Final GMO panel limits application of MEAs in future WTO disputes

The final World Trade Organization panel ruling on the European Union's moratorium on approvals of products with genetically modified organisms contains findings that will likely limit the extent to which future WTO panels will consider multilateral environmental agreements (MEAs), according to private-sector sources.

If the panel ruling stands, MEA rules would only be taken into account in the interpretation of WTO agreements in the unlikely case that all members of the WTO are also members of a given MEA, they said.

Specifically, the biotechnology panel rejected the claim by the EU that the Agreement on Sanitary and Phytosanitary Measures had to be interpreted in light of the Convention on Biological Diversity and the Biosafety Protocol, which refer to the precautionary principle. The precautionary principle gives countries the right to impose health and safety measures in cases even if there is no clear scientific opinion about the risk they are trying to address.

The EU had argued these agreements needed to be taken into account because the rules of interpretation in the Vienna Convention on the Law of Treaties state that "any relevant rules of international law applicable in the relations between the parties" shall be considered in interpreting a given treaty.

In order to respond to this claim, the panel said it had to define the meaning of the term "the parties" to which the relevant rules apply. It then defined them as all governments for which the WTO as a treaty is in force as well as those for which the Convention on Biological Diversity and the Biosafety Protocol are in effect, according to the ruling. For an MEA to be taken into account, it must be applicable to all members of the WTO, the panel said.

Since the U.S. has not ratified the Convention on Biological Diversity, the panel said it did not need to take into account this treaty in interpreting the SPS agreement. It also found it was not required to take into account the Biosafety Protocol, which the U.S. has not signed and which Argentina and Canada, the two co-complainants in the biotechnology case, have signed but not ratified. "It follows that the Biosafety Protocol is not in force for Argentina, Canada or the United States," the panel ruled. It is therefore not "applicable" in the relations between all WTO members, the panel said.

Given this narrow interpretation, it is unlikely that the Vienna Convention will lead future WTO panels to consider MEAs when interpreting WTO rules, private-sector sources said.

"[I]n the context of the MEA-WTO debate, this interpretative tool of the Vienna Convention has effectively been rendered a dead letter," said Brendan McGivern, a trade lawyer with White &Case, in his assessment of the case.

He pointed out that WTO panels legally apply only to the case they are deciding, but that panels in practice take into account earlier WTO rulings, particularly those of the Appellate Body.

Environmental groups like Greenpeace also criticized the panel for its narrow interpretation of the applicability of the Vienna Convention and charged that this decision, if it stands, would at best ignore or at worst undermine specific international environmental policies and rules relevant to WTO disputes.

These sources said that the panel alternatively could have defined the term "the parties" as those WTO members participating in a given dispute, which would not have led to the panel to consider the convention and the protocol in this case. But it could have led to a different outcome in future cases where all parties to a dispute also ratified the WTO and a relevant MEA, they said.

The panel also failed to offer an affirmative ruling on whether the precautionary principle can be considered a general or customary principle of international law as the EU has claimed.

It pointed out that the Appellate Body said in its 1998 decision in the dispute on the EU's ban on beef raised with artificial growth hormones that the debate on this issue is still unsettled. The biotechnology panel also pointed out that provisions implicitly or explicitly applying the precautionary principle have been incorporated into several environmental international conventions and declarations. But it also noted there has been no "authoritative decision" by an international court which recognizes the precautionary principle as a principle of general or customary international law.

Given the fact that the legal status of the precautionary principle remains unsettled, the panel declined to settle this issue, particularly since it said it is not necessary to do so for the purpose of deciding the biotechnology case.

The final WTO biotechnology panel was released on Sept. 29, months after it had been made available to the parties (Inside U.S. Trade, May 19).
It found that the EU applied a general de facto moratorium on the approval of biotechnology products from June 1999 to August 2003 in violation of the obligation in the SPS agreement to complete without undue delay any procedures ensuring the fulfillment of SPS obligations.

The panel ruled that the moratorium affected the operation and application of the EU procedures for the approval of biotech products, and that these procedures were subject to the obligations to the "disciplines" of the SPS agreement. The panel ruled that the moratorium was not itself an SPS measure as the U.S. and the other complainants had argued.

In light of these conclusions, the panel recommended that the EU bring the general de facto moratorium on approvals into conformity with its SPS obligations "if, and to the extent that, that measure has not already ceased to exist." This wording falls short of an actual ruling on whether the moratorium is still in place, but is a departure from the panel's interim ruling, which did not contain such a recommendation. In the interim report, the panel refused to take a position on whether the de facto moratorium continues to exist.

The panel also found that the EU had violated its SPS obligations to make decisions without undue delay in its handling of 24 of 27 biotechnology applications, but not the substantive obligations of the SPS agreement.

Regarding member state bans on biotechnology products that had already been approved as safe by the European Union authorities, the panel found a substantive violation of the SPS Agreement. Given the existence of EU risk assessments that showed negligible or no risks, the panel found that these member state bans could not be justified as provisional measures under Article 5.7 of the SPS agreement.

That provision allows members to impose provisional measures to safeguard health and the environment in the face of uncertain scientific evidence, but obligates them to seek a more certain risk assessment in a reasonable period of time.

The European Commission is still reflecting on the next steps it will take on the basis of a careful analysis of the final report, according to an EU spokesman. Any party to the dispute has 60 days to make a decision on whether or not to appeal, but none have said they will.

The EU spokesman also said that the ruling does not affect the EU legislation and policy on GMOs, and implied that the EU no longer applies any moratorium on biotechnology approvals. He pointed out that since the panel was established in 2003, 10 applications have been approved, and 30 more are currently being examined. "This confirms that the EU system for GMO approval authorizations is functioning in application of EU law," he said. In the biotechnology case, the EU formally denied that it had maintained a moratorium even though senior EU officials had previously referred to a moratorium publicly.

If the EU maintains its stance that it needs to make no further changes with respect to the moratorium-related findings of the panel, it may lead to further litigation, possibly through a compliance panel, sources said. U.S. Trade Representative Susan Schwab in a Sept. 29 press release urged the EU to comply with the ruling and "consider all outstanding biotech product applications" and to evaluate their scientific merits in accordance with the EU's own laws without undue delay.

Based on the final panel decision, the European Commission is clearly obligated to get member states to drop their bans, these sources said. But they stressed that this could be politically difficult to do.