Law and Economics of the SPS Agreement: A Critical Perspective

Forthcoming, RESEARCH HANDBOOK ON ENVIRONMENT, HEALTH AND THE WTO, Geert Van Calster, Denise Prévost, eds., Edward Elgar Publishing, 2013

RILE Working Paper Series 2012/3

51 Pages Posted: 29 Mar 2007 Last revised: 24 Mar 2014

See all articles by Alessandra Arcuri

Alessandra Arcuri

Erasmus School of Law; Erasmus Initiative Dynamics of Inclusive Prosperity

Date Written: Septmber 1, 2011

Abstract

The creation of the (World Trade Organization) WTO has in many respects revolutionized the system of international economic law. The main focus of this article is on the relationship between the liberalization of trade and the freedom of WTO Members to set different risk policies. The implementation of the Agreement on Sanitary and Phytosanitary Standards (SPS) is influential in the shaping of risk regulation, because it establishes specific norms that need to be followed by WTO Members when designing their risk regulation measures. The enforcement of this body of law has already shown the tensions underpinning the SPS Agreement. The WTO disputes between the European Union (EU) and the United States (US) over the use of hormones in beef for growth promotion purposes and over the marketing and approval of genetically modified organisms (GMOs) are icons of these inter-jurisdictional conflicts and differences in risk governance.

This article examines two important questions raised by Law and Economics scholars in relation to the efficient implementation of the SPS Agreement. The first is whether it is desirable to harmonize risk regulation via the WTO. The second question relates to the desirability of resorting to ‘a universal scale for assessing the legitimacy of health and safety precautions by reference to an objective cost benefit analysis’. If harmonization of risk regulation and the use of cost-benefit analysis may appear to offer a solution to the problems raised by SPS non-tariff barriers, this article shows just the opposite. Harmonization of risk regulation via WTO law is undesirable from a Law and Economics perspective. It is equally undesirable to rely on a cost-benefit test to assess the legitimacy of SPS measures. The article concludes with some concrete proposals on how to interpret the SPS Agreement, so as to respect the freedom of WTO Members to shape their own risk policy and to enable WTO 'Courts' to screen out protectionist measures.

Keywords: WTO, risk regulation, GMO, SPS Agreement, harmonization, economics of federalism, Law and Economics

JEL Classification: F02, H70, K32, K33

Suggested Citation

Arcuri, Alessandra, Law and Economics of the SPS Agreement: A Critical Perspective (Septmber 1, 2011). Forthcoming, RESEARCH HANDBOOK ON ENVIRONMENT, HEALTH AND THE WTO, Geert Van Calster, Denise Prévost, eds., Edward Elgar Publishing, 2013 , RILE Working Paper Series 2012/3, Available at SSRN: https://ssrn.com/abstract=974981 or http://dx.doi.org/10.2139/ssrn.974981

Alessandra Arcuri (Contact Author)

Erasmus School of Law; Erasmus Initiative Dynamics of Inclusive Prosperity ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam
Netherlands

HOME PAGE: http://alessandraarcuri.com

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