal with the same area of activity, raises a possibility that individual countries could arrive at different interpretations in the context of a specific application of their rights and obligations.
846. This Appendix is structured to respond to a series of issues and frequently asked questions that have arisen while the Guide was prepared. These include:
What is the WTO?
Do the Protocol and the WTO overlap?
What kinds of trade-related measures are required, authorized or justified under the Protocol?
Notification and identification requirements.
Risk assessment procedures.
Import bans or other trade restrictive measures.
Is it relevant whether a trade-related measure taken under the Protocol is required or authorized by the Protocol?
Which WTO Agreement would apply to a trade-related measure taken under the Protocol?
How will the WTO system take into account the Protocol?
How might Protocol-based measures be tested under WTO rules?
Rules against trade bans: GATT Article XI.
Rules against country-based discrimination.
Rules against indirect discrimination.
Exceptions to GATT rules for measures that protect the environment and human, animal and plant health.
Ensuring that measures are “no more trade restrictive than necessary” under the Agreement on Technical Barriers to Trade and Agreement on Sanitary and Phytosanitary Measures.
Which WTO rules are relevant to risk assessment under the Protocol?
Precaution and risk assessment.
Socio-economic considerations in risk assessment.
Carrying out and funding risk assessment.
Which WTO rules are relevant to risk management under the Protocol?
Which WTO rules are relevant to transparency and timing of decision-making under the Protocol?
How might a Protocol-related dispute arise at the WTO?
Could a non-Party to the Protocol challenge a Protocol-based measure under the WTO?
847. The World Trade Organization is an intergovernmental organization that is the institutional successor to the General Agreement on Tariffs and Trade (GATT). The WTO was established in 1995 and has a Membership of 144 countries and customs territories, including the European Communities. The WTO is responsible for administering the WTO Agreements – multilateral trade agreements that regulate the international trade in goods and services and the protection of intellectual property rights. The WTO's institutions also provide a forum for the negotiation of new trade rules, for reviewing the Members' trade policies and for the settlement of disputes among its Members.
848. The WTO's essential purpose is to liberalize markets, by removing unnecessary, discriminatory and protectionist barriers to free trade. The three main WTO Agreements of potential relevance to the Protocol are the General Agreement on Tariffs and Trade 1994 (GATT), the Agreement on Technical Barriers to Trade (TBT Agreement), and the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement). At the most basic level, all three agreements share the common purpose of ensuring that measures that affect the trade in products do not discriminate on the basis of a product's country of origin in a manner that harms imports, and that these measures are no more trade restrictive than is necessary to achieve the purpose for which they were designed.144 Each WTO Agreement has detailed rules, and a growing body of practice that further develops these rules, including the reports and recommendations of the WTO dispute settlement system.
849. The WTO Agreements are backed by a compulsory and binding dispute settlement system that can authorize bilateral trade sanctions. Any Member that feels that benefits it expected to derive from the WTO Agreements have been undermined by a trade-related measure put in place by another Member can challenge the validity of that measure through the WTO dispute settlement procedures. If the Members are unable to settle their differences by diplomatic means, a Panel of trade experts will be established to resolve the dispute. The report of the Panel can be appealed to the Appellate Body, composed of seven trade law specialists appointed by the WTO Membership. The WTO Dispute Settlement Body, a committee of all the WTO Members, formally reviews all the (unappealed) Panel reports and the reports of the Appellate Body. This Dispute Settlement Body can only reverse the conclusions of these reports by consensus. This means that the adoption of Appellate Body and of any unappealed Panel reports is effectively automatic. The main objective of the WTO dispute settlement system is to ensure that any trade-related measure that is found to be inconsistent with WTO rules either is removed or is amended to be made WTO consistent. If a Member fails to correct the offending measure, it can agree, on a temporary basis, to compensate the affected Member, or it may be subject to trade sanctions imposed by the affected Member at a level equivalent to the continuing harm done by the offending measure.
850. The Protocol and the WTO Agreements overlap, as they both contain rules that govern the international trade in LMOs. The CBD Parties negotiating the Protocol, most of which were also WTO Members, were aware of this overlap and appear to have sought to design the Protocol in a way that would avoid conflicts with Parties' existing commitments under the WTO. As has been discussed in the analysis of the Protocol's preamble, Parties to the Protocol that are also WTO Members are encouraged to implement and interpret their rights and obligations under the Protocol in a manner that is “mutually supportive” of their rights and obligations under trade agreements, and vice versa.
851. In 2001, the WTO Ministerial Conference agreed, with a view to enhancing the mutual supportiveness of trade and environment, “to negotiations, without prejudging their outcome, on:
...the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question. The negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question.”145
It is not yet clear what the implications of these negotiations, if any, will be for Parties to the Protocol. The negotiations are supposed to conclude on 1 January 2005 with report on progress due at the fifth session of the Ministerial Conference of the WTO in September 2003. Discussions on this issue are taking place in the WTO Committee on Trade and Environment.
