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Genetically Modified Organisms

Genetically Modified Organisms. 1. US-EU GMO Case Jessica Perotti Egla Taye Roberto Valencia. 3/16/2009. Measures Affecting the Approval and Marketing of Biotech Products. 2. DS-291,DS-292, DS-293. 3/16/2009. ITRN 603-Malawer. History and Context. 3. Background

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Genetically Modified Organisms

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  1. Genetically Modified Organisms 1 US-EU GMO Case Jessica Perotti Egla Taye Roberto Valencia 3/16/2009 ITRN 603-Malawer

  2. MeasuresAffecting the Approval and Marketing of Biotech Products 2 DS-291,DS-292, DS-293 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  3. History and Context 3 • Background • Beginning in October 1998, The European Communities (EC) applied an EU-wide moratorium on the approval of any new genetically engineered biotech products • This moratorium restricted the imports of agricultural and food products from the US, Canada, and other countries involved with complaint • The refusal by the EC to admit GMO biotech food and feed products into their markets has arguably resulted in one of the most volatile trade disputes 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  4. History and Context 4 • Terms • Genetically Modified Organism(GMO)- is an organism whose genetic material has been altered using genetic engineering techniques • Genetically Modified Foods(GM)-are foods made from crops that have been given specific traits through genetic engineering • Typically, Genetically Modified Foods are plant products: soybean, corn, canola, and cottonseed oil. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  5. History and Context 5 • Impact • The de facto ban has halted over $300 million in US corn shipments and also threatens trade in soy • Products from livestock that are fed with GMO are also at risk, as well as flour and flour-based exports, grain-based products, vegetable oil derived from soybeans, and pet food. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  6. History and Context 6 • Request for Consultations • On 13 May 2003, US and Canada requested consultations with the EC concerning certain measures taken by the EC and its member States affecting imports of agricultural and food imports from the US and Canada • Consultations were held on 13 June 2003 • According to the US the measures at issue appeared to be inconsistent with the EC’s obligations under several articles that will be discussed later. • Canada and Argentina also consider that the measures at issue nullify or impair benefits and are inconsistent with EC’s obligations under several articles 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  7. History and Context 7 • Establishment of Panel • On 7 August 2003, US, Canada, and Argentina each requested the establishment of a panel • At a meeting on 18 August 2003, the Dispute Settlement Body (DSB) deferred the establishment of the panels • Further, to second requests to establish a panel from the US, Canada, and Argentina, the DSB finally established a single panel at its meeting on 29 August 2003 • On 23 February 2004, the US, Canada, and Argentina requested the Director-General to compose the panel. On 04 March 2004, the Director-General composed the panel 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  8. History and Context 8 • Parties Involved • In the first dispute (WT/DS291), with the US as a complainant-Australia, Argentina, Brazil, Canada, Chile, Colombia, India, Mexico, New Zealand and Peru requested to join the consultations. • In the second dispute (WT/DS292), with Canada as the complainant- Australia, Argentina, Brazil, India, Mexico, New Zealand and the US requested to join the consultations • In the third dispute(WT/DS293), with Argentina as the complainant- Australia, Brazil, Canada, India, Mexico, New Zealand and the US requested to join the consultations. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  9. History and Context 9 • Delays • On 12 July 2004, the Chairman of the Panel informed the DSB that it would not be able to complete its work in six months, due to the parties’ common request for additional time to prepare rebuttals • On 18 August 2004, the Panel estimated it would issue its final report to the parties by the end of March 2005. The delay was due to the parties’ common request for additional time to prepare their rebuttals as well as the Panel’s decision to seek scientific and technical expert advice • On 2 November 2004, the Panel decided it would not be possible to issue its final report to the parties until the end of June 2005. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  10. History and Context 10 • More Delays • On 13 June 2005, the Panel estimated it would issue its final report to the parties by the end of October 2005 • On 11 August 2005, the Panel estimated it would issue its final report on 21 December 2005. • On 30 March 2006, Chairman informed the DSB that it would not be possible to issue its final reports to the parties at the end of March 2006 as the Panel has yet to receive further comments from the parties on its interim reports • Finally, on 29 September 2006, the panel reports were circulated to the Members. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  11. History and Context 11 • Result of Panel • The panel found that the EC adopted a de facto, across-the-board moratorium on the final approval of biotech products, starting in 1999 up through the time the panel was established in August 2003 • The Panel agreed with the US, Argentina, and Canada that the disputed measures of the EC, are inconsistent with the obligations set out in the SPS (Application of Sanitary and Phytosanitary Measures) Agreement • The Panel found that the EC had presented no scientific or regulatory justification for the moratorium, and thus that the moratorium resulted in “undue delays” in violation of the EC’s obligations under the SPS Agreement 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

