Globalization and the Environment: Risk Assessment and the Wto

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Globalization and the Environment: Risk Assessment and the WTO Edited by David Robertson and Aynsley Kellow Edward Elgar Publishing Limited

Globalization and the Environment

Globalization and the Environment Risk Assessment and the WTO

Edited by

David Robertson John Gough Professor of International Trade, Melbourne Business School, Melbourne University, Australia and

Aynsley Kellow Professor of Government, University of Tasmania, Australia

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© David Robertson and Aynsley Kellow 2001 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. 136 West Street Suite 202 Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Globalization and the environment : risk assessment and the WTO / edited by David Robertson and Aynsley Kellow. p. cm. Papers presented at a two-day meeting at the Melbourne Business School in Feb. 1999. Includes bibliographical references and index. 1. Free trade—Environmental aspects—Congresses. 2. International trade—Environmental aspects—Congresses. 3. Environmental policy—Congresses. 4. Foreign trade regulation—Environmental aspects—Congresses. 5. Risk management—Congresses. 6. Globalization—Environmental aspects—Congresses. 7. World Trade Organization. I. Robertson, David, 1935– II. Kellow, Aynsley J. (Aynsley John), 1951– HF1713 .G563 2000 333.7—dc21 00–060972 ISBN 1 84064 538 5 Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents List of figures, tables and boxes List of contributors Preface and acknowledgements Glossary and trade dispute cases

vii viii ix x

1 Introduction: accounting for risk in trade agreements David Robertson

1

PART I RISK AND THE WTO 2 Risk and the WTO Gary P. Sampson 3 Risk, the environment and MEAs Neil Byron 4 Risk management experience in WTO dispute settlement Thomas Cottier 5 Applying SPS in WTO disputes Joost Pauwelyn

15 27 41 63

PART II MANAGING RISK IN POLICYMAKING 6 Risk assessment and risk management in policymaking Marion Wooldridge 7 Allowing for risk in setting standards Michael J. Nunn 8 Public perceptions, risk communication and biotechnology Christine R. Deane

81 95 106

PART III NEGOTIATING EXPERIENCE WITH RISK 9 Accounting for risk in multilateral negotiations Aynsley Kellow 10 Reducing chemical risks: OECD and lead Kaye Dal Bon

v

119 135

vi

PART IV

Globalization and the environment

NATIONAL RISKS AND QUARANTINE STANDARDS

11 National risk management and the SPS agreement David Wilson and Digby Gascoine 12 Risk and protection for grains: analysis and quarantine Donald MacLaren 13 A business view of quarantine Lyall Howard

155 169 182

PART V MANAGING BIOTECHNOLOGY 14 Government regulations and genetically-modified organisms Nancy F. Millis 15 GM foods and global trade David Robertson PART VI

191 206

CONCLUDING SUMMARY

16 Trade and risk management: exploring the issues Ian Holland and Aynsley Kellow

229

Appendix Index

249 253

Figures, tables and boxes FIGURES 6.1 The major phases in risk management 12.1 Market effects of quarantine restriction 14.1 Surveillance system operating in Australia through IOGTR and GMAC 14.2 Steps required for an antibiotic resistance gene (R-gene) in food to be transferred to a pathogen

92 174 193 202

TABLES 14.1 GMAC activities in Australia 14.2 GMOs deliberately released in Australia to 1999 14.3 Some transgenes and host plants released in Australia from 1981–97

197 197 198

BOXES 15.1 Monarchs, milkweed and GM maize 15.2 The precautionary principle 15.3 European multifunctionality

vii

210 220 222

Contributors Neil Byron, Commissioner for the Environment, Productivity Commission, Melbourne. Thomas Cottier, Professor of European and International Economic Law, University of Berne. Kaye Dal Bon, Policy Analyst based in Canberra. Christine R. Deane, Visiting Fellow at the Bureau of Rural Sciences, Department of Agriculture, Fisheries and Forestry – Australia, Canberra. Digby Gascoine, Director, Policy and International Division, AQIS, Canberra. Ian Holland, Key Centre for Ethics, Law, Justice and Governance, Griffith University. Lyall Howard, Director, Trade and Quarantine, National Farmers’ Federation, Canberra. Aynsley Kellow, Professor of Government, University of Tasmania. Donald MacLaren, Associate Professor, Department of Economics, University of Melbourne. Nancy F. Millis, Professor Emeritus, Department of Microbiology and Immunology, University of Melbourne. Michael J. Nunn, National Offices of Animal and Plant Health and Food Safety, Department of Agriculture, Fisheries and Forestry – Australia, Canberra. Joost Pauwelyn, Legal Affairs Division, World Trade Organization, Geneva. David Robertson, John Gough Professor and Director of the Centre for the Practice of International Trade, Melbourne Business School. Gary P. Sampson, Professorial Fellow at the Melbourne Business School and Research Associate at the London School of Economics. Former Director for Trade and Environment, WTO Secretariat. David Wilson, Quarantine Development Unit, AQIS, Canberra. Marion Wooldridge, Director, Department of Risk Research, Ministry of Agriculture, UK.

viii

Preface and acknowledgements After the Uruguay Round reforms, the GATT and related agreements administered by the WTO have brought increasing trade liberalization and associated gains from increased efficiency in production and consumption. At the same time, the strengthening of trade rules in the WTO has increased the scope for disputes over interpretations of more extensive and complicated agreements and raised the profile of the dispute settlement process, one of the more farsighted innovations. One of the unforeseen consequences of the comprehensive WTO agreements has been controversy over risk. New agreements on technical standards and quarantine are designed to prevent these regulations from being used as surrogate protection as tariffs and other measures are dismantled. But changing national regulations to meet international standards introduces non-economic risks which need to be assessed and managed. Several high profile, controversial trade disputes have drawn attention to the problems associated with risk. Experts invited to give opinions to dispute panels have, if anything, fuelled the controversy. Because risk and the interpretation of WTO agreements have become contentious in international trade relations, the Centre for the Practice of International Trade convened a two-day meeting at the Melbourne Business School, in February 1999, on ‘Accounting for Risk in Trade Agreements’. The papers presented at the seminar are collected in this volume, with a final paper which highlights the key points made during the discussions. As Director of the Centre for the Practice of International Trade, I express my appreciation for the financial support provided by the Australian Quarantine Inspection Service (AQIS), Environment Australia, the Grains Development Research Council (GDRC) and Monsanto Ltd. Professor Aynsley Kellow, University of Tasmania, approached me with the idea for a multidisciplinary seminar on risk. His support and contributions are greatly appreciated. Among the many people who assisted with the organization and editing of this volume my special thanks must go to Gail Wissmann who has seen this project through the difficult process of editing the papers and preparing them for publication. Thanks also go to Sylvia Jones and Christina Rust for earlier work. David Robertson February 2000 ix

Glossary and trade dispute cases ADB AFFA ALOP ALR ANZFA AQIS BSE CAP CFC CITES CTE DFAT DPIE DSB DSU

EC EU FAO FCCC FDA GATT GM GMAC GMO GTRAP GTTAC IBC IPCS IPPC IPR ISO MAI MEA

Asian Development Bank [Ministry of] Agriculture, Fisheries and Forestry – Australia Appropriate level of protection Acceptable level of risk Australian and New Zealand Food Authority Australian Quarantine and Inspection Service Bovine Spongiform Encephalopathy (Mad Cow Disease) Common Agricultural Policy (EU) Chloro-fluoro carbon Convention on International Trade in Endangered Species Committee on Trade and Environment (WTO) Department of Foreign Affairs and Trade (Australia) Department of Primary Industries and Energy (Australia) Dispute Settlement Body (WTO) Understanding on Rules and Procedures Governing the Settlement of Disputes (Annex 2 of the Marrakesh Agreement Establishing the World Trade Organization) European Commission European Union Food and Agriculture Organization (United Nations) UN Framework Convention on Climate Change United States Food and Drug Authority General Agreement on Tariffs and Trade (1947, revised 1994) Genetically modified Genetic Manipulation Advisory Committee (Australia) Genetically modified organism Gene Therapy Research Advisory Panel (Australia) Gene Technology, Technical Advisory Committee Institutional Biosafety Committee International Programme on Chemical Safety International Plant Protection Convention (FAO) Intellectual Property Rights International Standards Organization Multilateral Agreement on Investment Multilateral Environmental Agreement x

Glossary

xi

MFN MNE NGO OECD OIE PIC

Most favoured nation treatment Multinational enterprise Non-government organization Organization for Economic Cooperation and Development International Office of Epizootics Convention on Prior Informed Consent for the Importation of Hazardous Chemicals PPMs Production and processing methods SPS Sanitary and phytosanitary [quarantine] TBT Technical barriers to trade TRIPs Trade related aspects of intellectual property rights UNCED UN Conference on Environment and Development (Earth Summit) UNCLOS UN Convention on Law of the Sea UNECE UN Economic Commission for Europe UNEP United Nations Environment Programme US EPA US Environmental Protection Agency WHO World Health Organization WTO World Trade Organization WWF Worldwide Fund for Nature

OTHER TECHNICAL TERMS Short Title Appellate Body

Basel Convention

Biodiversity Convention

Biosafety Protocol

Cairns Group

Full Details Recommendations from WTO dispute panels may be taken to appeal; an Appellate Body decision then goes to the Dispute Settlement Body for a consensus decision. Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, adopted 1989, came into force 1992 (UNEP). United Nations Framework Convention on Biological Diversity, signed at the conclusion of Earth Summit, Rio de Janiero, 1992. A protocol to the Biodiversity Convention, covering trade and movements of GMOs (a.k.a. Cartegena Protocol). Comprises major agricultural export countries (excluding EU and US), led by Australia (Argentina, Chile, Thailand, Hungary, Canada, and so on); now 18 members.

xii

Codex Convention on Desertification Miami Group

Millennium Round

Tokyo Round Uruguay Round

Vienna Convention


FAO/WHO Codex Alimentarius Commission UN Convention to Combat Desertification, 1995. Group of ‘like-minded’ countries who regard the Biosafety Protocol as an environmental treaty and seek to minimize its effects on trade (US, Canada, Australia, Argentina, Chile, Uruguay). Refers to new WTO negotiating round, intended to commence in 2000 after the Seattle ministerial meeting. Seventh round of GATT trade negotiations (1973–79). Eighth round of GATT trade negotiations which resulted in the Marrakesh Declaration, April 1994 and established the WTO. UN Vienna Convention on the Law of Treaties, 1969, came into force 1980.

TRADE DISPUTE CASES The following are the trade dispute cases most often cited in the text. These disputes (except for tuna-dolphin) have been handled by the WTO’s Dispute Settlement Body (DSB), its nominated panels and its Appellate Body. Details of the current status of these disputes can be found in the WTO’s Annual Report or its website: http://www.wto.org/dispute/dispute.htm. Australia – Measures affecting the importation of salmon. Complaint by Canada (WT/DS18). Hereinafter cited as salmon. European Communities – Measures affecting meat and meat products (hormones). Complaint by the United States (WT/DS26) and Canada (WT/DS48). Hereinafter cited as beef-hormones. European Communities – Regime for the importation, sale and distribution of bananas. Complaints by Ecuador, Guatemala, Honduras, Mexico and the United States (WT/DS27). Hereinafter cited as bananas. Japan – Measures affecting agricultural products. Complaint by the United States (WT/DS76). Hereinafter cited as agricultural products. United States – Import prohibition of certain shrimp and shrimp products. Complaint by India, Malaysia, Pakistan and Thailand (WT/DS58). Hereinafter cited as shrimp-turtle. United States – Measures affecting imports of woven wool shirts and blouses from India (WT/DS33). Hereinafter cited as United States – shirts and blouses.

Glossary

xiii

United States – Standards for reformulated and conventional gasoline. Complaints by Venezuela (WT/DS2) and Brazil (WT/DS4). Hereinafter cited as gasoline. United States – Tuna-dolphin. Complaint by Mexico against US restrictions on imports of tuna, based on US environment regulations to protect dolphins from tuna fishing nets. This case was handled in the GATT. In February 1991, Mexico asked for a panel according to GATT article XXII (nullification and impairment). The report in September 1991 was never implemented because the US and Mexico agreed to labelling standards. This case has aggravated tensions between the WTO and environmental groups. Hereinafter cited as tuna-dolphin. Six of these cases have quarantine or environmental dimensions; bananas is an unresolved issue over trade preferences and development assistance.

1.