852. Although the Protocol and the WTO overlap, the design of the Protocol has the effect of limiting its impact on international trade. Protocol provisions that have the greatest potential impact on trade are limited to the narrowest category of products. The Protocol's AIA and risk assessment procedures, which may provide the basis for trade restrictions, apply only to the first intentional transboundary movement of LMOs for intentional introduction to the environment. At present, this category of LMOs likely represents only a small proportion of overall international trade in LMOs. By contrast, the category of LMOs that likely represents the largest proportion of international trade, LMO-FFPs, is subject to less stringent measures under the Protocol, though transboundary movements of such LMOs may still be subject to similar domestic regulations of the Party of import.
853. It should also be noted that the Protocol governs some transboundary movements of LMOs that are unrelated to international trade and would thus fall outside the scope of the WTO. For example, the non-commercial transboundary movement of laboratory specimens (e.g. some LMOs destined for contained use), which is within the scope of the Protocol, but not within the scope of the AIA procedure (see commentary on Article 6). Measures regulating such transboundary movements would probably not be covered by the WTO, because they are unlikely to affect international trade. The unintentional transboundary movement of LMOs through, for example, the spread of pollen, is covered by the Protocol but would not be covered by the WTO. It is, however, possible that a trade-related measure could be used as a means of preventing the unintentional transboundary movement of LMOs. Such a measure would be covered by the WTO.
854. WTO rules will apply only to those measures taken by a Party under the Protocol that affect international trade. The Protocol provides for a number of trade-related measures. These measures vary depending, among other things, on whether the product at issue is a LMO or a LMO-FFP, and on the intended use to which the LMO is being put. Some of the trade-related measures can be described as obligations that are clearly identified and could be said to be required by the Protocol. Other trade-related measures can be said to be authorized under (but not required by) the Protocol. It is also possible that a Protocol Party could seek to use the Protocol to justify a trade-related measure related to LMOs that is not specifically required or authorized by the Protocol.
855. There are thus three main categories of traderelated measures that the Protocol either requires or authorizes its Parties to take:
Notification and identification requirements
856. Prior to the first intentional transboundary movement of a LMO into a Party of import the Party of export has an obligation to notify or to ensure the notification of the proposed movement to the Party of import, and to await the consent of that Party (see Article 8(1)). The importing Party has a right to demand such a notification and, presumably, the authority to deny import licences to any exporter that has failed to meet the notification requirements in Annex I of the Protocol.
857. Article 18 of the Protocol requires all Parties, prior to export, to identify through accompanying documentation any LMO-FFPs that “may contain” LMOs, and to identify any LMOs intended for intentional introduction into the environment or destined for contained use as such. The Protocol authorizes both exporting and importing Parties, to take measures to ensure this identification takes place. This requirement is a trade restrictive obligation willingly being undertaken by the Party of export, but that also may be enforced, through the use of additional trade-related measures, by the importing Party.
Risk assessment procedures
858. The risk assessment procedures under the Protocol are trade-related measures because they can delay the approval of the import of a covered product, and because they can provide the basis for a decision to ban or restrict imports under Article 10. Since, as will be discussed, the risk assessment procedures under the Protocol are not identical to those under the WTO Agreements, disputes may arise that call for a Party to show the provisions of both regimes are being applied compatibly.
Import bans or other trade restrictive measures
859. The Protocol's core regulatory procedure, a system of advance informed agreement (AIA), provides that the Party of import has the discretion to agree or not agree to the import of a particular LMO. The Party of import may also place conditions, such as restrictions on use, packaging or labelling requirements, on the import that could affect the product's sale or competitiveness. Prohibiting the import of a LMO, or subjecting its import to one or more trade restrictive conditions, are two of the possible responses that the Protocol anticipates could be the result of a Party of import's “decision procedure” under Article 10.
860. An import ban or other trade restriction might also be justified under the Protocol in response to:
The failure by a Party of export to ensure compliance with various provisions in the Protocol, or
A determination by the Party of import, on the basis of a risk assessment, that a LMO presents an unacceptable risk to the conservation and sustainable use of biological diversity, taking also into account risks to human health.
861. Import bans are strictly regulated by the WTO. The GATT, the SPS Agreement and the TBT Agreement would require a Party of import to demonstrate that any import bans:
have a rational basis,
are in support of a legitimate policy objective,
are no more trade restrictive than necessary to achieve that objective, and
are not being applied in an arbitrary or discriminatory manner.
862. Specific aspects of these general disciplines are discussed below on an agreement by agreement basis.
863. If a trade-related measure (TREM) taken under the Protocol were challenged under the WTO, it may be relevant whether that measure was specifically required by the Protocol, directly authorized under the Protocol, or was being justified only as promoting the Protocol's objectives. Some would argue that the existence of the Protocol would be relevant to the defence of a WTO challenge only if the trade-related measure at issue were specifically required by the Protocol. Others would argue that the Protocol gives its Parties considerable discretion in how they choose to meet its objectives, and that trade restrictive measures other than those specifically set out in the Protocol should be seen as compatible with both the Protocol and the WTO. Trade restrictive measures that are specifically required or authorized under the Protocol are likely to be less vulnerable under a potential WTO challenge. It should be noted that the issue of the relationship between MEA-based TREMs and WTO rules, including the relevance of the specificity and legal character of those TREMs, will be the subject of negotiations between WTO Members under the Doha Development Agenda (see paragraph 851 above).