  12. Contested Issue of EC Practice The EC had maintained a moratorium on the approval of biotech products that restricted imports of agricultural and food products from the US and Canada. Certain EC member states had maintained national import and marketing bans on biotech products despite approval by the EC for import and marketing in the EC ITRN 603-Malawer

  13. Relevant WTO Obligations Argentina Articles 2, 5, 7, 8 and 10, and Annexes B and C of the SPS Agreement Articles I, III, X and XI of the GATT (1994) Articles 2, 5 and 12 of the TBT Agreement Article 4 of the Agriculture Agreement Canada Articles 2.2, 2.3, 5.1, 5.5, 5.6, 7 and 8, and Annexes B and C of the SPS Agreement Articles I:1, III:4, X:1 and XI:1 of the GATT (1994) Articles 2.1, 2.2, 2.8, 5.1 and 5.2 of the TBT Agreement Article 4.2 of the Agriculture Agreement United States Articles 2, 5, 7 and 8, and Annexes B and C of the SPS Agreement Articles I, III, X and XI of the GATT (1994) Articles 2 and 5 of the TBT Agreement. Article 4 of the Agriculture Agreement ITRN 603-Malawer

  14. Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) Basic Rights and Obligations Article 2.2 “Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence.” Article 2.3 “Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail… [and the ] measures shall not be applied in a manner which would constitute a disguised restriction on international trade.” ITRN 603-Malawer

  15. Agreement on the Application of SPS Cont’d Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection Article 5.1 “Members shall ensure that their sanitary or phytosanitary measures are based on an assessment… of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organizations.” Article 5.5 With the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health, each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade.” Article 5.6 “When establishing or maintaining sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility.” ITRN 603-Malawer

  16. Agreement on the Application of SPS Cont’d Transparency Article 7 “Members shall notify changes in their sanitary or phytosanitary measures and shall provide information on their sanitary or phytosanitary measures in accordance with the provisions of Annex B.” Control, Inspection and Approval Procedures Article 8 “Members shall observe the provisions of Annex C in the operation of control, inspection and approval procedures, including national systems for approving the use of additives or for establishing tolerances for contaminants in foods, beverages or feedstuffs, and otherwise ensure that their procedures are not inconsistent with the provisions of this Agreement.” ITRN 603-Malawer

  17. General Agreement on Tariffs and Trade (GATT) General Most-Favoured-Nation Treatment Article I:1 “With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III, any advantage, favor, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.” National Treatment on Internal Taxation and Regulation Article III:4 “The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.” ITRN 603-Malawer

  18. General Agreement on Tariffs and Trade (GATT) Cont’d Publication and Administration of Trade Regulations Article X:1 “Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any contracting party, pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use, shall be published promptly in such a manner as to enable governments and traders to become acquainted with them.” General Elimination of Quantitative Restrictions Article XI:1 “No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.” ITRN 603-Malawer

  19. Agreement on Technical Barriers to Trade (TBT) Preparation, Adoption and Application of Technical Regulations by Central Government Bodies Article 2.1 “Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.” Article 2.2 “Members shall 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 fulfill a legitimate objective, taking account of the risks non-fulfillment would create.” ITRN 603-Malawer

  20. Agreement on Agriculture Market Access Article 4.2 “Members shall not maintain, resort to, or revert to any measures of the kind which have been required to be converted into ordinary customs duties, except as otherwise provided for in Article 5 and Annex 5.” ITRN 603-Malawer

  21. Main Parties Positions 01 July 2003, European Parliament ended the moratorium on new GMO crop approvals, but replaced it with food “traceability and labeling” rules Traceability and labeling rules "The provisions for traceability ensure a high level of environmental and health protection and pave the way for a proper labeling system. E.U. Environment Commissioner Margot Wallstrom said in a statement. ‘Certainly there is a cost for the producers and for trade, but what is at stake is our ability to build public confidence.’ The requirements also cover highly refined products such as corn oil or soybean oil, where the original GMO content is removed during the production process. These will have to be labeled as derived from GMOs although not actually containing them.” Under the moratorium, the EU had effectively banned GMO foods since 1998, the US believes this is in violation of WTO rules US government initiated litigation at the WTO regarding EU policy ITRN 603-Malawer