Introduction: accounting for risk in trade agreements David Robertson

The WTO agreements extended the GATT principles of non-discrimination and transparency into new areas of international commerce, strengthening and clarifying trade rules and extending them to cover trade in agriculture and services, establishing new agreements on trade-related investment measures and intellectual property rights, and introducing an understanding on dispute settlement procedures. Subsequently, new objectives were added to meet developing countries’ special interests, and trade and the environment. This enlargement of trade subject to international rules, however, has increased tensions among the WTO membership, which has reached 135, and generated trade disputes over interpretations of the complex new agreements. The Uruguay Round final act contains much bureaucratic language and many ‘constructive ambiguities’ to mask differences, all of which were necessary for a negotiated text to be agreed. In fact, new tensions have surrounded the rapid growth in international trade and globalization in the past decade. The new WTO agreements were incomplete and some texts contained ambiguities which increased the scope for disputes among members and placed unexpected pressures on the new dispute settlement understanding. Moreover, the new dispute settlement procedures introduced unforeseen issues, including the concept of ‘risk’ which had to be assessed and allowed for in dispute hearings. A complaint of ‘unfair’ trade protection arising from quarantine or technical regulations required an assessment of the consequences of changing them to meet international standards, which would include an analysis of risk of disease or damage. The WTO is not equipped to assess scientific risk or to establish international standards, and now disputes include arguments about social, environmental and cultural risks too. This has placed severe pressures on dispute panels and the Appellate Body, and has exacerbated differences among members over interpretations of WTO agreements. The WTO has also become a target for ‘global civil society’. Since 1995, non-government organizations (NGOs) pursuing a range of environmental and social objectives in the international arena have attacked inter-governmental 1

2


agencies, such as the WTO and OECD, declaring they are supra-national, probusiness and anti-democratic. The resulting demonstrations in Paris, Geneva, London and Seattle since 1998 have elicited very little response from governments. Such reluctance to confront the NGOs can only encourage them and weaken international agencies. A more subtle challenge is occurring through new procedures made possible by Uruguay Round agreements intended to shore up the multilateral trading system. The dispute settlement process has developed into a quasi-legal process which is constructing a case-law approach to interpretations of WTO provisions. This creation of ‘international law’ by bureaucrats is welcomed by NGOs, many of which are led by lawyers. These new legal verdicts are exactly what the NGOs seek through environmental treaties, such as the Kyoto Protocol, Montreal Protocol, Biosafety Protocol and so on. Agreements under United Nations’ auspices are declared to supersede national laws, and are used as standards with which to batter ‘politically incorrect’ governments into line. They provide a route to influence national policies without the hindrance of having to be democratically elected to national legislatures. Though many legal scholars deny that ‘international law’ is superior to national law – indeed, deny there is any such thing as international law – the acceptance of this approach by powerful NGOs confronts governments with a dilemma; to reject these ‘treaty’ laws and oppose NGOs, or to seek compromises which reduce sovereignty. Both require more courage than most OECD governments can find. The case-law approach employed in the WTO dispute settlement process has become one focus for NGOs. Any panel report or Appellate Body decision that suits their interest is regarded as a ‘law’ by NGOs. Each dispute referred to a WTO panel interests NGOs, even if the volume of trade affected is paltry. In this process risk measurement, assessment and management are scrutinized, and if necessary challenged. If scientific evidence does not suit their interests, social or cultural risks are emphasized to achieve the desired outcome, and any inconsistent evidence rejected or ignored. Since the WTO Secretariat is not equipped to undertake risk analyses, the dispute panels have to rely on outside experts, though this still requires them to choose between alternative opinions. This is a far cry from GATT’s negotiated settlements of disputes of earlier times. The role of risk in international trade relations and in the interpretation of agreements has become a battleground for NGOs to undermine the international economic agencies, and indirectly national governments, under the guise of countering the dangers of globalization. Ironically, multilateral environmental agreements – just as much a part of globalization – are viewed positively. At the same time, the question of risk raises difficult technical problems which go beyond the political dimension.

Introduction

3

WHAT IS RISK? Risk is evident in every aspect of life and it has to be taken into account at all levels of production, consumption, investment, leisure, sport and so on. Taking risk and overcoming it brings benefits; profits and growth, personal achievement, financial returns and so on. Current attitudes (probably drawn from economic prosperity and the welfare state) seek to minimize risk and suggest that any damage from taking risks is someone else’s responsibility (the litigious society). Progress depends on prudent risk taking, and risk takers benefit from making correct judgements, because few human activities do not involve some degree of risk. To understand the role of risk in economic and social decisions requires understanding of probabilities and alternative outcomes. Rejecting risk without some idea of probabilities of an event occurring, and the costs that may result from it, is to close opportunities unnecessarily. Analysis of risk in international trade requires assessment of probabilities of different scientific and economic outcomes, followed by an assessment of the social consequences of alternatives. Only when all the evidence and evaluations are available to policymakers can decisions be made about managing risk. Evidently, this depends on perceptions of risk by the community. A risk-averse community would place low value on potential returns from a risky venture. Collective or social decisions are likely to be more risk-averse than individual decisions, and wealthy individuals are likely to be more risk-averse than poor ones. In international agreements, participating countries may agree to harmonize standards of risk. This is most apparent in regional economic agreements (EU, NAFTA and so on) but harmonization is also present in some WTO agreements (TRIPs, GATS). Any compromise is likely to create conflicts with national policies in the more risk-averse countries. This causes problems over sovereignty, which becomes a reason for escape clauses and exceptions provisions in many agreements. This volume explores aspects of risk with special reference to the WTO, where some national instruments to reduce risks may conflict with international trade rules. Quarantine regulations, technical/product standards and environmental legislation in some circumstances may conflict with trade rules and principles, and result in trade disputes. How should differences in attitudes to risk be resolved? Should international commitments override national regulations? In what circumstances might national preferences prevail? How should risk assessments be made and judged? How should differences in social perceptions of risk be taken into account? The papers in this volume were presented at a seminar held at the Melbourne Business School in February 1999. That meeting brought together practition-

4


ers and scholars from the areas of trade and risk management, from universities and business, from national government agencies and the WTO. The chapters are based on the invited presentations and remarks by discussants who were provided with the papers in advance. Several discussants’ remarks have become chapters in their own right. The discussion proceeded under Chatham House rules, which preclude attribution of comments, but the flavour of these discussions has been distilled into the concluding chapter. The range of papers indicates the many disciples and perspectives which are appropriate to the subject of risk and trade. There is inevitably a diversity of styles and approaches, as befits contributions from international lawyers, economists, political scientists, scientists and administrators.

STRUCTURE OF THE VOLUME The papers presented at the seminar are under five headings, plus a concluding summary. I. II. III. IV. V.

Risk and the WTO Managing risk in policymaking Negotiating experience with risk National risks and quarantine standards Managing biotechnology

Part I comprises four chapters which explain how the WTO agreements deal inadequately with risk relating to trade and environmental considerations, and review the difficulties this has created in the dispute settlement process. Gary Sampson, former Director for Trade and Environment, WTO Secretariat, notes in Chapter 1 that the WTO seeks to provide flexibility for national policies without allowing disguised barriers to trade. The comprehensive scope of the WTO means that risk in all its forms has become a controversial issue when it comes to interpreting agreements. Sampson begins by explaining the narrow focus of the WTO’s mandate on the environment. Once this is understood many environmental NGOs’ complaints are put into perspective. The Committee on Trade and Environment (CTE) is concerned strictly with trade and trade effects of environmental policies, in the context of the WTO’s agreements and trade rules. Risk enters into the work of the CTE because international environmental agreements can contain provisions on trade that conflict with WTO disciplines. In particular, efforts to get the precautionary principle incorporated into these treaties (for example, EU efforts in the Kyoto Protocol and the Biosafety Protocol) raise problems if trade discrimination results. Some instruments proposed for the

Introduction

5

Kyoto Protocol would require border tax adjustments and discrimination according to production processes that would not be GATT compatible. Controversies over interpretations of GATT article XX have been at the centre of the CTE negotiations since 1995. In the recent shrimp-turtle dispute, the Appellate Body appears to have shifted this interpretation to allow for environmental considerations under some circumstances. Immediate adoption of this decision by the US delegate to the Dispute Settlement Body (DSB) brought a significant change in WTO treatment of environmental policies. WTO treatment of risk is important also in the context of the agreement on sanitary and phyto-sanitary policies (SPS) and, more broadly, the agreement on technical barriers to trade (standards) (TBT), where the adoption of international standards may produce arbitrary decisions which could affect trade but would impose economic and non-economic costs on countries. The Canadian complaint about Australian quarantine restrictions on imports of fresh, chilled and frozen salmon (salmon case) required assessments of risks arising from changes. Such cases of increasing risks may have farreaching consequences. These new Uruguay Round agreements emphasize the national treatment requirements in GATT article III. The TBT agreement was invoked in 1998 by the US and Canadian delegates against an EU proposal to regulate labelling of GM foods, which they regarded as an unnecessary technical barrier. If pursued, this would require assessment of scientific, economic, social and political risks. Each country may consider it necessary to conduct its own risk analysis. This would create complex problems for dispute panels. (The results from disputes that have been referred to panels are examined by Cottier and Pauwelyn.) Sampson concludes that the WTO function is to avoid unjustified impediments to trade. But do existing provisions give sufficient flexibility to address complex risk issues? Sampson’s chapter establishes the WTO framework for dealing with risk and identifies the relevant agreements. In Chapter 2, Neil Byron takes up the discussion as viewed by environmental lobbies. Green groups believe that the WTO impedes desirable environmental strategies and they would wish to transform the WTO into the guardian of the Earth’s environment. This confrontation is one of the most dangerous because it could end up restoring trade protection and reducing environmental protection. Byron agrees with Sampson that the WTO has no role in assessing scientific risk, especially when the environment is involved, and it should not arbitrate on acceptable levels of risk or on risk management. However, the WTO is responsible for assessing whether its trade rules are being flouted using risk as an excuse. The precautionary principle often features in such risk assessments. The European Commission (EC) has become a strong advocate of the precautionary principle in many international agreements including the recent Cartagena Protocol on Biosafety. The EC position leans towards social deter-

6


mination of risk and political processes that play down scientific estimates of risk. (The EC has published a ‘communication’ on use of the precautionary principle, which is an appendix to this report.) Byron analyses this controversial approach and exposes ambiguities in alternative definitions of the precautionary principle that cause many problems. He concludes, like Sampson (and later, Nunn), that there is no general acceptance of this principle as international law. Byron concludes that environmental groups seem to believe that trade measures administered by the WTO offer the best hope of enforcing their goals, and this accounts for the intensity of feeling generated against WTO rules requiring consistent and transparent procedures. Chapters 4 and 5 describe experience with the dispute settlement process and the uncertainties that have arisen between panel reports and re-interpretations of evidence by the Appellate Body. Thomas Cottier has participated in several dispute panels and has wide experience in the interpretations of WTO agreements. Joost Pauwelyn is a WTO official dealing with trade disputes. Both focus on disputes brought under the SPS agreement. Cottier separates scientific from social assessments of risk, and separates risk management from risk assessment, which is consistent with decisions by the beef-hormones panel. He calls for a suitable methodology for taking account of social and economic considerations in risk management, including social and political acceptance of risk, something not recognized in the SPS agreement. The need to adopt international standards has to begin with scientific evidence, as required by the SPS agreement. National authorities could be required to examine conformity of their measures with international standards to avoid disputes. Clarification of scientific interpretations, however, would help to eliminate contradictions between panel and Appellate Body reports. Trade remedies could be tightened by introducing compensation for delays in achieving international standards. Cottier acknowledges that conflicts in society over biotechnology products bring new problems and he calls for a review of the SPS agreement to take account of experience over the past five years. Pauwelyn traces the procedures and the evolution of case law in three trade disputes conducted using the SPS agreement – EU–US beef-hormones, Japan–US agricultural products and Australia–Canada salmon. The 1999 review of the SPS agreement drawing on this experience raised some matters of concern but no changes to the text were recommended to the ministerial meeting by the DSB. The type of amendments suggested by Cottier open the whole agreement to renegotiation, which was regarded as too radical in the lead-up to the Seattle ministerial meeting. Moreover, the case-law approach allows an evolutionary process to interpretation of the SPS agreement and panel procedures. For example, the EU beef-hormones dispute established that risk assessment should be based on scientific evidence and not involve social or

Introduction

7

political values. Once a risk assessment is made, it is up to the member government to judge an acceptable level of risk and, if necessary, an appropriate non-discriminatory SPS measure (ALOP). In many instances, the Appellate Body has reversed or qualified dispute panel decisions, which is causing confusions on interpretations and weakening the case-law approach. Adoption of dispute panel reports is delayed until an appeal has been held. When a decision is finalized by the DSB, implementation of the findings is invariably delayed. Decisions on compensation or retaliation create bad feeling. Whether trade sanctions against offenders are appropriate in terms of WTO principles on non-discrimination and trade liberalization is a fundamental question. Part II on managing risk takes a broader view of risk assessment and risk management in policymaking. The three chapters in this part cover definitions and perceptions of risk, and how they affect government policies. Marion Wooldridge is a quarantine expert in the UK Ministry of Agriculture and has given expert evidence to WTO dispute panels. In Chapter 6 she regards risk management as the key requirement of policymaking, to reduce uncertainties and anxieties in the community. Later she admits that risk taking is also the driving force for progress because risk takers earn high returns, but that definition is rather broader than her specific interest, which is quarantine – the protection of human, animal and plant health. If zero risk is not possible, how much risk is acceptable? This became a problem of perception, which Christine Deane later shows is a morass of alternative sources of information and opinion, complicated by competing interest groups and disinformation. Wooldridge posits that the first question is, ‘What is the acceptable level of risk?’ This is exactly where dispute panels find themselves in the SPS cases. This ‘judgement’ will determine the safeguards necessary (ALOP). In a review of requirements of international risk management, Wooldridge assesses favourably the principles of the SPS agreement. The traditional approach to risk assessment was to gather information on hazards and the consequent risks, which could then be compared with expected benefits from an activity and alternative safeguards. Dramatic changes in dissemination of information have shifted the emphasis of this approach to concern about ‘stakeholders’’ attitudes, which complicates risk assessments and any proposed policies. Wooldridge examines the stakeholder position and risk communication in detail. The political clout of ‘stakeholders’ (especially in the EU) evidently complicates decision making, and once policymakers open their deliberations to such groups it becomes difficult to exclude any group, however extreme or irrelevant. Ultimately, all opinions cannot be satisfied. In Chapter 7 Michael Nunn provides a very thoughtful and thorough chapter on risk analysis and identifies clearly the different stages in that process; risk

8


assessment, risk management and risk communication. He relates risk analysis to trade and technical standards. Nunn defines risk assessment as the identification of the risks or hazards, the assignment of probability of each risk and an estimation of the consequences of a risk. Quantifying risk poses many problems even when limited to scientific evidence, and difficulties of estimation have encouraged resorting to qualitative approaches in quarantine disputes. Moreover, variability in scientific risk assessment causes concern, particularly when associated with environmental problems. Nunn argues that sensitivity analysis can assist by showing that often only a few critical points significantly affect overall probabilities. However, where uncertainty occurs there are always advocates for the precautionary principle, which means a conservative approach to risk. Such approaches become especially difficult when quantitative assessments of risk consider economic and social factors as well as scientific evidence. He concludes that in future, trade disputes will require risk assessment by multidisciplinary teams. Christine Deane reviews evidence on risk perceptions, which introduces the additional uncertainties of opinion and disinformation. Deane concentrates on public perceptions of risks from biotechnology which extend beyond scientific risk to incorporate social attitudes, personal values and education. Once again, the role of ‘stakeholders’ becomes significant. By surveying public opinion polls, Deane is generally optimistic that new technology is acquiring more acceptance in OECD countries, but much scepticism still exists in these communities. Scientists and the general public have different perceptions of risk, and with social values dominating socially active groups (‘civil society’), it means risk perceptions depend more on the characteristics of the public than on risk probabilities. This is revealed in public acceptance of biotechnology for medical purposes while it is rejected in GM foods. With public opinion and ‘stakeholders’ becoming so significant in risk evaluation, the opinion formers in society become important. Surveys show that ‘experts’ (scientists, economists, bureaucrats) are not trusted. TV programmes, consumer organizations, NGOs and newspapers are thought more reliable. Consultation is regarded as one device to change public opinion in the EU, and establishing an effective independent regulatory system is also valuable (compare the US Food and Drug Authority (FDA) with food safety worries in Europe). The third element that Deane identifies as significant in influencing public perceptions of risk is education. Consultation and dissemination of information are important, but education can be more fundamental. The concept of probability is not widely understood judging by media reporting of scientific results. Most people focus on personal effects should an identified risk materialize. A probability of infection arising from a vaccination of 1:1 000 000