864. Trade-related measures taken under the Protocol could fall within the scope of the GATT, the TBT Agreement or the SPS Agreement, and a Party would need to examine the compatibility of its measures under each Agreement. The GATT applies to all measures affecting any product in international trade, including LMOs. The TBT and the SPS Agreements were adopted to “further the objectives”146 and to “elaborate rules for the application of the provisions”147 of the GATT.
865. The TBT expressly provides that it will not apply to sanitary and phytosanitary measures as defined in the SPS Agreement, while the SPS Agreement clarifies that it will not affect the rights of Members under the TBT Agreement with respect to non-SPS measures.148 The SPS Agreement also provides that any measure found to be in conformity with its provisions will be presumed to be in accordance with Members' obligations under the relevant provisions of the GATT.149
866. The relationship between the GATT, the SPS Agreement and the TBT Agreement has yet to be fully clarified by the WTO dispute settlement system. It appears that the three Agreements were designed to work in a hierarchy which gives priority to the most specific Agreement applicable to any given measure. In practice, the GATT has provided a kind of catchall agreement that Members use as a basis of their claims in addition to the SPS Agreement or the TBT Agreement.150
867. The most specific of the three Agreements is the SPS Agreement. This Agreement, in simplest terms, governs all measures which may directly or indirectly affect international trade in any products, and that are applied with the policy objective of protecting animal or plant life or health within the territory of the Member from risks arising, inter alia, from pests, diseases or contaminants.151
868. If a trade-related measure does not fall within the scope of the SPS Agreement, it could be covered by the TBT Agreement. Indeed, a single law or regulation could contain some provisions that are disciplined by the SPS Agreement and others that fall under the TBT Agreement. The TBT Agreement applies to all measures affecting the trade in any products that are technical regulations or technical standards, as long as those measures do not fall under the SPS Agreement. Technical regulations are documents that lay down product characteristics that are mandatory in character (such as trade restrictions on products containing certain substances), and technical standards are those that are nonmandatory in character (such as voluntary labelling schemes).152
869. For example, a mandatory LMO-FFP identification scheme, because it would require a trade-related measure based on product characteristics, would be a technical regulation and fall under the TBT Agreement. However, if this identification scheme were being applied for one or more of the health and food safety-related objectives set out in the SPS Agreement, it would then fall exclusively within the scope of the SPS Agreement. Thus, which Agreement will apply to a measure will depend, in part, on the specific risks the measure has been designed to regulate. Finally, the GATT will continue to apply to any trade-related measure, regardless of its policy objective, that directly or indirectly affects the trade in products.
870. An analysis of the relationship between the WTO Agreements and any trade-related measure taken under the Protocol must, therefore, begin with an understanding of the policy objective behind the measure. What, in other words, is the risk that the measure is designed to protect against? The Protocol's scope and objective indicate that any trade-related measure taken under the Protocol would seek to ensure an adequate level of protection that would prevent “adverse effects on the conservation and sustainable use of biological diversity, taking also into account risks to human health, and specifically focusing on transboundary movements”. This poses a number of interpretative challenges that will be relevant to an analysis under WTO rules.
871. First, the specific risks that LMOs may pose to biological diversity, and to human health, are not identified in the Protocol. These risks will, however, be identified, on a case-bycase basis, in the course of the risk assessment procedures set out in Article 15 and Annex III of the Protocol. Without knowing the nature of the risk in advance, or the kind of trade-related measure that has been chosen to regulate that risk, it is not possible to determine in advance, which WTO Agreement will apply to a trade-related measure taken under the Protocol.
872. Second, the intended territorial scope of the Protocol is unclear. The Protocol's Articles on Scope (Article 4) and Objective (Article 1) indicate a specific focus on transboundary movements. This suggests that measures taken in accordance with the Protocol are primarily concerned with the impact of LMOs on the biodiversity, and/or human health, in the Party of import, i.e., the “likely potential receiving environment”. But the Protocol's objective does not focus exclusively on transboundary movements. The Protocol's provisions related to safe handling, use and transport of LMOs suggest that the Protocol could perhaps be used to justify trade-related measures with the aim of discouraging the production of LMOs in the country of export where that production poses a threat to biodiversity. Such measures, for example, would not fall within the scope of the SPS Agreement, which applies exclusively to measures designed to protect the environment of the importing State. Either the TBT or the GATT could, however, continue to apply to such a measure.
873. As discussed earlier in this Guide, the Protocol's preamble and other related provisions seek to ensure that Parties take into account the WTO and other international agreements when implementing the Protocol. But how will the WTO Agreements take into account the Protocol? Like the Protocol and the CBD, the WTO Agreements reflect the need to take into account other existing international agreements and other relevant State practice.
874. The Protocol contains potentially widely accepted international standards of treatment for LMOs in international trade. Both the SPS Agreement and the TBT Agreement make reference to international standards developed by competent international organizations that are not part of the WTO itself. Under the SPS Agreement, a WTO Member is required (unless it can justify the need for a higher standard) to base its SPS measures on international standards, guidelines or recommendations adopted by international agencies as identified in the SPS Agreement, or that might later be agreed by the WTO Membership.153 SPS measures that are in conformity with these international standards are rebuttably presumed to be consistent with the SPS Agreement.154 In the context of a dispute, a rebuttable presumption would require the Member challenging the measure to meet a higher burden of proof than would otherwise be the case. However, neither the CBD nor the Protocol is currently recognized as a standard setting body under the SPS Agreement. The SPS Agreement does not preclude Members from setting standards that are higher than international standards, as long as these standards meet the Agreement's other requirements.
