1

Sachin CHATURVEDI

Fifth Asian Biotechnology and Development ConferenceKandy, Sri Lanka

December 17, 2010

International Trade and Biotechnology: Emerging Challenges

2

Structure of the Presentation

• Emergence of (Bio)Technology and Governance

• National Trade Interests

• Global Trade Rule Framework

• Policy Issues

3

Emergence of New Issues

Adoption and diffusion of biotechnology

* Trade regime

* Cartagena Protocol on biosafety

* Regional and national standards

* Release and safety assessment

* Food use of genetically modified organisms.

4

5

Status of Ag Bio in Developing Countries

• First Generation Products• GM Crops

- Place of National Institutes- TNCs-Local Firms

6

The Organizational Structure of the WTOWorld Trade Organization

Dispute Settlement Trade Policy review

Trade in goods Trade in services Intellectual property

Textiles and clothing

Rules of origin

Technical barriers to tradeTrade-related investment measuresAnti-dumpingCustoms valuation

Import licensingSubsidies and countervailing measuresSafeguards

Sanitary/phytosanitaryAgricultureGATT 1994

Pershipment inspection

Plurilateral trade agreements

Civil aircraftGovernment procurementDairy productsBovine meat

7

* WTO Ministerial Conference stated at Doha that negotiations on issues relating to SPS measures will be addressed on priority basis in the next ministerial conference.

* The Committee on Trade and Environment (CTE) has been instructed to give particular attention to the effect of environmental measures on market access and trade.

* This has become relevant in light of the fact that the past decade has seen a global proliferation of environment and health related standards along with a rise in the trade in environmentally sensitive goods.

* Since the inception of WTO some 12000 notifications have been received and almost 17 per cent of them are related to environment.

Developments at WTO

8

• While Codex standards are only voluntary, the Codex Alimentarius Commission is SPS for standard-setting related to food safety.

- International Plant Protection Convention (IPPC) for plant health

- Office International de Epizooties (OIE) for animal health

• Codex Alimentarius Commission Working Group on Safety Assessment of Foods - define the unique challenges posed by animal

biotechnology and - how to take up non-food safety concerns such as

environmental risks, animal welfare and ethical issues.

Issues at Codex

9

SPS and TBT Agreements

* GMOs were not a trade issue when the SPS and TBT Agreements were negotiated in 1994.

* National Governments are free to choose their own standards or follow international standards.

* Currently, there are no international standards that specifically govern GMOs nor is there a harmonization of regulatory approaches mandated, although the SPS and TBT Agreements have spurred countries to modify their regulatory systems.

* OECD is in the process of attempting to provide a process that will allow its member countries to harmonize their regulatory approaches for GMOs.

10

* The International Plant Protection Convention (IPPC) covers plant health and the environment but doesn’t make any distinctions between traditionally developed products and GMOs.

TBT Agreement: – technical regulations and standards,– packaging,– marking and labeling requirements– procedures for the assessment of conformity.

* The disciplines of the both the SPS and TBT Agreements are designed to prevent technical regulations from creating unnecessary and arbitrary obstacles.

SPS and TBT Agreements

11

WTO: Trade Dispute• The US, Canada and Argentina introduced their first-time

panel requests regarding EC-level measures, the moratorium maintained since October 1998 on the approval of biotech products had restricted the imports of agricultural and food products.

• Regarding the EC member State-level measures, the complainants said that a number of EC member States maintain national marketing and import bans on biotech products even though those products have already been approved by the EC.

• The US further clarified that the Sanitary and Phytosanitary Agreement recognizes that WTO members may adopt approval procedures for crops and food products, including biotech products, in order to protect health and the environment.

12

WTO: Trade Dispute• The US emphasized that the EC procedures, as written, are

not the focus of the US complaint. It is the EC's application of its measures governing the approval of biotech products.

• The US also expressed its concern that the EC measures were hindering the worldwide development and application of agricultural biotechnology – a technology which, according to the US, has great promise for raising farmer productivity, reducing hunger and improving health in the developing world, and improving the environment.

• Argentina added that agricultural products account for over half of Argentina's total exports, and that it is the second largest producer and exporter of biotech products in the world. Argentina said that the EC's “behaviour” discourages the introduction of the biotech process, and that it is particularly detrimental because EC has the ability to influence other WTO members.

13

WTO: Trade Dispute• In response, the EC expressed surprise and disappointment

at the panel requests. The EC said that it had repeatedly made clear that the approval of genetically-modified organisms and genetically-modified food was possible in the EU that a number of applications were being examined and decisions would be taken shortly.

• The EC further pointed out that 18 GMOs and 15 food products derived from GMOs have been approved and that these GM products are imported each year by the EC.