Introduction

9

dissuades some mothers from having a child vaccinated, but no weight is given to the 1:10 000 risk of contracting the disease without such protection. The same misunderstanding of probabilities is apparent in smokers. This suggests basic education is very important for public risk perception. Part III introduces the politics of international negotiations. Aynsley Kellow (Chapter 9) explores the politics of risk and the balancing of conflicting interests in international negotiations. Kaye Dal Bon presents a history of extended OECD negotiations on reducing risks from lead. This experience indicates that low risk perceptions can differ and result in conflicting proposals, even when all the evidence is scientific. Aynsley Kellow draws on extensive research on multilateral environmental agreements (MEAs). He divides risk analysis into four stages: hazard identification, risk estimation, risk evaluation and risk management. The first three are covered by risk assessment in Nunn’s approach and Kellow combines risk management with risk communication. But Kellow focuses on socio-political factors which Nunn incorporates into risk assessment and emphasizes in risk communication. Kellow points out that in international negotiations there is a temptation to seek unanimity (or at least agreement) in science: a fault that could be levelled at the SPS agreement. But on environmental issues, the sociopolitical forces tend to be as significant as the scientific evidence: references are made to the Kyoto Protocol and the Basel Convention. Kellow argues that attempting to keep socio-economic interests out of risk management at the international level is to invite the contamination of science by interests. Rather, the evaluative aspects of risks need to be explicitly included at the appropriate stage to enhance negotiated agreements. This would reduce the chance of measures being used as trade impediments. Dal Bon’s review of OECD negotiations on lead contamination in Chapter 10 is a valuable case study. It shows how mistaken perceptions can arise in measurement of lead levels under different circumstances. Happily European misperceptions of lead levels were corrected in these extended OECD negotiations. Other attempts to condemn chemical uses may not be properly constrained, causing potential damage from protection for false environmental reasons (for example, restricting use of dioxin in developing countries to control mosquitos may satisfy OECD environmentalists but it does not help developing countries to control disease). Part IV draws on Australian experience with the SPS agreement to evaluate interactions between national policies and international agreements. The intensity of the quarantine debate in Australia over a broad range of import embargoes makes this a review with implications for many other countries. In Chapter 11, Wilson and Gascoine (AQIS) review the contents of the SPS agreement and its relationships with other WTO agreements and international standards organizations. They go on to examine quarantine risk analysis in

10


Australia after the Nairn review of Australian Quarantine (1996) and compare these procedures with obligations in the SPS agreement, including references to the salmon dispute proceedings. The authors conclude that the SPS agreement has been beneficial and the gain real. Ambiguities remain in the drafting, but clarifications from experience are preferable to a substantial re-negotiation of the present text. Donald MacLaren (Chapter 12) undertakes an economic analysis of the SPS provisions in the context of bulk imports of feed grains into Australia in 1994. He casts doubt on the practicality of the SPS agreement because it assumes that scientific evidence is unambiguous and risk probabilities can be estimated. MacLaren argues that even if very small probabilities of damage exist, very high costs might occur. Governments are very sensitive to these, and unforeseen contingencies cannot be allowed for. All these considerations complicate national decisions on quarantine risks, while international assessments of these risks may place different weights on the risks and costs of outcomes. Chapter 13 contains a business view of quarantine regulations. Lyall Howard acknowledges the AQIS assessment of the SPS agreement and the ambiguities and gaps that need to be clarified. Some Nairn report submissions indicated that uncertainties surround risk assessments and MacLaren’s paper has formalized these problems in a theoretical analysis. The 1994 grains case analysed by MacLaren has provided new information on risks for future national assessments. Howard notes that a harmonized approach to quarantine regulation should benefit world trade, but the three chapters in this part also show a proper balance still has to be found between trade and SPS interests. Part V introduces the controversial subject of genetically modified organisms (GMOs). Nancy Millis (Chapter 14) is Chair of Australia’s Genetic Manipulation Advisory Committee and has had a distinguished career in microbiology. While acknowledging that proper testing of GM crops is necessary, Millis points out that much genetic engineering simply accelerates normal breeding within species that has been followed for decades (even centuries). Transgenic manipulation (splicing genes from different species) needs more careful monitoring but on the whole this is still in laboratories and strictly supervised. Testing of GM crops needs to be scrutinized, but opposing all GM plants on principle is irrational, especially when it is ‘within species’ rather than transgenic – and seems ridiculous when genetic engineering for medical purposes is welcomed. Professor Millis explains the complicated procedures and committees being introduced in Australia to monitor and evaluate GMOs. The draft legislation, which has yet to be discussed in Parliament, constructs a pyramid of screening bodies and review committees to assess GMOs at the experimental stage and before release for experimental or commercial use. This is an example of regulatory mechanisms that are being prepared by most national governments.

Introduction

11

Robertson’s Chapter 15, ‘GM foods and global trade’ draws attention to the major trade issues surrounding the GM foods issue. This was expected to form part of the general discussion of biotechnology in the new trade round. Interestingly, many of the risk issues and prejudices evident in WTO disputes are also present in the GM food debate. The volume concludes with a summary of the main points raised during the seminar and some assessment of problems. Globalization of economic activity and the adoption of a system of trade rules to facilitate integration have highlighted problems of risk evaluation, assessment and management. The papers here attempt to clarify some of the issues arising in the growing controversy over risk. The final chapter considers the issues surrounding risk management as globalization and the counterforce of ‘civil society’ confront.

PART I

Risk and the WTO

2.

Risk and the WTO Gary P. Sampson*

Risk assessment is the scientific determination of the relationship between cause and effect in situations where adverse effects may occur. While the process of identifying, analysing and assessing risk is the province of experts, risk management – the determination of an acceptable level of risk and the appropriate level of protection (ALOP) – involves elements of political judgement. In many instances, the importance that public opinion assigns to a specific risk appears to bear little relation to science-based risk assessments. For example, cigarette smoking poses a greater scientific risk to health than eating hormone-treated meat, yet in many European countries, the first is tolerated and the second is banned. How risks are managed can provide opportunities for arbitrary and unjustified restrictions on trade and commerce. The prevention of unwarranted discriminatory barriers to trade is the raison d’être for WTO rules and disciplines. The present challenge facing WTO members is implementing its component agreements to provide flexibility for domestic policies without creating disguised barriers to trade. Balancing these conflicting interests can lead to controversy and disputes in international trade. Moreover, public perceptions of risk and their management differ between WTO member countries. The purpose of this chapter is to address the manner in which risk assessment, risk management and public perceptions of risk bear on the work of the WTO. This depends on how the problem presents itself and how the WTO agreements deal with their trade dimension. The intention is not to be prescriptive, nor to cover all WTO agreements where risk is relevant. The aim is to identify key areas in the WTO where risk is important and to examine relationships between risk management and trade relations.

TRADE AND THE ENVIRONMENT The WTO Committee on Trade and Environment (CTE) was established by a decision of the Marrakesh ministerial meeting (April 1994). The CTE was given *

Professor Sampson is on leave from the WTO Secretariat in Geneva. Until January 1999, he was Director, Trade and Environment Division. This paper is part of a larger study on the Role of the WTO in Global Governance financed by the Ford Foundation.

15

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Risk and the WTO

a broad mandate to identify the relationships between trade and environmental measures and to make recommendations on whether any modifications are required to permit a positive interaction between them. The CTE presented a comprehensive report to the 1996 WTO ministerial meeting in Singapore which established the trade and environment issues on the WTO agenda through the continuation of the Committee. While the CTE does not specifically address matters relating to risk management, it is a recurring theme. For example, the acceptability of using trade sanctions as a policy tool to deal with risks to the environment is dealt with under various headings. They may take the form of the acceptability of Multilateral Environment Agreements (MEAs) that provide measures to deal with environmental problems that are not consistent with WTO agreements (for example banning trade in endangered species and hazardous wastes). Another example is discussion of the conditions under which exceptions can be sought to employ measures that protect against risk to the environment which would otherwise breach WTO obligations. Two specific parameters guide the CTE’s work: (i)

the competence of the WTO is limited to trade and aspects of environmental policies which may result in significant trade effects; (ii) policy coordination to promote sustainable development must uphold and safeguard the principles of the multilateral trading system. In other words, there is no intention that the WTO should become an environmental agency, nor that it should review national environmental priorities, set environmental standards or develop global policies on the environment. These responsibilities belong to national governments and inter-governmental organizations designed for the task. The CTE work programme has focused on rules and disciplines of the multilateral trading system and trade-related aspects of environmental issues, including trade measures that may be employed according to MEAs. WTO provisions on non-discrimination, most-favoured-nation and national treatment (GATT articles I and III), and transparency (GATT article X) are relevant to any use of trade measures for environmental purposes. Beyond that, the exceptions clauses contained in GATT article XX allow members to give priority to public health and safety, conserving natural resources and national environmental goals ahead of its WTO obligations, as long as the measures used do not go beyond what is necessary, in terms of trade restrictions or discrimination.

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17

WTO RULES AND THE ENVIRONMENT An important challenge is to deal with the interface between trade policy and environmental policy designed to reduce risks to the environment. Measures to discriminate among products in international trade because of the way they are produced is prohibited through the interpretation of ‘like products’ in GATT article III on national treatment. For environmentalists, the life-cycle approach differentiates between products precisely on the grounds that they are produced differently. Different production methods constitute grounds for discriminating between products in environmental regulations. Measures taken to reduce greenhouse gas emissions as part of the Framework Convention on Climate Change (FCCC, 1997) provide one example of this conflict, which is not helped by the uncertainty surrounding the science of ‘climate change’. There are differing scientific findings relating to the risk of greenhouse gas emissions heating the upper atmosphere, and different national priorities over management of this risk. The FCCC is intended to establish institutional and economic mechanisms to provide negotiated reductions in global emissions of greenhouse gases. The FCCC addresses trade effects: ‘Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.’ It does not provide for any specific trade-related environmental measures. The Kyoto Protocol to the FCCC requires that the parties shall strive to implement policies and measures ‘in such a way as to minimize adverse effects ... on international trade’ (FCCC article 2:3). After the Kyoto agreement establishing emission reduction targets, the next step is to determine how emissions should be reduced. Several measures are already in use; including taxes on carbon content, mandatory or ‘voluntary’ emission standards, subsidies for environmentally friendly production processes, labelling and certification schemes and markets in emission permits. The Kyoto Protocol itself contains mechanisms for the fulfilment of commitments; Annex I countries are allowed to act within ‘bubbles’ to achieve their emission reduction commitments (that is, share responsibilities to achieve commitments). All these measures to reduce emissions will affect international trade, through costs of production and competitiveness on world markets. Individual producers who lose in this process will demand compensation for reduced competitiveness arising from different emission standards or taxation. Such measures will raise complex issues about WTO consistency; for example, border tax adjustments. Enforcement of environmental standards by discrimination between imported products according to production processes contradicts fundamental WTO principles. It has been argued also that preferential trading of emission entitlements between countries within ‘pollution’ bubbles may be subject to WTO roles relating to regional trading arrangements (GATT article

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XXIV). Any inconsistencies between the rights and obligations of the WTO and conditions in future global environmental treaties may lead to new disputes (Goldberg, 1995; Robertson, 1995). These conflicts over measures to reduce greenhouse emissions are complicated further by the assessment and management of risk. The FCCC gives formal recognition to the precautionary principle: Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation, taking into account that policies and measures to deal with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost.

Effective consideration depends on the risk of damage and the uncertainty of pre-emptive actions. Disagreements about the risk that greenhouse gas emissions will alter climatic conditions will influence any assessment of risk. The WTO does not inhibit governments from taking action to minimize risks associated with the production and consumption within national boundaries, as long as foreign goods are treated no less favourably than domestic goods inside the country. They can be prohibited, regulated or subject to charges, according to the conditions of GATT article III. High levels of carbon dioxide emissions and energy-use may be penalized or managed by a government to reduce the risk of climate warming. The WTO permits governments to levy taxes according to method of production, as long as an imported product or service is not discriminated against according to the production process such as its energy intensity. An importing country should not discriminate in trade. An import cannot be treated differently from a ‘like product’ (that is, a product with the same physical characteristics) produced domestically (GATT article III). To be WTO consistent, products that have the same physical form have to be treated as ‘like products’, irrespective of how they have been produced abroad (for example, even if produced in an environmentally unfriendly manner). Despite the GATT/WTO principles of non-discrimination and transparency, there are provisions for ‘exceptions’ from WTO obligations. Under specific circumstances, WTO members can invoke measures that normally would constitute a breach of WTO obligations. The circumstances for exceptions are set out in GATT article XX: General Exceptions, which includes measures necessary to protect human, animal or plant life or health or to conserve natural resources. Measures taken under GATT article XX can be effective only within the boundaries of the implementing country. In the case of greenhouse gas emissions, the production process in an exporting country is outside the jurisdiction of the importing country. If such trade action is taken in the context of

Risk and the WTO

19

a legal instrument addressing reductions in greenhouse gas emissions, it would be inconsistent with the necessity test of GATT article XX(b) (if taken against a WTO member that is not a signatory of that environmental agreement). According to GATT article XX, any measure which breaches WTO obligations should not be used as a means of arbitrary or unjustifiable discrimination between countries, or a disguised restriction on international trade. Further, the measures must be necessary to protect the environment; that is, other means are not available. In the case of measures to restrict trade in products that emit too much carbon dioxide, they could be consistent with a multilateral environmental agreement (MEA). While the WTO does not have the protection of the environment as a primary aim, this commitment has been acknowledged in the preamble to the agreement establishing the WTO – members agreed to ‘protect and preserve the environment and to enhance the means for doing so’. In November 1998 in the US shrimp-turtle dispute, the report of the Appellate Body drew on the preamble of the WTO agreement to assert ‘we have not decided that the sovereign nations that are members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should.’ Furthermore, WTO members are free to adopt their own policies aimed at protecting the environment as long as, in doing so, they fulfil their obligations and respect the rights of other members under the WTO agreement. This interpretation regards principles expressed in the preamble as general legal commitments, rather than specific obligations of states. In making its ruling, the Appellate Body clearly assigned importance to promoting sustainable development and preserving the environment, something that appears only in the WTO preamble. In this case, however, there was agreement between all the parties to the dispute that turtles are an endangered species – that is, there is a serious risk of their extinction. What was not agreed to and which led to the sanctions by the United States is how the risk should be managed. WTO members recognize that the organization has no special expertise to deal with the risk assessment or management of environmental problems such as greenhouse gases. Nor is it equipped to make judgements on the most appropriate means to reduce greenhouse gas emissions. MEAs are the best instruments to coordinate policies to deal with global and trans-boundary environmental problems. Members of the WTO are, however, sensitive that trade measures taken using MEAs can contradict WTO rights and obligations. Only about 20 MEAs contain trade provisions: some, such as the FCCC and the Kyoto Protocol, could have important commercial and political consequences. The CTE has examined suggestions that the WTO should formally recognize how some measures designed to deal with risk and available within MEAs may be inconsistent with WTO provisions. If special treatment is given to any specific MEA, provisions would have to be made for WTO countries not

20

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wishing to join the MEA; a country may be unpersuaded by the scientific evidence, it may not have access to the necessary technology, or it may not agree with the objectives of the MEA. Society may simply not assign the same priority to the management of the risk in question.