875. Under the TBT Agreement, a Member is also required (unless it can justify the need for a higher standard) to use international standards for the basis of its technical regulation. 155 A technical regulation that is put in place for an identified “legitimate objective” (which includes the protection of human heath or safety, animal or plant life or health, or the environment) and is in accordance with “relevant international standards” is rebuttably presumed to be TBT compatible.156 Unlike the SPS Agreement, the TBT Agreement does not identify specific international standardizing bodies whose standards would by definition qualify for a rebuttable presumption of consistency with the TBT Agreement. Although this issue has never been tested, the CBD and the Protocol might meet the TBT Agreement's general definition of an “international body or system whose membership is open to the relevant bodies of at least all of the Members”.
876. The GATT does not make reference to international standards or standard-setting bodies. However, when clarifying relevant provisions of the GATT, in the context of a specific dispute, the WTO Appellate Body has signalled its willingness to take into account existing international agreements and State practice outside the WTO. Indeed, the Appellate Body made reference to the CBD when, in the process of clarifying the meaning of “exhaustible natural resources” under GATT Article XX (General Exceptions), it reviewed State practice for evidence of the “contemporary concerns of the community of nations about the protection and conservation of the environment”.157 In that case, the CBD was one of many existing international agreements the Appellate Body referred to in concluding that the sea turtles at issue were an exhaustible natural resource.158
877. In an effort to ensure that trade-related measures taken to implement the Protocol are mutually supportive of its existing commitments under the WTO Agreements, a Party may wish to consider specific aspects of the WTO Agreements that have been used to test trade-related environmental measures in past GATT/WTO disputes. The following set of bullet points identifies disciplines from the GATT, the SPS and the TBT Agreements that may be relevant to the implementation of the Protocol.
Rules against trade bans: GATT Article XI
878. GATT disciplines govern all products traded between WTO Members, including all LMOs. GATT Article XI forbids WTO Members from instituting or maintaining prohibitions or quantitative restrictions on the importation of products from another WTO Member (through quotas, import licences or other measures). Import bans under Article 10 of the Protocol would appear to be prima facie violations of GATT1994. Thus any trade ban put in place to implement the Protocol could be challenged under Article XI, and a Party may be called upon to justify the measure under one of the GATT's exceptions, discussed in Box 55 below.
Rules against country-based discrimination
879. The WTO's anti-discrimination rules prohibit measures that directly or indirectly discriminate between “like products” on the basis of their country of origin in a manner that modifies the conditions of competition in the relevant market to the detriment of imported products.159 Under the GATT and under the TBT Agreement, a WTO Member must accord treatment to imported products that is no less favourable than treatment accorded to “like products” of national origin. This is the so-called “National Treatment” principle. Furthermore, a WTO Member may not provide any advantage, favour, privilege or immunity offered to any product originating in or destined for any other country without immediately and unconditionally extending the same to the like product originating in or destined for the territories of all other Members (Most Favoured Nation or MFN treatment). At a minimum, these rules require Members to apply the same or equivalent regulations to domestic LMOs that they are applying to like imported LMOs, and to treat all imported like LMOs in a similar manner that allows those LMOs an equal opportunity for market access.
Rules against indirect discrimination
880. Under both the GATT and the TBT Agreement, a trade-related measure that is on its face neutral as to country of origin could still be challenged as indirectly discriminatory, if the exporting country feels that the importing country is treating its product less favourably than a “like” domestic product or a “like” product imported from another country. A WTO Panel assessing such a claim would conduct a case-by-case examination of the relevant products, applying what has become known as the “like product test”(see Box 54).
881. The Protocol applies to “LMOs... that may have adverse effects on the conservation and sustainable use of biological diversity, taking also into account risks to human health” (Article 4). Within that category, the Protocol distinguishes between various categories of LMO, primarily on the basis of the LMO's intended use (human pharmaceuticals, LMO-FFPs, LMOs destined for contained use, LMOs destined for intentional introduction into the environment). Each of these categories is subject to different treatment under the Protocol. This difference in treatment with regard to distinct categories of LMOs, should provide a sufficient basis, as between Parties to the Protocol, for concluding that LMOs are not, for WTO purposes “like” their non-LMO counterparts. As the Protocol gains wide acceptance internationally, it may also provide a basis for concluding that LMOs, or certain LMOs, are not “like” their non-LMO counterparts as between Parties and non-Parties to the Protocol.
882. The Protocol anticipates that Parties may make further distinctions in treatment with regard to categories of LMOs on the basis of risk assessments carried out under Articles 10 and 15 and Annex III.
883. Further arguments for distinguishing between LMO and non-LMO products, and for distinguishing among LMOs, can be derived from the GATT's own like product test, including differences in the products' physical characteristics, their end uses and in consumer preferences.
884. The WTO's rules against indirect discrimination can also be read to require a degree of consistency of treatment within a particular category of LMO. The failure to treat LMOs that carry “like” risks in a similar manner could provide the basis of a claim of indirect discrimination.