• The EC said that we need to chose the path of international cooperation to build an appropriate framework for the development of biotechnology, while seriously addressing any potential risks and social concerns.

14

Regulation of GMOs

* What kind of regulations they should be;

* What exactly they should regulate;

* How strict they should be;

* How GMOs should be regulated compared to their conventionally-bred counterparts;

* What impact of regulation on the trade of GM products and on theresearch and development climate for GMOs

15

EU Strategy: Employ the Precautionary Principle Globally

* The EU has sought to inject it within the WTO system at large through creative interpretation of the SPS and TBT Agreements and through incorporation within them of obligations assumed under multilateral environmental agreements

* The EU has sought to incorporate the precautionary principle within international standards through active and skilled participation in the international standards development process.

* The EU has begun to incorporate it within bilateral and regional free trade and aid agreements and within EU trade capacity-building initiatives offered to developing countries. Apparently, the EU is attempting to elevate the status of the precautionary principle from a limited WTO exception to a ‘norm’ of general customary international law equal in importance to general principles of international trade law.

* Even if the EU were able to establish the precautionary principle as a norm of customary international law, its ability to incorporate that norm within the SPS and TBT Agreements remains uncertain.

16

(Tolerance for GM Impurity)

EU/Switzerland 0.9 per cent

Japan 5 per cent

Australia 1 per cent

South Korea 3 per cent

Brazil 4 per cent

Thailand Soybean 5 per cent

Corn 3 per cent

Threshold Value

17

Labelling RequirementsEU

Mandatory label for foods with detectable DNA or protein, 1% threshold since 1997

New proposals for traceability, process-based labeling of food and feed at a 0.9% threshold

Africa South Africa: Mandatory label based on substantial equivalence- like US Ethiopia: Mandatory label on all products Algeria & Morocco: ban importation of GM products

China Mandatory label for foods derived from GM, 1% threshold, not applicable when

GM ingredient is used to produce a finished food product

Philippines Mandatory label, 5% threshold

Thailand Mandatory label, 5% threshold by weight/top 3 ingredients

18

Labeling Policy?

Labeling is often used

- to deliver information to consumers on characteristics of products that they are not able to evaluate.

- Economists refer to this type of characteristic as a credence attribute

- Whether a product is produced with the use of biotechnology or genetic engineering is frequently difficult or impossible for the consumer to judge (Caswell, 2000).

19

Available Method for Detection

CropsCotton, Soybean, Corn, Potato, Canola Sugarbeet, Rice, Alfalfa, Chicory, Tomato, Tobacco, Wheat, Papaya, Linseed,

MethodsELISA; LF Assay; PCR; Ref. Mat.

20

Since the implementation of the Cartagena Protocol on Biosafety

* Policy and institutional issues to bridge the gap between the protocol and national biosafety guidelines.

* In this regard, some of the possible areas for initiative are being listed below:

1. Capacity Building- BCH: Strengthening and Enhancing/Regional-

Sub Regional- Zonal Institutional Committees- Capacity of Quarantine Agency- Risk Assessment and Risk Management (Related

Methodologies)- Custom & other Document (Trade Facilitation)

Key Policy Issues

21

2. Cooperation with Other MinistriesThe implementation of Cartagena crucially depends upon policies and commitments of other ministries such as Ministry of Commerce engaged at WTO especially in its committees like that of TRIPs, SPS and TBT. Similarly, Ministry of Agriculture and their policy towards GM and initiative at forums like FAO should also be engaged. The role of national biotech agencies is equally important determinant in the process.

3. Regional Arrangements for Notification (Article 8)- National biosafety guidelines have yet to come out explicitly on the

issue of notification.

- The requirements by a party of export to ensure notification andaccuracy of information contained in the notification by the exporter

- The contours of advance informed agreement and its linkage with BCH also need immense clarification.

- Elaborate upon the related liability and redress mechanisms that would be in place.

22

4. Brief and Clear Trade Information• Summary of what is needed before LMOs can be exported

• For any LMO export intended for other than contained use in the importing country, the exporter will need to comply with specific conditions of export pursuant to the Prohibition Order before approval for export will beganted.

• The exporter is provided with a reference number confirming the export has been approved (if this approval is not obtained the export cannot proceed).

• The exporter provides with the relevant details of nature of proposed export, the intended country of import and the receiving facility.

23

5. Points for Policy Consideration

* Costs and benefits have to be weighed up when considering the monitoring and enforcement aspects of GMO regulations.

* Balance between the potential environmental and health risks viz. a viz. economic interest.

* Risk analysis and compensation mechanism to be developed.

6. National Biotechnology Regulatory Authority