ENVIRONMENT: THE PRECAUTIONARY PRINCIPLE The Rio Declaration (UNCED, 1992) defines the precautionary principle in similar fashion to the FCCC (p. 20). Some OECD governments and the European Commission (EC), in particular, regard the precautionary principle as accepted into customary international law. This suits environmental groups and their advocates (Sands, 1995). The Appellate Body of the WTO’s Dispute Settlement Board, however, has not accepted the precautionary principle as customary law (US–EU dispute reports on hormone-treated beef (beef-hormones)). The legal underpinnings of the precautionary principle are elusive and difficult to define. Precaution is a ‘culturally framed concept ... muddled in policy advice and subject to the whims of international diplomacy and the unpredictable public mood over the true cost of sustainable living’ (O’Riordan and Cameron, 1994). Because the precautionary principle is so flexible and can adapt to circumstances, it remains legally controversial. Precautionary measures require some scientific evidence before they are used and evidence that inaction would lead to irreversible damage or demonstrate harm to the environment (O’Riordan and Cameron, 1994). The precautionary principle depends on determining when the definition shifts the burden of proof towards protection of the environment, or heath and safety. This threshold can be high, as in ‘serious or irreversible harm to the environment’, or lower, as in ‘may cause harm to the environment’. The precautionary principle has been incorporated into some international environmental agreements.1 The treaty establishing the European Community incorporates it into European law, which was significant in the EU–US WTO dispute over beef-fed growth hormones (beef-hormones). The WTO panel and the Appellate Body ruled against the EU employing trade restrictions on hormone-treated beef because of insufficient scientific evidence (Pauwelyn, Chapter 5, this volume). The acceptance of the precautionary principle into the text of the UN Biodiversity Convention and the Biosafety Protocol is also controversial. The Biodiversity Convention states ‘where there is a threat of significant reduction or loss of biological diversity, lack of full scientific certainty should not be used as a reason for postponing measures to avoid or minimize such a threat’ (UNEP, 1994). This could become an important source

Risk and the WTO

21

of restrictions on trade in products using genetically modified organisms if it is extended to the bio-safety protocol. Notwithstanding the importance that some ascribe to the precautionary principle, there is no international consensus to accept it or agree on any one definition.2 This lack of consensus has already caused controversy in WTO disputes, which will intensify if the precautionary principle is inscribed into international agreements, such as the FCCC and the Biodiversity Protocol. The status of the precautionary principle in international treaties has immediate relevance to risk. If a precautionary approach can be invoked, the analysis and measurement of risk becomes less relevant because any risk becomes sufficient to justify preventative action, including trade protection. It is the role of the WTO to distinguish between legitimate trade protectionist measures and those that contravene WTO rules.

WTO PRODUCT STANDARDS AND REGULATIONS The core concept of non-discrimination as contained in the GATT 1994, and the interpretation of ‘like products’ and ‘non-product related production processes’ are criticized (and misunderstood) by some environmental groups. But if there is a legitimate basis to discriminate between ‘like products’, the WTO members have argued in the CTE that the grounds should be established by setting standards in an MEA. The agreement on technical barriers to trade (TBT agreement) addresses matters relating to risk assessment and management through assigning the responsibility to experts. The TBT agreement encourages the use of international standards developed by international standards organizations with the necessary technical competence. There is a fine line between the right of governments to adopt the standards they consider appropriate, and the use of standards that have trade protection as their intent. Internationally recognized standards are assumed to constitute acceptable non-trade measures. So the TBT agreement defers to specialized organizations to establish standards. According to the TBT agreement, the difference between a standard and a technical regulation rests on compliance and enforcement. While conformity with standards is voluntary, technical regulations are mandatory. If an imported product does not fulfil the requirements of a technical regulation, it will not be tradable. In the case of standards, non-complying imports will be allowed but they may not be acceptable to consumers.3 Most technical regulations and standards adopted are to protect human safety or health. Five principles govern the preparation, adoption and application of technical regulations, standards and conformity procedures in the TBT agreement:

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Risk and the WTO

(a) members must respect the fundamental principles of non-discrimination and national treatment in their use of technical regulations, standards and conformity procedures; no preference may be granted to national producers in charging fees for testing, inspection, and so on; (b) members shall ensure that technical regulations, standards and conformity assessment procedures are not prepared, adapted or applied to create unnecessary obstacles to trade; (c) members, whenever appropriate, should use relevant standards or conformity assessment guidelines provided by international standards organizations; (d) members should, where possible, recognize foreign technical regulations as equivalent to their own, and consult with other authorities to seek mutual recognition of standards; (e) transparency should be encouraged through notification processes and the establishment of national information centres. Technical barriers to trade result from the adoption and application of different regulations and conformity assessment procedures. Differences may exist for legitimate reasons such as different tastes, income levels, geographical and climatic resources. The TBT agreement acknowledges legitimate divergences and provides for flexibility in the preparation, adoption and application of national technical regulations. The preamble to the TBT agreement notes ‘no country should be prevented from taking measures necessary to ensure the quality of its exports, or for the protection of human, animal, and plant life or health, of the environment, or for the prevention of deceptive practices, at the levels it considers appropriate’. TBT article 2.2 admonishes that technical regulations should not be prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade. It should choose the approach which has the least restrictive impact on trade. In consequence, international standards, guidelines or recommendations should be adopted to avoid unnecessary obstacles to trade. Unnecessary obstacles to trade may result from regulations that are more restrictive than necessary to achieve a given policy objective. Risks of over regulation arise from inadequate consideration of available technical and scientific information, technology or product uses. TBT article 2.2 lists objectives that are legitimate, including national security requirements, prevention of deceptive practices, protection of human health or safety, protection of animal and plant life or health, and the environment. The TBT agreement embraces the GATT’s non-discrimination and national treatment obligations. TBT article 2.1 states that ‘in respect of their technical regulations, products imported from the territory of any member be accorded treatment no less favourable than that accorded to like products of national

Risk and the WTO

23

origin and to like products originating in any other country’. A similar provision applies to standardization. The TBT agreement encourages members to adopt international standards unless their use would be ineffective or inappropriate; for example, because of climatic or geographical conditions or fundamental technological problems (TBT article 2.4). Risk assessment is becoming relevant to the TBT. At the September 1998 TBT committee meeting, the United States and Canada expressed concern over EU proposals to regulate the labelling of products containing genetically modified soya or maize. They argued that such labels were unnecessary technical barriers to trade since no scientific reason existed to differentiate foodstuffs produced from genetically modified crops. This dispute has now become a fundamental issue of biotechnology that transcends several WTO agreements (Robertson, Chapter 15, this volume).

SANITARY AND PHYTOSANITARY MEASURES Before the Uruguay Round, quarantine measures to protect human, animal or plant life and health were allowed under GATT article XX(b). The complicated effects on trade, however, required more precise rules and the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) was negotiated in the Uruguay Round (Wilson and Gascoine, Chapter 11, this volume). The SPS agreement recognizes members’ sovereign rights to apply quarantine measures which may restrict trade in order to implement national laws protecting human, animal or plant life or health. In accordance with the nondiscrimination principle, such measures should apply to domestically produced food or local animal and plant diseases, as well as to products coming from other countries, and without discriminating among foreign sources of supply. Sanitary and phytosanitary measures should not become disguised restrictions to trade. The main purpose of the SPS agreement is to reduce arbitrariness of decisions by clarifying which factors should be taken into account when imposing quarantine measures. Measures to ensure food safety and animal and plant health should be based on the analysis and assessment of objective and accurate scientific data. This has proved harder to supervise than expected (Pauwelyn, Chapter 5, this volume). International standard-setting organizations offer ready-made yardsticks for WTO members, and most countries participate in these standards committees. The SPS agreement explicitly refers to three standard-setting organizations; the FAO/WHO Codex Alimentarius Commission, the International Office of Epizootics (OIE), and the international and regional organizations operating within the framework of the FAO International Plant Protection Convention

24

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(IPPC). These organizations provide expert advice to WTO dispute settlement panels. Before the WTO was established, however, international standards, guidelines, recommendations and so on, were adopted by governments on a voluntary basis. Since 1 January 1995, these norms have achieved new status according to the SPS agreement, although their use is not compulsory. One criticism of the SPS agreement is the adoption of standards that were not originally legally binding, but have acquired that status as part of the legally binding SPS agreement.4 When adopting these norms, a WTO member is presumed to be in full compliance with the SPS agreement. If a country decides to establish standards that exceed existing codex, OIE or IPPC standards, it requires scientific evidence to support the higher standards. A harmonized standard of risk management would be facilitated if all WTO members adopted international standards, but they do not exist for all goods and services produced and traded. Moreover, different circumstances (climate, income levels and so on) may require different standards. Each country needs to conduct its own risk assessment and determine its acceptable level of risk. The exporting country has to demonstrate that its domestic quarantine and technical standards are at least as good as those required by the importing country. Even so, under present agreements, WTO members should be guided by scientific principles when deciding their appropriate level of protection. The SPS agreement has generated some significant trade disputes and revealed that scientific evidence does not always provide clear-cut conclusions.5 Hence disputes over EU import bans on beef treated with growth hormones (beef-hormones), Australia’s quarantine barriers against imported fresh salmon (salmon), and Japan’s quarantine testing of imported fruit (agricultural products) have resulted in intricate legal battles in the WTO. (These three SPS disputes are examined in detail in the following chapters.) These cases are evolving new legal interpretations of Uruguay Round agreements that will influence applications of multilateral trade rules in future. A vital element in the scientific evidence concerns the risk associated with changes in the SPS measures, and what level of risk is acceptable. What is the risk a disease or pest might be introduced if standards are lowered? And what might be the economic/social costs of such an invasion? How might risk be assessed and then managed?

A NEW DIMENSION The principal goal of the WTO is to avoid unjustified or discriminatory barriers to trade. As new agreements to deal with non-tariff measures have been established, new difficulties of implementation have come to prominence. In

Risk and the WTO

25

particular, ‘risk’ has become contentious in the context of the environment, quarantine standards, technical standards and new products (such as those derived from genetically modified organisms). Member countries evaluate the risks differently, have different perceptions of risk and how it can be managed. The critical question is what constitutes an appropriate response to a particular risk? WTO concern is that protection from risk should not be disguised trade protection. How risks are managed can lead to abuse and existing GATT articles and other WTO agreements contain provisions to prevent such abuse, but can they cope with complex new multi-dimensional questions and conflicts between environmental and trade objectives, scientific and socio-economic goals, national and international commitments? The WTO must rule on the legitimacy of trade measures. But do the existing WTO provisions provide sufficient flexibility to address issues of an economic, social, cultural and environmental nature?

NOTES 1. This includes the preamble of the 1985 Vienna Convention, the Montreal Protocol, the Framework Convention on Climate Change, the London Dumping Convention, as well as the Rio Declaration of 1992. The Convention on Biological Diversity does not mention the principle by name, but defines its properties within the agreement. 2. This consideration is formally recognized in principle 7 of the Rio Declaration, which states that there is a ‘common but differentiated responsibility’ of states in resolving environmental problems of a global nature. 3. For example an energy-intensive refrigerator, that does not qualify for a national eco-label, may be admitted for sale, but environmentally sensitive consumers might simply abstain from purchasing it. 4. Requirements that motor vehicles carry reflective devices to prevent road accidents; labelling requirements for cigarettes, drugs and alcoholic beverages; electric insulation requirements; car emission standards, or limits on the use of certain dying and tanning materials. 5. The codex standard for minimum residue levels for growth promoting hormones were adopted by a vote of 33–29, with seven abstentions. The SPS agreement requires that the EU implement a full risk assessment for hormones if the minimum levels are agreed to by less than half of the codex experts.

REFERENCES Goldberg, D.M. (1995), ‘The Framework Convention on Climate Change’, in R. Houseman et al. (eds), The Use of Trade Measures in Select Multilateral Environment Agreements, UNEP. O’Riordan, T. and J. Cameron (1994), ‘The History and Contemporary Significance of the Precautionary Principle’, Interpreting the Precautionary Principle, London: Earthscan.

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Robertson, D. (1995), ‘Environmental Constraints on Development and International Rules’, in R. Garnaut, E. Grill and J. Reidel (eds), Sustaining Export Oriented Development, Cambridge: Cambridge University Press. Sands, Philippe (ed.) (1995), Principles of International Environmental Law, Manchester: Manchester University Press. UNCED (1992), Rio Declaration on Environment and Development; principle 15. UNEP (1994), Convention on Biodiversity; Preamble, UNEP/CBD/04/1, Geneva. WTO (1997), Taxes and Charges for Environmental Purposes: Border Tax Adjustment, WT/CTE/W/47, May, Geneva.