Exceptions to GATT rules for Measures that Protect the Environment and Human, Animal and Plant Health
885. Measures that are found to violate GATT rules against trade bans, or against discrimination, may nonetheless qualify for an exception under GATT Article XX. The Member defending the measure bears the burden of provisionally justifying it under one of the policy objectives enumerated in subparagraphs of Article XX, including as being necessary to the protection of “human, animal or plant life or health” (Article XX(b)) and, under certain conditions, related to the conservation of natural resources (Article XX(g)). If a Party succeeds with its provisional justification, it must then demonstrate that the measure is not being applied in an arbitrary or unjustifiable manner, and is not as a disguised restriction on trade.
886. Measures taken under the Protocol to regulate LMOs that “may have adverse effects on the conservation and sustainable use of biological diversity, taking also into account risks to human health.” would appear, as a general matter, to be necessary or related to the objectives of the protection of human, animal or plant life or health or of conservation of natural resources. GATT disciplines that would govern how these measures should be applied are described in Box 55.
Ensuring that Measures are “no more trade restrictive than necessary” under the TBT and SPS Agreements
887. The TBT and the SPS Agreements draw upon GATT Article XX (b) by requiring Members to ensure that measures falling under these agreements are no more trade restrictive than necessary to achieve their objectives.
888. Article 2.2 of the TBT Agreement requires that Members ensure “that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfillment would create”. The TBT Agreement identifies as legitimate objectives “protection of human health or safety, animal or plant life or health, or the environment”. In assessing the risks to life, health, safety and the environment, the relevant elements of consideration include: available scientific and technical information, related processing technology or intended end-uses of products. This suggests that a Party that has put in place a trade-related measure to implement the Protocol, may need to demonstrate that it has balanced the trade restrictiveness of that measure against the need to prevent the risks associated with the LMO.
889. As has been noted, the wide acceptance of the Protocol by the international community will be relevant to defending a LMO-related trade-related measure against a WTO challenge. In accordance with Article 2.5 of the TBT Agreement, any technical regulation that is “prepared, adopted or applied for one of the legitimate objectives explicitly mentioned in [Article 2.2] and is in accordance with relevant international standards ... shall be rebuttably presumed not to create an unnecessary obstacle to international trade”.173 In other words a WTO Member challenging a measure that is in accordance with the Protocol, would carry a heavier burden of proof than would otherwise be the case.174
890. Article 2 of the SPS Agreement also contains a “necessity” test. Members are required to ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail, and that these measures are applied in amanner which would constitute a disguised restriction on international trade. In practice, it has been the SPS Agreement's disciplines on risk assessment and risk management that are used to test the necessity of SPS measures.
891. Both the SPS and the TBT Agreements promote the use of science and risk assessment as a means for justifying trade-related measures. The Protocol's risk assessment procedures were designed along similar lines, and the WTO and Protocol procedures on risk assessment do not directly conflict. However, in some instances the Protocol's risk assessment procedures are more specific, and in other instances the WTO rules are more specific.
892. The SPS Agreement requires Members to take into account risk assessment techniques developed by relevant international organizations. SPS risk assessment is geared towards the control of the impact of pests or diseases on the territory of the Party of import, or on the prevention of adverse effects on human or animal health from additives, contaminants, toxins or disease carrying organisms in food or beverages. Risk assessments under the SPS Agreement must take into account available scientific evidence; relevant processes and production methods; relevant inspection, sampling and testing methods; prevalence of specific diseases or pests; existence of pest- or disease-free areas; relevant ecological and environmental conditions; and quarantine or other treatment.
893. Unlike the SPS Agreement, the TBT Agreement does not expressly require a Member to analyze its regulation on the basis of a risk assessment prior to putting it into place.175 However, under Article 2.5, if a Member's technical regulation “may have a significant effect on trade of other Members” that Member is under an obligation, upon the request of another Member, “[to] explain the justification for that technical regulation in terms of the provisions of [TBT Article 2.2–2.4].” If the obligation to justify the measure is triggered, the Party defending the measure will have to follow the relevant elements of a risk assessment in Article 2.2. The relevant elements of consideration for a risk assessment under the TBT Agreement are generally stated as “inter alia: available scientific and technical information, related processing technology or intended end-uses of products.”
Precaution and risk assessment
894. An area of contention during the negotiations was the relationship between the Protocol's references to the precautionary approach, and the WTO rules. The WTO's strong emphasis on the use of science as a basis for risk assessment and decision-making has raised concerns that trade-related measures without sufficient scientific backing could be particularly vulnerable to challenge. The precautionary approach is invoked by governments in circumstances where the potential seriousness or irreversibility of a risk justifies regulatory action even when there is a lack of full scientific certainty.
895. WTO Panel interpretations of the SPS Agreement confirm that a risk assessment must be based on scientific principles, and may not be maintained without sufficient scientific evidence. Panels have not, however, insisted that the science relied upon represent a mainstream scientific opinion, as long as it is based on respected and qualified sources. They have also confirmed that a risk may be evaluated either in quantitative or qualitative terms.176
896. The SPS Agreement contains the WTO's most relevant provision on precaution, and might guide a Panel's approach to dealing with the issue in the interpretation of other WTO Agreements. SPS Article 5.7 provides that:
“In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information, including that from the relevant international organizations as well as from sanitary or phytosanitary measures applied by other Members. In such circumstances, Members shall seek to obtain the additional information necessary for a more objective assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time.”