  22. Main Parties Positions Cont’d Framework of argument US-Trade Issue GMOs are a “natural progression of the breeding of plant and animal species that humans have been engaged in for thousands of years” EU-Public Safety Issue Precautionary principle- Scientific research must be exhaustive and prove beyond doubt that a food product is safe before it can be approved for production and sale In practice, research can not answer scientific questions about products until data has been collected for many years. As a result, applying precautionary principle can cause the approval of products to be delayed for years. ITRN 603-Malawer

  23. Main Parties Positions Cont’d US Policy makers perspectives GMOs are normal product GMOs could potentially Promote health through the creation of more nutritious foods Create new vaccines that combat animal disease and increase animal livestock production Fight world hunger by creating high-yield crops Protect the environment by reducing the need for pesticides and fertilizers Resistance towards GMOs as an inappropriate trade restriction George W. Bush “EU officials are allowing prejudice to obstruct the vital humanitarian goal of beating world hunger by blocking all new bio-crops because of unfounded, unscientific fears” ITRN 603-Malawer

  24. Main Parties Positions Cont’d United States Rejects precautionary principle Merely a tactic of protectionism and used to compensate for EU’S lack of technological capability in the field Directly violates Sanitary and Phytosanitary (SPS) Agreement Countries have a right to set special controls on food products “based on scientific principle”; however, the precautionary principle states “a product must be proven safe before being approved for sale to the public” ITRN 603-Malawer

  25. Main Parties Positions Cont’d Dispute Continues EU demands US exporters keep detailed records of origins and movements of GMO foods and clearly label them as such EU claims this will allow them to track food products “from the farm to the fork” EU officials acknowledge that these rules could mean aa drop in sales for US producers ITRN 603-Malawer

  26. Other Implications Not only concerned with access to EU Market but other countries as well African nations refused US food aid US government and corporate leaders were convinced at first that Europe was indulging in protectionist activity, but came over time to understand that the European reaction was mostly consumer-driven and derived from citizens' suspicion of government's ability to understand and regulate scientific discoveries sufficiently to protect public health. Still, US food corporations were alarmed when in 2002 Zambia refused to accept desperately-needed US food aid on the grounds that US-made GM products might preclude Zambia selling its own produce to Europe. ITRN 603-Malawer

  27. Sources 27 • Raymond J. Ahearan, Foreign Affairs, Defense, and Trade Division, “US-EU Trade Relations: Issues and Policy challenges,” at p. Crs-10 • USTR, “Dispute Settlement Update” September 21, 2007 http://www.ustr.gov/assets/Trade_Agreements/Monitoring_Enforcement/Dispute_Settlement/asset_upload_file243_5697.pdf • Duncan EJ Currie LL.B. (Hons.) LL.M, “Genetic Engineering and the WTO: an Analysis of the Report in the ‘EC-Biotech’ Case” GreenPeace .http://www.wto.org/english/forums_e/ngo_e/posp66_greenpeace_engi_e.pdf • National Foreign Trade Council, Inc “Looking Behind the Curtain: The Growth of Trade Barriers that Ignore Sound Science” http://www.wto.org/english/forums_e/ngo_e/posp47_nftc_looking_behind_exsum_e.pdf • World Trade Organization, Uruguay Round Agreement: Agreement on the Application of Sanitary and Phytosanitary Measures (1995), http://www.wto.org/english/docs_e/legal_e/15-sps.pdf, 70. • World Trade Organization, Dispute 291: European Communities — Measures Affecting the Approval and Marketing of Biotech Products (2008), http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds291_e.htm. • Source: World Trade Organization, Uruguay Round Agreement: Agreement on the Application of Sanitary and Phytosanitary Measures (1995), http://www.wto.org/english/docs_e/legal_e/15-sps.pdf, 71-72. • World Trade Organization, Uruguay Round Agreement: Agreement on the Application of Sanitary and Phytosanitary Measures (1995), http://www.wto.org/english/docs_e/legal_e/15-sps.pdf, 73. • World Trade Organization, Uruguay Round Agreement General Agreement on Tariffs and Trade (1994) http://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf, 2-6. • World Trade Organization, Uruguay Round Agreement General Agreement on Tariffs and Trade (1994) http://www.wto.org/english/docs_e/legal_e/gatt47_e.pdf, 16-17. • World Trade Organization, Uruguay Round Agreement: Agreement on Technical Barriers to Trade (1995), http://www.wto.org/english/docs_e/legal_e/17-tbt.pdf, 118. • World Trade Organization, Uruguay Round Agreement: Agreement on Agriculture (1995), http://www.wto. org/english/docs_e/leg88al_e/14-ag.pdf, 46. 3/16/2009 ITRN 603-Malawer ITRN 603-Malawer

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