3.

Risk, the environment and MEAs Neil Byron

It is increasingly popular to paint a demonized image of the WTO as the ‘World Trans-Science Organization, a global meta-regulator’. It is allegedly resolving scientific issues such as carcinogenicity, decreeing what are acceptable levels of risk or scientific uncertainty, and making decisions about appropriate levels of public health and safety. In doing so, it stands accused of overriding the role and authority of national governments to protect their people and their lands. It might seem like exaggerated rhetoric, except for the fact that there are some who believe it, and these critics – or opponents – have some powerful allies, particularly amongst international environmental NGOs and on the fringes of secretariats to the MEAs. This suggests that the trade–environment debate suffers from a serious communication failure or worse. Some environmentalists apparently want to transform the WTO into the supreme guardian of the Earth’s environment. Their goals and standards for the international environmental agenda would come from MEAs. Those goals and standards would be incorporated into the WTO, making trade restrictions and bans the instrument of choice for environmental policy. The discussions and protests over genetically modified foods indicate the control consumers in developed countries would like to acquire over certain production processes. Sampson’s chapter takes us through a discussion of risk and rationality, noting the irrationality, or at least inconsistency, of many government decisions based on perceived public demands or opinions. The case is built up from general trade–environment linkages and the existing (and prospective) role and the various interpretations of the precautionary principle. This lays the basis for a discussion of the WTO’s current rules and processes regarding the environment. These in turn are then extended into the specific areas where risk assessment and response are important – namely technical product standards and regulations, and quarantine standards. The chapter articulates a consistent thread throughout the whole body of practice – consistency, transparency, the rule of principle over expediency, and the principles of national treatment and most favoured nation treatment. Thus Chapter 2 traces the logical development of the practice of risk assessment to its current state, but one missing element in the story is the 27

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Risk and the WTO

author’s assessment of how processes might evolve from here, and what forces might shape that. Clearly, there is no role for the WTO in scientific risk assessment of environmental (or public health and safety) hazards and risks – the scientific determination of the relationship between cause and effect in situations where adverse effects can occur. Nor does it (or should it) attempt to arbitrate on what constitutes an acceptable level of risk, or the most appropriate risk management strategy. However, the WTO does have the responsibility and authority to rule on whether risk is being used as an ‘unjustified and discriminatory barrier to trade’. Differentiating between a (valid) reason and an excuse can be difficult, and this is precisely where the WTO stands. At the extremes of the spectrum of possible scenarios, it is easy to distinguish black from white, but in the middle are many shades of grey – plausible excuses for protectionism, and apparently strong cases for bending the rules. It seems that in many cases, the protagonists in the trade–environment debate do not have opposite (black/white) objectives, but rather have conflicting priorities. To caricature the conflicting objectives: (a) Pursuing gains from trade liberalization; environmental problems can and should be dealt with only in other fora. (b) Pursuing gains from trade liberalization; subject to a constraint of no serious environmental harm and no direct incompatibility with the pursuit of MEA objectives. (c) Pursuing environmental gains; recognizing a constraint of not damaging trade too much. (d) Pursuing environmental gains, at any price, whenever possible. People in the first and last of these groups have very little common understanding as a basis for communication. Most international discussions seem to be at the interface of (b) and (c) above. Different organizations quite legitimately have different focuses and responsibilities. In cases of conflict in policy coordination and priorities, the WTO’s position could hardly be anything but to uphold and safeguard the principles of the multilateral trading system, that is more like (b) above. The MEAs are, quite rightly, concerned solely with achieving environmental gains but, in practice, they have demonstrated awareness of the consequences of distorting world trade in the process of achieving their aims. Oxley (1999) has argued that a major reason why environmental organizations want to use the WTO’s strong and effective apparatus is the inherent weakness or fuzziness of enforcement measures within the MEAs. This question will be dealt with in the final section, asking whether trade measures even work in pursuit of MEA objectives.

Risk, the environment and MEAs

29

THE PRECAUTIONARY PRINCIPLE The precautionary principle is an increasingly important concept in environmental disputes. According to the Rio Declaration on Environment and Development:1 in order to protect the environment, the precautionary approach shall be widely applied by states according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. Note that it does not say anything like the following interpretation which is commonly used or implied in many environmental circles: where there are threats of serious or irreversible damage (either domestically or in any other member state), all member states must take all possible measures to prevent environmental degradation. The Rio version of the precautionary principle does not demand action, it merely negates one possible reason for inaction. Other reasons for postponing measures may be acceptable; the measures should be cost-effective, and so on. However, the new EC definition (EC, 1998) is quite different from the Rio one: ‘The precautionary principle is an approach to risk management that is applied in circumstances of scientific uncertainty, reflecting the need to take action in the face of potentially serious risks, without awaiting the results of scientific research.’ (For the latest 2000 version see appendix to this volume.) This seems to authorize and legitimize governments taking action even without due cause. It reverses the onus and the direction of action. Nevertheless, the more positive aspect of the EC paper is that it does require that: • the implementation of an approach based on the precautionary principle should start with an objective risk assessment identifying at each stage the degree of scientific uncertainty; • measures based on the precautionary principle must be proportionate to the risk which is to be limited or eliminated; • measures based on the precautionary principle must include a cost/benefit assessment with an eye to reducing the risk to a level that is acceptable to all the stakeholders; • measures based on the precautionary principle must establish responsibility as to who must furnish the scientific proof needed for a full risk assessment; • measures based on the precautionary principle must always be of a provisional nature, pending the results of scientific research performed to furnish the missing data and performance of a more objective risk assessment.

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This is consistent with the interpretation used later in this volume by Wooldridge ‘when the manager believes on the basis of an initial examination of the evidence, that there is a risk of serious (and possibly irreversible) consequences contingent upon a given hazard, steps should be put in place to minimize that risk whilst a more thorough risk analysis is performed’. But this is quite different from either the Rio or the SPS articulation of the precautionary principle. Clearly the concept continues to evolve, along with elaborations of the conditions under which it may or may not be applied, but much of the controversy may well be due to the ambiguity of alternative definitions in current usage. As Sampson notes ‘The legal underpinnings of the precautionary principle are elusive and difficult to define’. How rigorous is this concept, or does the precautionary principle have so much flexibility in application that it could be little more than ‘smoke and mirrors’? How much weight in decision-making can be given to such a nebulous and qualified concept? Note the differences between the relatively strong wording of the precautionary principle in the Rio Declaration and the Convention on Biological Diversity and the much more moderate articulation, and requirements for evidential support in the SPS (Sampson, Chapter 2, this volume). To speculate, why is the onus of proof reversed – perhaps because the primary objective in the former was environmental and the drafters and signatories were principally not economists concerned with trade impacts? Sampson (p. 20) takes us through a discussion of whether the precautionary principle is now established as a principle of customary international law.2 Principles as expressed in preambles are general legal commitments. In making its shrimp-turtle ruling, the Appellate Body clearly assigned importance to promoting sustainable development and preserving the environment, something that appears only in preambular language. It also found that living, as well as non-living, exhaustible resources are embraced under article XX(g). Nevertheless, the USA applied a measure that was legitimate under XX(g) – in a manner that constituted ‘arbitrary and unjustifiable discrimination between countries’. The second order question is, if the precautionary principle is indeed now part of customary international law, how is it to be applied in practice? That is where Sampson focuses on the threshold level for the burden of proof regarding protection of the environment, or public health and safety (p. 20). This threshold can be high, such as will definitely cause ‘serious or irreversible harm to the environment’, or very low and general, as ‘may harm the environment’. Sampson points out that the European Commission has embraced, and attempted further to clarify and codify, the precautionary principle to make it more accepted as customary international law. The EC apparently believes that it can be used as an argument to ban foods (apparently in the absence of scientific evidence) that the public perceive to constitute a health risk. The


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United States still denies that the principle is customary law, while Canada takes the middle ground. One wonders what the current positions are on this matter in countries like China and India? (They have given little evidence of much concern over precautions except as the principle has been applied to impede their exports.) In short, there is still no consensus on accepting the precautionary principle as a basis for establishing obligations in national and international rules.

DISCRIMINATION ON THE BASIS OF PROCESS The two areas of the WTO in which exemptions could be made on environmental grounds (article XX paras (b) and (g)) concern product standards and regulations, and sanitary and phytosanitary standards. Each of these is now the subject of separate agreements, which elaborate and seek to clarify the more contentious trade–environment linkages. The fundamental trade–environment dispute revolves around the central tenet of the WTO (GATT article III) that ‘measures to discriminate against products in international trade because of the manner in which they are produced’ are not permitted. Yet this is precisely what environmentalists want to achieve – the ability to differentiate between, and selectively target, those products, processes and producers they consider dirty, or perhaps ‘unclean’, in many different senses. The greenhouse issue provides an excellent example, where a country’s management response to a widely perceived (but poorly defined) risk has potentially profound trade impacts. The Framework Convention on Climate Change (FCCC) does not provide for any specific trade-related environmental measures only that ‘Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.’ The Kyoto Protocol to the FCCC article 2:3 states that parties shall strive to implement policies and measures ‘in such a way to minimize adverse effects on international trade’. While the FCCC thus gives formal recognition of the precautionary principle, it also recognizes the potential pitfalls of pseudoprotection measures being introduced in the guise of measures to address the greenhouse/climate change concerns. The WTO does not inhibit governments from protecting against risks associated with the production and consumption of products produced within national boundaries. As Sampson notes, these can be prohibited, regulated, taxed or charged for any purpose thought appropriate by national governments. Similarly, the WTO has no problems with a government levying taxes according

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to how a product is produced within its territory, for example, domestic taxes on production methods. The important point is, however, that the manner in which a foreign product is produced is not a basis on which WTO rights and obligations are established. An imported product cannot be discriminated against only because the production process was energy intensive, for example. As Sampson argues, the underlying thesis is that should any country wish to influence the manner in which products are produced in other countries – however appropriate this may be thought by the importing country – this should not be translated into discriminatory trade measures.3 For example an imported product, produced by a process that emits more greenhouse gas than the importing country considers acceptable, cannot be treated differently from a ‘like product’ (that is, a product with the same physical characteristics) produced domestically or in another country, solely because of the production process. The exceptions clauses contained in GATT article XX do allow a WTO member legitimately to place its public health and safety and national environmental goals ahead of its WTO commitments. But this is subject to not going beyond what is necessary, in terms of trade restriction or discrimination, to achieve those policy goals. Exceptions can be sought providing the measure is necessary to protect human, animal or plant life or health (article XX(b)) or for measures related to the conservation of exhaustible natural resources (article XX(g)).4 This general exception is clearly designed to permit governments to maintain or implement laws they feel are necessary to preserve the lives of people, flora, fauna and exhaustible natural resources. Pressure for the use of trade sanctions comes from various sources. One is the rising environmental awareness and mobilization of consumers in developed countries. With varying degrees of success and geographical coverage, campaigns have been driven by large international non-governmental organizations on different real or perceived environmental threats: perhaps mostly against logging, but also against disposal of oil platforms in the sea, against the use of fur, in favour of cute animals, against hydro-electric dams, against oil exploration, against pesticides and fertilizers, against genetically modified food. Radical environmentalists tend to be mono-thematic and single issue campaigners and, accordingly, operate (consciously or not) with very partial analyses. Past experience in the GATT/WTO has been that the measures taken to protect fauna and flora applied within the boundaries of the country taking the action. This raises the question of whose flora, fauna, exhaustible resources, or public heath and safety is at risk? For example, could Australia discriminate against Polish cars because the steel manufacturing process there threatens Swedish lakes and fish with acid rain? Or French cars because they use energy produced by nuclear power stations that some believe constitute a health and


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safety risk to the French public? Now these are deliberate exaggerations, stretching the point, but they aim to illustrate the ‘slippery slope’ of discrimination on the basis of production process. Such differentiation really challenges the definition of ‘like product’ (GATT article III), especially when the manner of production cannot be scientifically detected in the finished product. Try opening two cans of tuna, with their labels removed, and see if you can tell which one is ‘dolphin-friendly’. Sampson also explains how, if a trade action is taken in accordance with an MEA, then the necessity test of article XX(b) comes into play. Snape (1999) in his comments on the shrimp-turtle case, notes that the word ‘necessary’ appears in article XX(b) and has been strictly interpreted in the past, but XX(g) does not contain the word ‘necessary’ in dealing with the exhaustion of natural resources (which, in the Appellate Board’s report, includes the extinction of species). The question of a special ‘window’ or provision for the MEAs has been raised – in effect a cross-linking of international instruments, where membership of an MEA would confer some special rights/obligations in the WTO, and vice versa. Sampson makes a strong case against that. Furthermore, it is not inconceivable that ‘strategic’ manoeuvres have been in play; for example that countries have (reluctantly) accepted trade provisions in the MEAs confident that the WTO/GATT would preclude them from ever being actually exercised or, in other cases, might provide an ‘escape clause’. The WTO has no special expertise to deal with environmental problems such as greenhouse gas emissions, and nor is it well placed to judge the most appropriate means to achieve targets such as reducing those emissions or conserving biodiversity. A consensus has emerged that MEAs are the best way of coordinating policy action to tackle global and trans-boundary environmental problems cooperatively. But as Oxley (1999) has argued, they tend to be quite ineffective in doing so. Rather than modifying WTO rules and procedures, through blanket exceptions, approval for selective sanctions and so on, those pursuing environmental objectives would be better advised to address the underlying causes of the environmental problems where they arise.5 Thus the core WTO concepts of non-discrimination and transparency as contained in the GATT since 1947, and the important interpretation of ‘like products’ and non-product related production processes, have evolved to the current position as responses to risk of environmental hazard or public health and safety. The logical conclusion is that if there is a legitimate basis to discriminate between like products, then the grounds should be established by those with the technical expertize to do so through setting standards in an MEA. This comes under the TBT agreement which encourages the use of international standards developed by international standardizing bodies technically competent to deal with such matters.