897. The SPS Agreement reflects precaution in Article 5.7 by allowing Members to adopt SPS measures where relevant scientific evidence is insufficient. However, Article 5.7 subjects the right of Members to take “precautionary” measures in these circumstances to four specific conditions:
(i) the measure must be adopted provisionally;
(ii) it must be adopted on the basis of available pertinent information;
(iii) the Member must seek to obtain the additional information necessary for a more objective assessment of the risk; and
(iv) the Member must review the measure within a reasonable period of time.
898. These conditions apply cumulatively, so where one is not met the measure in question will be incompatible with the SPS Agreement.177
899. Anumber of commentators have compared the precautionary provisions of the Protocol and the SPS Agreement to assess their compatibility. Article 5.7 of the SPS Agreement requires the importing Member to adopt only a provisional measure, to seek additional information for a more objective risk assessment, and to review the measure within a reasonable period of time. The Protocol does not explicitly include such obligations. Nevertheless, Article 12 of the Protocol requires the Party of import to review its decision upon request where the Party of export or notifier considers that there has been a change of circumstances or where additional relevant scientific or technical information has become available.
900. With regard to the obligation to review the measurewithin a reasonable period of time, the WTO Appellate Body has accepted that this should be established on a case-by-case basis depending upon the specific circumstances of the case including the difficulty of obtaining the additional information necessary for the review and the characteristics of the SPS measure.178 It does not therefore seem to imply a fixed or necessarily brief period for review, but rather the time it takes for new scientific knowledge to become available.
901. Article 5.7 also explicitly requires that any “precautionary” measure be adopted “on the basis of available pertinent information”. While the Protocol does not explicitly contain such an obligation, it seems clear that precautionary measures taken under the Protocol, can be applied only after an assessment of existing relevant information.
Socio-economic considerations in risk assessment
902. Another area of contention during the negotiations was over the compatibility of the Protocol's provisions on socio-economic considerations, and the WTO Agreements. Some countries were concerned, in particular, whether the Protocol would provide a basis for restricting imports on LMOs on the grounds that these products might lead to a loss of cultural traditions, knowledge and practices, particularly amongst indigenous and local communities. At least one previous GATT Panel had rejected trade restrictions that were justified solely on the grounds that cheap imports would undermine the traditional livelihoods of a certain minority population.179 Furthermore, the WTO's emphasis on science as the basis for risk assessment and risk management raised concerns that trade-related measures taken under the Protocol, and based on socio-economic considerations, could be challenged.
Under Article 26 of the Protocol, Parties may take into account, when deciding whether or how to allow the import of a LMO, “socioeconomic considerations arising from the impact of LMOs on the conservation and sustainable use of biological diversity.” The Protocol highlights, in particular, the need to take into account the potential impact on “the value of biological diversity to indigenous and local communities.” Further guidance on the implementation of this provision might be expected from the COP/MOP in due course.
903. Risk assessment under the SPS Agreement also involves a mix of scientific and socio- economic considerations. Procedures under the SPS Agreement will differ, depending on whether the risk is to animal or plant life or health, or instead, the risk is human life or health. When assessing risks to animals and plants, Members are to take into account relevant economic factors. These include an assessment of the impact that the eshtablishment or spread of a pest or disease could have on the production or sales of the affected crops, as well as the costs of controlling or eradicating the pest or disease. There is no similar reference to economic concerns in relation to impacts on human health. Compatibility between the Protocol and the WTO is encouraged by the reference, in Article 26, to the need for Parties to implement this provision “consistent with their international obligations”.
Carrying out and funding risk assessment
904. While the importing Member under the SPS Agreement must base its trade-related measures on a risk assessment, WTO Panels have clarified that the importing Member is not required to carry out the risk assessment itself. It can, for example rely upon assessments made by the exporting Member or by a third party. By contrast, the Protocol, in Article 15, entitles the Party of import to require the notifier to pay for a risk assessment.
905. Any risk management-related measures imposed by WTO Members that have an impact on trade will be subject to WTO disciplines, and the SPS Agreement may give some indication of how a Panel might assess such measures. The SPS Agreement does not refer to “risk management” as such. It does, however, contain disciplines that govern the elements of risk management as described in Article 16 of the Protocol, including the setting of the appropriate level of protection, and designing measures to achieve that level of protection.
906. Once a Member has determined that the risk associated with a product is supported or reasonably warranted by a risk assessment, WTO accords that Member wide discretion in setting the level of exposure to that risk it is willing to tolerate.180 However, when setting that level of protection, a Member should take into account the objective of minimizing negative trade effects. In the context of interpreting both the SPS Agreement and the GATT, the WTO Appellate Body has indicated that its Members are free to put in place measures that achieve a “zero-risk” level of protection against risks associated with specific products.181
907. Article 5 of the SPS Agreement also governs the design of the measure necessary to achieve the level of protection. As has been indicated, the measure should be no more trade restrictive than necessary to achieve the level of protection. For the purposes of risk management, a SPS measure is not more trade restrictive than required unless there is another measure, reasonably available taking into account technical and economic feasibility, that achieves the appropriate level of sanitary or phytosanitary protection and is significantly less restrictive to trade. There must be a reasonable relationship between the risk assessment and the design of the measure.
