Trade Conflict Over Genetically Modified Organisms

Abstract

This paper is now published as:

Bernauer, Thomas, Aerni, Philipp. 2008. Trade Conflict Over Genetically Modified Organisms. In Kevin Gallagher, ed. Handbook on Trade and the Environment. Cheltenham: Edward Elgar: 183-193.

Please read and cite the published version.

In 2003 the USA, seconded by Argentina and Canada, initiated litigation in the World Trade Organization (WTO) against the European Union's regulatory policy for genetically modified organisms (GMOs). The three plaintiffs claimed that the EU's GMO policy was creating illegal trade restrictions. Specifically, they argued (i) that the EU had implemented a de facto moratorium on approval of new biotech crop varieties; that (ii) the EU had failed to approve some particular GM crops for which US firms were seeking approval; and (iii) that several EU countries were unilaterally banning the import and marketing of GM crops that had been approved at the EU level. The WTO Dispute Settlement Panel's verdict (a 2000 pages document!), issued in September 2006, supports the plaintiffs' position to a large extent and asks the EU to bring its GMO approval process in line with WTO rules. As of December 2007, it appeared very unlikely that the EU would be willing or able to comply with the WTO verdict. The EU's GMO legislation had been overhauled even before the WTO panel issued its verdict. But the EU decision-making process for GMO approvals has remained complex and subject to political considerations rather than scientific-risk assessment alone: it involves the European Food Safety Authority (EFSA), which has an advisory role, as well as the EU Commission and Council of Ministers, which hold the decision-making authority.

Why does the WTO trade dispute on GMOs, one of more than 300 WTO disputes since 1995, deserve a full chapter in this book? We submit that this dispute is interesting because it pits countries with a predominantly GMO-adverse public (Europe) against countries whose GMO policy is driven by large, export-oriented farmers and the biotech industry (primarily the USA, to some extent also Argentina and Canada). These circumstances raise difficult questions with respect to legitimate justifications for trade-restricting environment, health and safety policies. Most European governments and the EU take the position that the precautionary principle (a "better safe than sorry" approach to regulation in the presence of uncertainty about risks posed by GMOs) and the prevailing GMO-skepticism among consumers and voters are sufficient justification for a restrictive policy. The USA, in contrast, claims that WTO rules, particularly those of the Agreement on Sanitary and Phytosanitary Measures (SPS Agreement), mandate a strong "sound science" discipline. From the latter perspective, trade restricting GMO policies are permitted only to the extent they are supported by scientific evidence on risks.

Keywords: GMO, genetically modified organisms, trade dispute, WTO