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However, there is a fine line between the right of governments to adopt the standards they consider appropriate, and the use of standards that have trade protection as their intent. The difference here is that internationally recognized product standards are rebuttably presumed not to constitute unnecessary barriers to trade.6 TBT article 2.2 lists policy objectives that may be deemed ‘legitimate’ including national security requirements; prevention of deceptive practices; protection of human health or safety; protection of animal and plant life or health, or the environment. Most technical regulations and standards adopted by countries are aimed at protecting human safety or health.7 Sampson summarizes the five principles governing the preparation, adoption and application of technical regulations, standards and conformity assessment procedures in the TBT agreement. The present or potential impact of trade clauses in an increasing number of MEAs warrants more study. Those which discriminate between countries are not compatible with WTO rules, and at least until the Appellate Body’s shrimpturtle decision, neither was discrimination between products on the basis of process. Those seeking the protection of the environment in a country other than the one imposing the measure, constitute an ‘extraterritorial’ reach that is also incompatible with free trade principles. Strictly, the gasoline dispute was not an environmental case. The dispute was not over the environmental goals pursued by the country which discriminated against imports and there was no discussion on whether those goals were being reached in the best way, or even whether they were being reached at all. The dispute was over the use of trade as an instrument to reach that goal. According to the panel report, WTO members are free to set their own environmental objectives, but trade discrimination is not an accepted instrument to pursue them. Nobody examined whether the original trade ban had any impact on cleaning the air of the cities in the country (USA) applying the ban.

SANITARY AND PHYTOSANITARY (SPS) MEASURES The final section of Sampson’s chapter deals with the more stringent measures for the protection of human, animal or plant health – clearly an area where very different perceptions of risks can legitimately exist, and lead to quite different responses, which in turn may have substantive trade impacts. Prior to the Uruguay Round, such protection could only be taken under GATT article XX(b). The new agreement on SPS measures applies to measures to protect against additives, contaminants, toxins or disease-causing organisms in foods as well as the spread of disease by pests or animals or plants.


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Like TBT, any sanitary and phytosanitary measures should not be disguised restrictions to trade. That is, they must accord with the national treatment and MFN principles. Again the main purpose of this agreement is to reduce the possible arbitrariness of governments’ decisions in this field by clarifying which factors should be taken into account when imposing health protection measures. In particular, measures should be based on the analysis and assessment of objective and accurate scientific data. Like the TBT, the SPS agreement encourages consistent and transparent decision making in setting up the appropriate level of protection; that potentially trade-restrictive measures be applied for no other purpose than ensuring food safety and animal and plant health, and not result in unjustified barriers to trade. A country may decide to establish protection levels that exceed international standards if it believes that the latter do not meet its acceptable level of protection. But subject to article 5.7 this decision, if challenged, must be supported by scientific evidence resulting from an objective assessment of the potential health risks involved. When introducing a more trade restrictive standard, members must be able to demonstrate that any deviation from existing standards (codex, OIE or IPPC) is based on sound scientific criteria. Countries must establish SPS measures on the basis of an evaluation of the actual risks involved. On the basis of the risk assessment exercise, governments must determine their ‘acceptable level of risk’ which commonly includes substantial safety margins as a precautionary measure. The exporting country has the burden of demonstrating that its domestic sanitary requirements are at least as good as those of the importing country in that they achieve the same level of health protection. Overall, WTO members should be guided by scientific principles when deciding their appropriate levels of protection, so that those decisions are not arbitrary or protectionist. The accepted level of risk should be a reflection of health protection, not a means to protect domestic producers from competition. Where the risks and the health consequences are similar, the accepted level of protection should be similar. The SPS agreement does not preclude countries taking precautionary measures in an emergency even when sufficient scientific evidence does not yet exist to support definitive measures. The BSE scare in 1996 was a good example. In the absence of sufficient scientific evidence, emergency bans were immediately introduced on a provisional basis. In the long run, governments must seek the additional information needed to carry out a more objective assessment of the risks involved, and adapt their measures accordingly. (Again, note the contrast with the Rio wording of the PP, and the move towards convergence with the EC 1998 definition discussed above.) The key point from the beef-hormones case was that although the chemical treatments posed no scientifically discernible risk to public health in the

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European Union, there was a strongly held public perception that the risk was real and serious. The dispute between the EC and North America over genetically modified organisms (and products which may contain them) centres on a standard which has the effect of impeding trade, justified by the precautionary principle, in spite of no scientific evidence of risk to public health and no evidence of the magnitude of the hazard. The onus thus seems to fall on the EC to provide a scientific risk assessment, and to demonstrate that its response is necessary, consistent and appropriate.

DO TRADE MEASURES WORK TO PURSUE THE MEAs’ GOAL OF ENVIRONMENTAL PROTECTION? What some economists seem to find particularly irritating about the trade-ban clauses of the MEAs, is that they seem to rely on an incomplete or ‘half-baked’ diagnosis of the problem. For example, since tropical deforestation is due primarily to conversion of forests to various forms of agriculture, total bans on the imports of tropical timber will not prevent tropical deforestation. If the trees cannot be sold they are burnt, in order to get at the land beneath. A (CITES) ban on trade in turtle-shell handicrafts will not stop people killing turtles for food, destroying their habitat, eating their eggs and so on. While turtle excluder devices may save as many as 700 turtles per year in North Queensland fisheries, is this a major accomplishment while just across the border 7000 per year are killed in the eastern islands of Indonesia, and this is not being addressed by anyone! Perhaps in addition to a ‘necessity’ test, there should also be a rationality test or an efficacy test? To sum up Hoffmann’s (1998) argument, it is not evident that trade restrictions are the best, or even a workable, instrument for environmental purposes. The Montreal Protocol is a good example of an MEA explicitly using traderestricting measures. Roughly, worldwide production of ozone-depleting substances fell by the mid 1990s to one-fifth of its 1988 peak (Van Vuuren and Bakkes, 1997, p. 27). There is no direct answer to the question of whether trade bans were crucial in meeting the Montreal Protocol’s phase-out requirements. Most analysts agree that the main factors contributing to the ‘success’ were: • the availability of technical alternatives for substitution of CFCs at costs that, albeit somewhat higher, were acceptable; • clear scientific evidence of the damage to the ozone layer, which was easy to publicize (for example, images of the Antarctic ozone hole using satellite photography); its potential health impact, skin cancer, was


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considered serious by the public, and almost became a general scare, as indicated by the worldwide rise in the sales of sun-blocking creams; • the Montreal Protocol comprises well-defined implementation schemes and evaluation procedures, as well as flexible implementation, such as the possibility for countries to meet their production and consumption limits jointly; • industrialized countries provided technical and financial assistance through the global enviornment fund and bilateral financial and technical assistance, supporting a change of consumption and production patterns away from ozone-depleting substances (Van Vuuren and Bakkes, 1997, pp. 27, 75–6). In addition, once developed countries banned the production of CFCs and alternative technology was available (even though somewhat more expensive), a powerful set of exporting interests was created that functioned as a pressure group in favour of those alternative technologies – the infamous ‘Baptists and Bootleggers Coalition’ (Yandle, 1998). Thus, international business interests probably magnified the environmental outcome sought, but the mechanism bears little relation to trade bans. There were other incentives to join, but it is probably fair to conclude like Brack (1996, p. 57) that ‘the combination of financial assistance [after 1990] and technology transfer plus the fear of trade discrimination created a powerful incentive amongst developing countries’. Once a given environmental measure is in place in one country, those industries or groups forced to apply it at home have a vested interest in pushing their international competitors along the same path. This is evident in the implementation of the Montreal Protocol, in the role played by large chemical concerns that invested heavily in CFC substituting technology. At a different level, it is also evident in the gains to domestic competitors from the dolphin/tuna ban imposed by the USA, or the more recent shrimp-turtle ban. For the time being, enforcement and dispute settlement mechanisms in MEAs remain extremely weak (Oxley, 1999). Voluntary commitments and exchange of information are emphasized, as well as domestic policies, such as the approval of ‘national strategies’ in response to international environmental agreements. In fact, trade measures are about the only coercive instrument in MEAs (von Moltke, 1996). That explains to some extent the enthusiasm of some environmentalists for ‘greening the WTO’ and the illusion that the dispute settlements mechanism of the WTO could be transformed to enforce environmental goals. This is a dangerous proposition and not just because it could reinforce protectionist trends in developed countries under the guise of environmental prudence. To mix the international environmental regime and the international trade regime, as they stand now, could only create an extremely disorderly and conflict-prone institution for global negotiations. The growing

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number and variety of multilateral environmental agreements in existence, and their rapid evolution through new protocols and amendments, is creating a web of ever more complex international environmental regimes.

CONCLUSIONS There is a consistent thread throughout the whole body of WTO practice – consistency, transparency, the rule of principle over expediency, and the principles of national treatment and MFN. This has been built up over 50 years in the GATT and the WTO, but has yet to consolidate for the MEAs (most of which are less than 10 years old). There is no shortage of contentious topics where legitimate differences of opinion exist firstly in the assessment of the risk and secondly in the appropriate response to that assessment. Environmental health For example: decision on reprocessing of spent nuclear fuel rods in Germany; motor vehicle emission standards; greenhouse gas emissions; the next generation of tuna-dolphin and shrimp-turtle cases; sustainably managed forests; excessive use of surface water and land degradation. Public health and safety For example: agricultural chemicals; antibiotics or growth hormones in meat; GMO foods not just maize and soya; pharmaceuticals; aircraft noise standards; certification and safety standards of motor vehicles and aircraft. Extra-territoriality For example: human rights, occupational health and safety concerns; and more generally under the ‘social justice’ rubric. In principle the WTO now has a process, a mechanism to deal systematically and consistently with such a plethora of prospective challenges. Again this reveals the advantage of a rules-based system – having established a set of principles and procedures, consistency and transparency should prevail over ad hoc and arbitrary discretion. There is a temptation for certain groups to wish to retain the ability to throw up their own protective shield in response to a national risk assessment (which of course could be perfectly fair and fully justifiable!) but at the same time to want to prevent others from using their shields to (unfairly) exclude exports. Small, open trading countries, however, are better served by consistent and rigorously enforced rules which prevent the arbitrary use of market power by large economies. As stated in the introduction, the essential feature of the system is the ability to differentiate, fairly and transparently, between a legitimate


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response to strongly held fears of catastrophic risks, and attempts to use exaggerated risk assessments and responses as a barrier to trade. Environmentalists are pressing urgently to address land degradation and conservation issues in countries like Australia and are willing to use any instrument that might assist in the battle. The ability to pressure competitors into accepting the same environmental standards that Australia has (or that they would like Australia to adopt) increases the political palatability of these measures. If that means using trade measures (boycotts, bans), then so be it! No doubt US fishermen were pleased when US trade pressures forced Mexican fisherman to meet the same dolphin-saving standards that were required of US tuna fisheries. It greatly complicates the arguments to assert ‘We have to force you to improve your environmental protection, to enable us to improve our standards, without suffering too much competition’. People arguing thus, do not realize how much it challenges the rule-based system, and how much the rules protect everyone, rather than constrain actions. Industries in rich countries sometimes find themselves in natural alliance with environmentalists to exclude what they claim to be ‘environmentally inferior products’ from the market (Cairncross, 1995). Some environmental groups in developed countries are campaigning for the introduction of tariffs and taxes to raise the price of imports that do not conform to certain standards. Unilateral definition of criteria to classify environmentally superior or inferior products will bring more trade conflicts. But will it bring improved environmental outcomes (Hoffmann, 1998)?

NOTES 1. United Nations (1992), Report of United Nations Conference on Environment and Development, Annex 1, Rio Declaration on Environment and Development, Principle 15. Rio de Janeiro, 3–14 June 1992. 2. In the preamble to the WTO, member countries agreed to ‘protect and preserve the environment and to enhance the means for doing so’. In its late-1998 ruling in a dispute concerning US trade measures against countries that do not employ devices to protect sea turtles from drowning in shrimp nets, the report of the Appellate Body drew on the preambular language of the agreement establishing the WTO to assert that ‘we have not decided that the sovereign nations that are members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should.’ The Appellate Body held further that ‘WTO members are free to adopt their own policies aimed at protecting the environment as long as, in doing so, they fulfil their obligations and respect the rights of other Members under the WTO agreement’. 3. Prison labour is a noteworthy exception, which may be used as a precedent in future. 4. There are other grey areas at the margin, for example discriminating between hand-made and machine-made goods (that is, on the basis of capital intensity) or against products made by sweatshop labour (on the basis of human rights and labour obligations) even though there may be no discernible difference in the products, even at the level of microscopic or chemical analysis. 5. Note that CITES is now to be reviewed in the light of evidence that it has been ineffective, even counter-productive, in such cases as banning the ivory trade in order to conserve African elephants.

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6. Unnecessary obstacles to trade may result from a regulation that is more restrictive than necessary to achieve a given policy objective, for example, because the objective can be achieved through alternative measures which have less trade-restricting effects, or the necessary effects of the regulation on trade are disproportionate to the risks the non-fulfilment of the objective would create. 7. Technical regulations are inherently mandatory – an imported product, which does not fulfil the requirements of a technical regulation, will not be allowed for sale. Conformity with standards is voluntary; non-complying imports will be allowed on the market, although they may be shunned by consumers.

REFERENCES Brack, Duncan (1996), International Trade and the Montreal Protocol, London: The Royal Institute of International Affairs and Earthscan Publications. Cairncross, Frances (1995), Green, Inc. A Guide to Business and the Environment, London: Earthscan. European Commission (1998), Guidelines for the Application of the Precautionary Principle, Brussels: Directorate General XXIV (Consumer Policy and Consumer Health Protection). Hoffmann, Helga (1998), Trade as Instrument of Environmental Policy: Does it Work? Presentation to the First World Congress of Environmental Economists, Venice, Italy, 25–7 June 1998. Oxley, Alan (1999), ‘MEAs and the WTO – the Real Trade and Environment Issue’, in Industry Competitiveness, Trade and the Environment, Melbourne: Productivity Commission. Sampson, Gary P. (1999), Trade, Environment and the WTO: A Framework for Moving Forward, ODC Policy Paper, Washington, DC: Overseas Development Council. Snape, Richard (1999), ‘Some Implications of the Shrimp-Turtle Decision (AB1998–4)’, in Industry Competitiveness, Trade and the Environment, Melbourne: Productivity Commission. Van Vuuren, D.P. and J.A. Bakkes (1997), ‘Agenda 21 Interim Balance, 1997’, Netherlands Institute of Public Health and the Environment, Bilthoven, The Netherlands, October (RIVM Report no. 402001008). von Moltke, Konrad (1996), International Environmental Management, Trade Regimes and Sustainability, Winnipeg: International Institute for Sustainable Development. Yandle, B. (1998), Bootleggers, Baptists and Global Warming, PERC Policy Series PS14 Bozeman MT, Political Economy Research Center.