908. Finally, in order to avoid arbitrary or unjustifiable discrimination, the SPS Agreement seeks to ensure that Members achieve a level of consistency in their application of SPS measures when managing risks of a similar nature. This means that Members would need to ensure that LMOs carrying similar risks are regulated in a consistent manner.
909. WTO rules are designed to ensure that a potential exporter has full notice of any traderelated measures that might affect its product, and that any process implementing those measures is transparent and timely. Both the TBT and the SPS Agreements require Members to establish national “enquiry points”, to publish regulations and to notify Members, through the WTO Secretariat, of existing and proposed trade-related measures. Members must have sufficient time to comment on and seek changes to such measures. The WTO's TBT and SPS Committees provide an opportunity for Members to debate and defend proposed and existing trade-related measures.
910. WTO Members are also under an obligation to ensure that their domestic regulatory systems operate without undue delay, and in a way that does not place imported products at a disadvantage to “like” domestic products.
911. These requirements are compatible with the objectives of the Protocol's provisions on “national focal points,” information sharing and the Biosafety Clearing-House. The Protocol contains a number of provisions requiring Parties to make information on their national regulatory frameworks and national decisions available to other Parties through the Biosafety Clearing-House. Protocol Parties will however need to be aware that the WTO will share jurisdiction with the Protocol over these requirements, and its dispute settlement system could be invoked to play a role in assessing the reasonableness of Parties decisionmaking on LMOs, particularly where the Protocol is silent.
912. If a Party of export feels that it has had a trade-related measure imposed upon one of its proposed LMO exports in a way that undermines its rights under the WTO, it could attempt to convince the Party of import to withdraw the measure, either bilaterally, or through the Protocol's own institutions or mechanisms. If the Parties were unable to resolve their differences through the Protocol's own procedures, the dispute could be brought to the WTO, if one Party felt that a measure enacted by another Party undermined its rights under the WTO.
913. The issue might arise as to whether the aggrieved Party would have to seek to resolve its dispute within Protocol procedures before turning to WTO procedures. This will depend, in part, on the extent to which the Protocol Parties are able to design a procedure capable of resolving differences between Parties (see Article 34 of the Protocol, and Article 27 CBD). The SPS Agreement provides, in Article 11 that “[n]othing in this Agreement shall impair the rights of Members under other international agreements, including the right to resort to the good offices or dispute settlement mechanisms of other international organizations or established under any international agreement.”
914. It is, of course, also possible that a dispute related to the Protocol could be raised at the WTO between a Party and a non-Party to the Protocol, where both are WTO Members. A non-Party would not have access to the Protocol's institutions or mechanisms except as an observer. Unlike other MEAs, the Protocol does not authorize the use of specific trade-related measures with regard to non-Parties,182 although it does require that transboundary movements of LMOs between Parties and non-Parties are undertaken “consistent with the objective of this Protocol” (see commentary on Article 24). It is possible that Parties to the Protocol, in order to implement the domestic systems necessary to regulate LMOs, will apply the same trade-related measures to LMOs imported from non-Parties as they apply to Parties.
144 WTO Agreement on Technical Barriers to Trade, Articles 2.1, 2.2; WTO Agreement on the Application of Sanitary and Phytosanitary Measures, Articles 2.2, 2.3; General Agreement on Tariffs and Trade, Articles I, III, and XX.
145 Ministerial Declaration of the fourth session of the Ministerial Conference of the World Trade Organization, Doha, 9–14 November 2001, WT/MIN(01)/DEC/1, 20 November 2001, para 31.
146 TBT Agreement, preamble, 2nd recital.
147 SPS Agreement, preamble, 8th recital.
148 TBT Agreement, Article 1.5; SPS Agreement, Article 1.4.
149 SPS Agreement, Article 2.4.
150 The relationship between the GATT and the SPS Agreement was raised in EC Measures Concerning Meat and Meat Products (Hormones) Complaint by the US, Report of the Panel WT/DS26/R/USA, in which the Panel found that both the GATT and the SPS Agreement were applicable to the dispute, but that as the SPS Agreement contained commitments additional to the GATT, it was appropriate to analyse the case under the SPS Agreement first. Having found a violation of the SPS Agreement, the Panel then found that an analysis under the GATT was unnecessary. The applicability of the GATT to the dispute was not raised on appeal. The relationship between the GATT and the TBT Agreement was raised in the US Reformulated Gasoline and in the EC-Asbestos cases. Under the first dispute, the Panel chose to apply the GATT rather than the TBT Agreement, and upon finding a violation of the GATT did not find it necessary to proceed to a TBT analysis. United States - Standards for Reformulated and Conventional Gasoline, AB-1996-1,WT/DS2/9, adopted 20 May 1996 [the Panel and Appellate Body reports are published jointly and are referred to hereinafter as US-Gasoline and US-Gasoline Report of the Panel]. Under the EC-Asbestos dispute, the Panel found that the TBT Agreement did not apply to an absolute ban on a product, and applied the GATT. The Appellate Body reversed, finding that the TBT Agreement would apply to an import ban if it, in effect, applied to the characteristics of a product (e.g. a product containing asbestos). Because the Panel had not analyzed the facts of the case under the TBT Agreement, the Appellate Body was unable to carry out a legal analysis under that Agreement, and limited its opinion to an application of the GATT. European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R [hereinafter EC-Asbestos Report of the Appellate Body] adopted 5 April 2001.
151 SPS Agreement, Article 1(1), Annex A, Article 1.
152 TBT Agreement, Article 1(2), Annex 1(1). See also EC-Asbestos Report of the Appellate Body, paras 63–72.
153 These include agencies which are conducting work of relevance to LMOs, such as the Codex Alimentarius and the International Plant Protection Convention (see Introduction and Box 12). SPS Agreement, Article 3.1; Annex A, Article 3. International standards, guidelines and recommendations are defined as: “(a) for food safety, the standards, guidelines and recommendations established by the Codex Alimentarius Commission relating to food additives, veterinary drug and pesticide residues, contaminants, methods of analysis and sampling, and codes and guidelines of hygienic practice; (b) for animal health and zoonoses, the standards, guidelines and recommendations developed under the auspices of the International Office of Epizootics; c) for plant health, the international standards, guidelines and recommendations developed under the auspices of the Secretariat of the International Plant Protection Convention in cooperation with regional organizations operating within the framework of the International Plant Protection Convention; and (d) for matters not covered by the above organizations, appropriate standards, guidelines and recommendations promulgated by other relevant international organizations open for membership to all Members, as identified by the [SPS] Committee.”
154 SPS Agreement, Article 3.3, EC-Beef Hormones, Report of the Appellate Body, para 170.
155 TBT Agreement, Article 2.4.
156 TBT Agreement, Articles 2.2 and 2.5.
157 United States – Import Prohibitions of Certain Shrimp and Shrimp Products, WT/DS58/R, WT/DS58/AB/R, [hereinafter US-Shrimp/Turtle] reports adopted 8 November 1998, paras 129, 130.
158 US-Shrimp/Turtle Report of the Appellate Body, para 134.
159 Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS169/AB/R, 11 December 2000, para 137.
160 EC-Asbestos Report of the Appellate Body, para 101.
161 EC-Asbestos Report of the Appellate Body, para 113.
162 US-Gasoline Report of the Panel, para 6.20.
163 United States – Section 337 of the Tariff Act of 1930, BISD 36S/345, para 5.26 (adopted on 7 November 1989). A similarreasoning was followed in Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes, BISD 37S/200, para 75(adopted on 7 November 1990). Both cases are quoted in para 6.24 of US-Gasoline Panel. The Panel's interpretation of Article XX(b) of the GATT was not appealed, and was thus not reviewed by the Appellate Body.
164 EC-Asbestos Report of the Appellate Body, para 172.
165 EC-Asbestos Report of the Appellate Body, para 172.
166 US-Gasoline Report of the Panel, para 6.35.
167 US-Shrimp/Turtle Report of the Appellate Body, para 136–142.
168 US-Shrimp/Turtle Report of the Appellate Body, para 143.
169 US-Shrimp/Turtle Report of the Appellate Body, para 157.
170 US-Shrimp/Turtle Report of the Appellate Body, para 159.
171 US-Shrimp/Turtle Report of the Appellate Body, para 159.
172 See generally, US-Shrimp/Turtle Report of the Appellate Body.
173 It is not clear whether this rebuttable presumption is intended to apply equally to proof of a violation of Article 2.1, as well.
174 This provision could not, however, be read to imply that a Member whose measure is not applied for one of the legitimate objectives listed in Article 2.2, and/or is not in accordance with an international standard, bears the burden under Article 2.2 of demonstrating that its measure does not create an unnecessary obstacle to trade. The prima facie burden of establishing a violation of Article 2.2 remains on the complaining Member.
175 Compare the SPS Agreement, Article 5.1.
176 EC-Beef Hormones Report of the Appellate Body;EC-Asbestos Report of the Appellate Body, paras 167–168.
177 Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R, 19 March 1999 [hereinafter, Japan- Agricultural Products Report of the Appellate Body].
178 Japan-Agricultural Products Report of the Appellate Body, para 93, where the Panel and the Appellate Body found that a period of three years exceeded a reasonable period of time for a provisional measure to be in place. See also Communication of the European Commission on the Precautionary Principle (2000), which states that the provisional nature of the measures under Article 5.7 of the SPS Agreement is “not bound up with a time limit but with the development of scientific knowledge”, p.12.
179 Japanese Measures on Imports of Leather, GATT Panel Report BISD 31S/94 (2 March 1984), p 44.
180 EC-Beef Hormones Report of the Appellate Body, para 186.
181 EC-Beef Hormones Report of the Appellate Body;EC-Asbestos Report of the Appellate Body, paras 167–168. This right is tempered by the obligation in Article 5.5 to “avoid arbitrary or unjustifiable distinctions in the levels [the Member] considers to be appropriate in different situations, in such distinctions result in discrimination or a disguised restriction on international trade.” See Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, 20 October 1998.
182 See, for example, the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer, Montreal, 26 ILM 1550 (1987) as adjusted and amended, Article 4, banning the trade in regulated substances with non-parties.
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