4.

Risk management experience in WTO dispute settlement Thomas Cottier*

INTRODUCTION The 1995 WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), negotiated during the Uruguay Round, subjects the adoption and application of national or regional measures relating to the protection of human, animal and plant health to the WTO dispute settlement system (WTO, 1995; Barcel, 1994; Yukyan Shin, 1998). Until 1995, such measures were excluded from international legal scrutiny, as both GATT articles XI and XX(b) and the ‘standards’ agreement did not offer adequate guidance and had not assisted in solving longstanding issues. One unresolved case was the EC ban on the importation of hormone-treated beef from the United States. The persistence of this dispute motivated negotiations on a specific and separate instrument. Since coming into force, the SPS agreement has profoundly affected the international law on food security (WHO, 1998; FAO, 1998). During the Uruguay Round negotiations, work on the SPS agreement did not receive much publicity, despite the looming dispute over hormone-treated beef. The SPS negotiations were overshadowed by major topics, such as liberalization of agricultural trade, the elaboration of multilateral disciplines for services (GATS) and the establishment of a multilateral framework for intellectual property (TRIPs). Once adopted, however, the SPS agreement quickly moved to centre stage. Within four years, it had been tested in three major cases before dispute panels: the expected complaints of the United States and Canada against the EC ban on the importation of hormone-treated beef,1 the complaint by Canada against the Australian ban on the importation of fresh, chilled and frozen salmon2 and the complaint by the United States against Japan on measures affecting agricultural products.3 All these cases were appealed. By mid 1999, Appellate Body reports on beef-hormones,4 salmon5 and quarantine on agricultural products,6 and three arbitration awards relating to implementation had been produced.7 *

The author was a member of the Swiss negotiating team during the Uruguay Round and a member and chairman of several GATT and WTO panels, including EC – Measures concerning Meat and Meat Products (Hormones) and related arbitration.

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These disputes were complex legal undertakings. The panels and the Appellate Body were confronted, for the first time, with adjudicating politically sensitive and legally difficult matters under the new agreement, and required to assess extensive scientific evidence for the first time in the history of GATT/WTO. In terms of implementation of results, some are likely to remain controversial because they represent fundamental differences in attitudes to technology. The experience has been, and still is, a process of trial and error in an essentially new domain of WTO law. This is true for the cases and the case law. The SPS agreement itself will require amendment and improvement during the coming Millennium Round, in the tradition of gradually improving and developing the side agreements of the GATT after the Tokyo Round. The main feature of the SPS agreement consists in an approach which is essentially based on scientific evidence and assessment. Members are obliged under SPS articles 2.2, 3.3 and 5.1 and 5.2 to base their SPS measures on scientific evidence, with the exception of temporary precautionary measures under SPS article 5.7. The cases adjudicated so far show that science plays a predominant role. Yet, there are other societal, ethical and political factors at stake with which the present framework has difficulty coping in a systematic and organized manner. Indeed, transAtlantic tensions caused by the beefhormones dispute result less from scientific disagreement than from diverging societal and ethical perceptions in the public at large (see Deane, Chapter 8, this volume). A better framework to deal with such concerns and to differentiate them from economic protectionism needs to be developed. In future work, it will be necessary to provide adequate room and an appropriate methodology for assessing such arguments and concerns in dispute settlement. This is important not only for dealing with traditional issues of quarantine regulations, but more significantly in adjudicating on matters relating to genetically modified organisms in the new age of biotechnology (see Millis, Chapter 14, this volume; Robertson, Chapter 15, this volume). This chapter will consider a number of fundamental systemic issues arising from recent disputes and assess their implications for risk assessment and risk management in the WTO. It will offer some recommendations for further work in the concluding section. The focus is the relationship between the scope of national or regional autonomy in standard setting and administration of standards, and the requirements of the SPS agreement as they emerge from the dispute panels and Appellate Body reports.

THE CORE FUNCTION OF THE SPS AGREEMENT Enactment, monitoring and enforcement of appropriate food and health standards is a core function of government and has long been an important part

Risk management experience in WTO dispute settlement

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of policing domestic agriculture, industry and imports, despite restricting effects on trade and market access for foreign agricultural products. This is uncontested and clearly reaffirmed by the preamble and article 2.1 of the SPS agreement. States have a right to take sanitary and phytosanitary measures necessary for the protection of human or plant life or health within their own jurisdictions. In practice, however, such measures frequently and equally provide protection for domestic markets (James and Anderson, 1998). With the process of liberalizing international trade in agricultural products and foodstuffs, such traditional powers are confronted with enhanced market access requirements. Sanitary and phytosanitary measures became increasingly apparent as other barriers are gradually reduced. It might also be that there will be a temptation to compensate for the reduction in traditional trade barriers by new and sophisticated SPS barriers in the future, relating in particular to GMOs. Given these risks on the one hand, and the legitimate interests protected by SPS measures on the other hand, law and policy in food and health standards has become a matter of balancing equally legitimate interests: health protection, market access and consumer interests. Essentially, it is a matter of detecting measures which are economically protectionist, rent-seeking interests and exercise more restrictions on trade than is necessary to achieve the goals of health protection. The SPS agreement, therefore, is at the centre of what is a constitutional approach to WTO rules, and their relationship to national or regional sovereignty and rule making (Jackson, 1999). The problem of national or regional autonomy in standard setting appears at several levels in the SPS agreement. Of course, the very existence of GATT (1994) and the SPS agreement entails a restriction on uninhibited national or regional standard setting. Yet, this still leaves open the substantive question of the proper relationship between existing international standards and recommendations to scientific evidence and the burden of proof and the impact of societal judgements. Procedurally, it is a matter of defining the appropriate level of investigation and research to be undertaken in order to satisfy the needs of the international system. What is the proper degree of control which the international system should exercise beyond traditional examination of necessity and proportionality under general exceptions (GATT article XX(b)). How have dispute panels and the Appellate Body dealt with this question under the new agreement? The record is mixed, and the proper balance still has to be found. The Appellate Body first offered in beef-hormones substantially more deference to the member country than the panel did. Subsequently, it showed somewhat stricter views than the dispute panel in complying with risk assessment requirements in the salmon case. In agricultural products, there is an essentially balanced relationship between the panel’s finding and the assessment by the Appellate Body. It essentially affirmed the panel’s reasoning and findings, and emphasized the

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procedural obligations under the SPS agreement. The following sections address some of these questions. It should be stated at the outset, however, that this chapter falls short of dealing with all the puzzling complexities of the cases involved. It is far from a complete analysis.

THE RELATIONSHIP OF INTERNATIONAL AND NATIONAL OR REGIONAL STANDARDS: THE BURDEN OF PROOF The scope of autonomous standard setting is firmly defined by the reading of SPS article 3 on harmonization. While SPS article 2.1 affirms the right of member states to enact measures, article 3.1 essentially states that they shall base such measures on international standards, guidelines and recommendations, where such instruments exist. According to article 3.2, these international standards are deemed to be necessary and prevail over market access rights, as they are presumed to be in accordance with the pertinent provisions of the SPS agreement and the GATT (1994).8 Measures in conformity with international standards of risk assessment undertaken by specialized international fora are likely to pose less potential for conflict with trading rules. It will be difficult to rebut the presumption of the need for such multilateral standards, just as it has been impossible to rebut the presumptions of nullification and impairment of unlawful measures in the context of GATT article XXIII.1(a).9 It is interesting to observe that the policy and approach expressed in SPS article 3.1 is comparable to the one adopted by the Appellate Body with respect to multilateral environmental agreements (MEAs). The Appellate Body indicated in shrimp-turtle that trade restrictions emanating from MEA agreements are to be respected by the WTO.10 Unlike most unilateral measures adopted by members and having transnational effects, they are very likely to prevail in dispute settlement. The situation may be different in the context of bilateral or regionally agreed health standards, to the extent it can be shown that they result in excessively high levels of protection. However, this would seem to be an exceptional constellation as SPS article 4 encourages the adoption of policies and agreements of equivalence and mutual recognition in bilateral relations. Overall, the SPS agreement clearly seeks to provide an incentive to use and to refer to multilateral standardization.11 It goes without saying that under the international or global approach, the autonomy of national or regional standard setting is inherently limited as both agreement and common ground need to be found in an appropriate institution, such as the FAO/WHO Codex Alimentarius Commission, or the International Office of Epizootics (OIE). The system therefore offers an escape route. SPS


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article 3.3 leaves members the option to maintain or adopt their own and higher standards under a number of conditions. This option, of course, is necessary where common and international standards are still lacking. But it allows governments to ignore international standards whenever they are deemed to be inadequate. Taking into account the compelling wording of SPS article 3.1, the panel on beef-hormones construed this provision to establish an exception to a commitment, in principle to use and rely upon lawfully adopted international standards in the first place (beef-hormones, paras 8.49, 8.89). The Appellate Body, on the other hand, strongly rejected this approach and ruled that the option to establish own levels of sanitary protection in article 3.3 ‘is an autonomous right and not an “exception” from a “general obligation” under article 3.1’.12 Conceptually, the change was important. It established and emphasized the equivalence of national standards under the SPS agreement. It barred international standards from achieving farreaching effects and from becoming binding on the WTO members by way of the SPS agreement (beef-hormones, para.165). It expressed the principle of in dubio mitius, that is, that in doubt an interpretation is adopted which puts a lesser burden on national sovereignty. The judicial policy of deference most clearly appears at this juncture of the report and perhaps was felt necessary because of the cries of anguish expressed upon publication of the dispute panel’s report. The shift was welcomed in particular by European commentators who found the ruling much too intrusive and detrimental to the WTO (Eggers, 1998; Hilf and Eggers, 1997). Subsequently, the view and perception of an autonomous right to set national standards was no longer contentious in salmon (Panel Report, note 2, para. 4.15) and in agricultural products (Panel Report, note 3, para. 8.13). The equivalence of international and national standards is settled in case law. Politically, the drive and incentive to work towards international standards – unlike in the field of environmental protection – has been lost. In a dispute settlement, the conceptual shift from an exception to a right and obligation on its own is of procedural importance. The prevailing interpretation shifts the burden of proof from the defending to the complaining party. While the beef-hormones panel report concluded that it is up to the defending party to demonstrate that all requirements of SPS article 3.3 (and thus of article 5) are met, it is now up to the complaining party to establish prima facie evidence first, not only with respect to the violation of SPS article 3.1, but also with respect to independent national measures adopted under article 3.3 of that agreement (beef-hormones, paras 104–9). In accordance with standards set out by the Appellate Body in United States – shirts and blouses,13 the complaining party bears the initial burden to demonstrate in law and facts that the defending party is in violation of its

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obligations. It is only upon the establishment of such prima facie evidence that the burden then shifts to the defendant to justify the measures under review. The Appellate Body stated the law in beef-hormones as follows: The initial burden lies on the complaining party, which must establish a prima facie case of inconsistency with a particular provision of the SPS agreement on the part of the defending party, or more precisely, of its SPS measure or measures complained about. When that prima facie case is made, the burden of proof moves to the defending party, which must in turn counter or refute the claimed inconsistency.14

In this first case, it was not quite clear what the conceptual shift really meant in practical terms. The Appellate Body refrained from setting down detailed requirements to be met by the complainant in order to pass the test of providing prima facie evidence. Since the Appellate Body is limited to reviewing legal issues, it was not in a position, nor did it find it necessary, to undertake an additional and detailed examination of evidence put forward by the claimants. Instead, it essentially relied upon the findings of the panel in that respect. It would seem from this case, as well as from salmon, that the prima facie evidence test is not too difficult to pass. In agricultural products, the Appellate Body reversed the findings of the dispute panel relating to the alternative, and less restrictive methods of testing (‘determination of absorption levels’) under SPS article 5.6. The panel deduced its finding from evidence before it while the approach was not specifically argued by the United States as a complainant (agricultural products, paras 125, 126). The Appellate Body held: Pursuant to the rules on burden of proof set out above, we consider that it was for the United States to establish a prima facie case that there is an alternative measure that meets all the three elements under article 5.6 in order to establish a prima facie case of inconsistency with article 5.6. Since the United States did not even claim before the panel that the ‘determination of sorption levels’ is an alternative measure which meets the three elements under article 5.6, we are of the opinion that the United States did not establish a prima facie case that the ‘determination of sorption levels’ is an alternative measure within the meaning of article 5.6.

From this ruling, two conclusions may be drawn. First, the prima facie evidence test can only be met if specific arguments to the point are explicitly made by the complainant. Secondly, panels are barred from stating in accordance with the principle of iura novit curia, short of specific arguments raised by the complainant. They cannot, in other words, find the law on their own initiative and draw from evidence generally before the panel on a particular issue if the complainant has not established a prima facie case.15 The ruling entails a limitation to a broad statement found in beef-hormones. Here, the Appellate Body held that a panel, within the legal claims made, is free to adopt


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its own arguments and legal reasoning to support its own findings and conclusions on the matter in dispute.16 It follows from agricultural products that such liberty only exists in as much as the complaining party has provided sufficient arguments to sustain a prima facie case. Finally, it still is an open question whether the complaining party needs to make a compelling case on the possibility of less restrictive measures. Is it sufficient to raise the argument, or is demonstration of viable alternatives within the legal system of the other member required? In practical terms, it would still seem that the important conceptual shift in the relationship of SPS article 3.1 and article 3.3 has had limited practical effect. Whatever the precise standards for prima facie evidence, it is clear that even under SPS article 3.3, the main burden in defending national measures and demonstrating that they have met all the conditions of that article 3.3 and other pertinent provisions of the SPS agreement remains with the defending party. The thrust of debate and discussion in the panel proceedings and reports thus relate to the arguments in defense of the measure. There is no evidence that the Appellate Body, based upon the shift, pursues a clear policy of deference visà-vis the defendant. Interestingly, the policies of deference inspired by beef-hormones and followed by the next panel on salmon were reversed. The dispute panel carefully sought to avoid findings on risk assessment where they were not absolutely necessary. The Appellate Body, on the other hand, found that the panel should have made such findings and stated itself that Australia had not based its measures on risk assessment. On this basis, the Appellate Body reversed the panel’s presumptions (salmon, para. 128). Discussions held at the Melbourne conference on the problem of deference and burden of proof inherent in the interpretation of SPS article 3, as it is currently framed, revealed disagreements on interpretation. It showed conceptual shortcomings and dilemmas in the present agreement. My view on the subject is that in beef-hormones there is not sufficient doubt as to the reading of article 3.1 and article 3.3. While article 3.1 requires members to apply international standards where appropriate recommendations exist, a member may introduce or maintain measures based upon a higher level of protection. It would seem from the wording and the context of SPS article 3 that the drafters intended to reinforce international standard setting with a view to preventing difficult trade disputes. At least, it would have been necessary to look into the travaux préparatoires, as required by article 32 of the Vienna Convention in cases where the interpretation of the text is considered to be contextually unclear. It is submitted that the relationship of international and national standards should be reviewed and clarified. Which is the best regulatory approach to bring about a reasonable balance between SPS and market access rights? What are the long-term political incentives which the system should provide in order to avoid severe trade disputes while at the same time continuing to protect life

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and health? These considerations, on the one hand, would tend to speak in favour of shaping SPS article 3.1 as a mandatory requirement and SPS article 3.3 as an exception to it. On the other hand, the current SPS article 5 and annex A leave members with full rights to determine the appropriate level of sanitary or phytosanitary protection (ALOP) or the acceptable level of risk (ALR). The existence of such rights, recognizing divergent societal values implies a right to set national standards, independently of existing international recommendations. This allows for levels of ALOP or ALR which are different from international standards. The Appellate Body argues conversely. Finally, one further explanation for the Appellate Body’s approach may be found in an implied argument that international bodies are not yet fully prepared to absorb the function of enacting in effect binding instruments in the field. This is of importance from the point of view of legitimacy and democracy, and should be further discussed. A presumption to apply international recommendations and base measures on these presupposes a high level of legitimacy of such standards. Legitimacy again depends on participation and representation of those elaborating such recommendations. In conclusion, bearing in mind the lessons from case law, the relationship of SPS articles 3.1 and 3.3 and SPS article 5 requires further thought and consideration in coming negotiations with a view to achieving a fully consistent regime. It is submitted that incentives to develop international standards should be created. Efforts need to go hand-in-hand with improving rule making and procedures in appropriate standard-setting bodies and institutions outside the WTO. This is yet another example of how institution building may transgress the scope of one particular international organization. One way to bring this about would be to establish procedural requirements in terms of transparency, participation, representation and rights for other organizations to have to comply with, such as the Codex Alimentarius (FAO/WHO), as a prerequisite for accepting global, and common recommendations as mandatory rules under SPS article 3.1. Discussions should also include whether more nuanced differentiations need to be made between binding standards and recommendations adopted in specialized fora and in dealing with those within the SPS agreement. A further and more fundamental change would be to shift the burden of showing compliance with international standards to the exporting producer, and not the importer. In dispute settlement, it would be up to the exporting country to demonstrate that all the relevant international standards had been complied with. Such compliance would establish a presumption of market access rights. The importing country could rebut such a presumption by demonstrating that the level of protection provided by international standards is inadequate to meet the national level of appropriate protection (ALOP) or the level of risk deemed acceptable (ALR).


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STANDARDS OF REVIEW A second and important aspect of the relationship between national and international systems is standards of review. What exactly should a panel or the Appellate Body examine and look into, and to what extent? Clearly, it is not enough for these bodies to make a de novo assessment, that is, to define proprio motu whether or not the measure is necessary to protect public health. Rather, it is currently a matter of assessing whether (i) the complaining party provides adequate prima facie evidence that the measures are inconsistent with the SPS agreement and, if yes, whether the defending party is in a position to demonstrate that it has complied with its requirements. In the absence of any defined standards, a panel is bound to examine the matter in accordance with DSU article 11. The panel therefore is obliged to make ‘an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with relevant covered agreements’. This standard entails levels which differ, in particular between questions of law and questions of fact. Questions of Law and Facts On questions of law and interpretation of the provisions of the SPS agreement, the reports clearly show that this is entirely in the hands of the panels and the Appellate Body, although no reference could be found to this effect. The Appellate Body, in particular, undertakes to prescribe the proper reading of rights and obligations without deference to the parties, or the interpretation given to the provision by the panel (Cottier, 1998). The salmon panel was held to have examined the wrong measure, exceeded its terms of reference, and failed to focus on the ban on uncooked salmon. Accordingly, the Appellate Body reversed the decision (salmon, paras 97–105). Things are different for questions of facts and the assessment of scientific evidence. In SPS cases, this is of paramount importance. Measures in SPS article 3.3 need to be based on a scientific justification or the criteria of risk assessment in SPS article 5.1–8 (which are equally, but not exclusively, based on scientific justification, except for article 5.7). In terms of scientific evidence, the review by the panel was held to mean that the result of the risk assessment provided in SPS article 5.5 ‘must sufficiently warrant – i.e. reasonably support – the SPS measures at stake’ (beef-hormones, para. 193; salmon, Panel Report note 3, para. 8.94). This does not mean the standard should be limited to mere standard reasonableness (beef-hormones, para. 119), as it was suggested by the EC, with academic writings as the appropriate standard of deference. Instead, the panel has to assess whether the arguments and findings made are sustained by scientific evidence and sound policy considerations.

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In agricultural products (para. 79), the Appellate Body defined scientific justification within SPS article 3.3 as establishing a rational relationship between the SPS measure at issue and the available scientific information (Walker, 1998; Wirth, 1994). As the Appellate Body does not have jurisdiction over factual assessment, this is essentially a task for the panel. The Appellate Body does not intervene in correcting factual assessments except in cases of egregious and grave errors or misrepresentations which amount to a violation of DSU article 11, and thus constitute a legal issue over which the Appellate Body has jurisdiction. In agricultural products, it held: As we stated in our Report in European Communities – Hormones, not every failure by the Panel in the appreciation of the evidence before it can be characterized as failure to make an objective assessment of the facts as required by DSU article 11. Only egregious errors constitute a failure to make an objective assessment of the facts as required by DSU article 11.

The panels therefore bear a considerable responsibility when reviewing the factual aspects of the case. The following sections turn to the relevant standards of review in discharging this difficult task. Review of Risk Assessment Factors Within the application of SPS article 3.3, parties have to comply with the requirement of risk assessment set forth in article 5. The Appellate Body set forth the relevant factors as listed in the agreement (beef-hormones, para. 185). In the salmon case, it elaborated the relevant criteria to include (i) the identification of the disease, (ii) the evaluation of the likelihood of the establishment and spread of the diseases and of the biological and economic consequences, and (iii) evaluation of the likelihood (that is, the probability as opposed to mere possibility) of events occurring in the light of the measures which might be applied (salmon, para. 121). Under current definitions of SPS annex A (4), risk assessment comprises all the potential elements, scientific, economic, social and valuational. A distinction made by the parties and the beef-hormones panel to distinguish within SPS article 5.1 and annex A (4), between risk assessment (in a technical sense) and risk management was not upheld by the Appellate Body on grounds that the text did not provide a basis for such a distinction (beef-hormones, para. 181). The reason for the panelists adopting this implied distinction was their attempt to distinguish between scientific evidence and assessment, and those relating to political and economic considerations. Despite the fact that precise definitions are still lacking, such a distinction was considered useful, not only because it is generally used in the field,17 but also because the two groups require different


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standards of review. The distinction allows for a rational and systematic analysis of the measure at stake, and should be retained. The panel first examined the risk assessment on scientific grounds and intended to proceed to societal values and risk management where an existing risk can be affirmed. Risk assessment: review of scientific evidence The review of SPS measures in dispute settlement cases necessarily entails the involvement of an independent expert view regarding the assessment of scientific evidence. The beef-hormones panel sought and found a number of individual experts to conduct the hearings. The approach was upheld and referred to also by the salmon panel and agricultural products panel and upheld by the Appellate Body (beef-hormones, paras 146–54). The hearings were based on questions formulated in the light of legal requirements. The answers provided were evaluated in the light of the arguments and facts submitted by the defendant parties. The panels strongly relied upon expert views, and could not have rendered their assessment and recommendation without such independent advice of individual experts. Again, it is not a matter of asking for a de novo review by the experts, that is, how they themselves would best regulate the problem. Rather, it is a matter of asking whether the facts and findings submitted by the defendant could be seen as warranting the measure or not in light of the evaluation made by individual experts. While the assessment of scientific evidence per se is a matter of fact and essentially a matter left to the panel, the standards of review for scientific evidence are a question of law and may be defined by the Appellate Body. In the beef-hormones case, the panel relied upon extensive scientific evidence and concluded, on the basis of prevailing views in the scientific communities, that the EC failed to demonstrate a risk to health and life by the use of growth hormones if administered in doses according to good veterinary practices. It dismissed hypothetical evidence relating to potential cancerous effects, not yet established nor accepted by the scientific community. Yet, it held that evidence may evolve and change the situation in time (beef-hormones, note 1, paras 7.113, 7.116–7.199). The Appellate Body, however, adopted a more liberal attitude to relevant scientific evidence and dismissed the idea of relying upon prevailing views in the scientific community. It defined the standard as follows: article 5.1 does not require that the risk assessment must necessarily embody only the view of a majority of the relevant scientific community. ... In most cases, responsible and representative governments tend to base their legislative and administrative measures on ‘mainstream’ scientific opinion. In other cases, equally responsible and representative governments may act in good faith on the basis of what, at a given time, may be a divergent opinion coming from qualified and respected sources. (ibid., para. 194; restated in agricultural products, para. 77)

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This approach, again, implies a considerable amount of deference to WTO members. It leaves governments to choose from scientific evidence available. Yet, while it is true that science is not based on majority views (Wirth, 1994), and long-held prevailing views and paradigms may change due to novel insights necessarily put forth as minority views in the first place (Kuhn, 1970), there is a risk of adopting too broad a scope for scientific justifications of what perhaps may amount to an economically protectionist agenda. Allowing governments wide and open access to all scientific views and data from which they can pick and choose therefore requires some caution and containment. Such containment is inherent in the criteria applied to the relationship of scientific evidence and the risk for life and health discussed above. It is not enough to show the possibility of risk, but a tougher standard of probability of risk has to be shown under the criteria of likelihood discussed above. The Appellate Body qualified this criterion in salmon and agricultural products. ‘It is not sufficient that a risk assessment conclude that there is a possibility of entry, establishment or spread. ... A proper risk assessment ... must evaluate the “likelihood”, i.e. the “probability”, of entry, establishment or spread’ (salmon, para. 123; agricultural products, para. 78). Scientific evidence invoked therefore must meet these standards. Justification based upon far-fetched, speculative and uncorroborated scientific theories and data is excluded. It will be interesting to see how a future panel or the Appellate Body addresses new evidence submitted on health risk relating to the use of growth hormones and other substances under this test in any future assessment of the import ban of hormone-treated beef. Risk management: review of social, economic and ethical factors The standard of ‘sufficiently warranting the measure’ applies to scientific evidence. Different and more deferential standards apply, however, to societal and ethical goals inherent in the criteria set forth in SPS article 5. The Appellate Body ruled in the light of annex A art. 5, according to which the level of protection is described as being ‘deemed appropriate by the member’, and the right under the SPS agreement for members to determine the allowable level of risk, that it is entirely a matter to be defined by governments. The level set cannot be reviewed by the panel even under a standard of reasonableness. DSU article 11 does not allow a panel to substitute its own reasoning about the level of protection (Hilf and Eggers, 1997) (beef-hormones, para. 199). Members therefore enjoy substantial discretion in setting the goals of protection and therefore the import of valuational and hence societal and political considerations. It is important to stress that this can be done within a category of risk management. It was not the intention of the beef-hormones panel to exclude such considerations. Yet, it held that they should only take effect upon establishment of risks to life and health, on the basis of scientific evidence in the


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first place. The panel held: ‘[A]n assessment of risks is, at least for risk to human life or health, a scientific examination of data and factual studies; it is not a policy exercise involving social value judgments made by political bodies.’ The second aspect of a member’s decision to enact or maintain a sanitary measure relates inter alia, to the determination of the appropriate level of sanitary protection by that member against risks to human, animal or plant life or health which have been assessed in accordance with articles 5.1 to 5.3. This aspect is commonly referred to by the parties to this dispute as an essential part of risk assessment. The member wishing to impose a sanitary measure must decide the extent to which it can accept the potential adverse affects related to specific substance which have identified in the risk assessment. (ibid., note 3, paras 8.97 and 8.99; see also 8.8.101, 8.8.107, 8.8.110)

Member states therefore are free to set ambitious levels of protection. Subject to consistency requirements discussed below, they can even adopt a zero risk policy (Atik, 1997), provided, however, that in the first place some minimal risk to health based on scientific evidence can be shown. Members, therefore, are allowed to include political and ethical considerations under the existing agreements in setting their standards of tolerable risk. This also explains why standards more restrictive than those developed by international bodies can be applied. The international system will, in particular, examine whether the measures go beyond what is necessary to achieve the level of protection defined. The test of proportionality under SPS article 5.6 is particularly ripe for judicial review, but hardly effective under an adopted zero-risk policy. The absence of reviews relating to the appropriate level of protection gives maximum autonomy to national standard setting, but there may not yet be an appropriate balance between health and trade interests. If a government decided to operate on a zero risk basis, it is difficult to see how measures less than a ban on importation would be able to achieve this goal. It would seem that the only avenue to discipline excessive measures is the test on consistency discussed below. In future negotiations, the problem of adopting appropriate risk standards should be further studied with the possibility that members could be disciplined if their measures disguised restrictions of trade. It will be necessary to develop appropriate standards and tests, and review procedures for decisions on risk management. To this effect, a proper methodology based upon social sciences should be developed to assist panels and the Appellate Body. Such a methodology should be able to look into factors such as acceptance of new technologies and ethical considerations. For example, polls could be used. Expert hearings should not be limited to science, but extend to social scientists in order to assess to what extent a limitation is primarily motivated by legitimate political and ethical concerns. The present agreement does not sufficiently nor systematically respond to these concerns which need to form part of an integral constitutional approach to assessing SPS measures.

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Risk assessment and risk management may occur in the absence of scientific evidence, but strong political and societal inhibitions to grant market access for a product may arise from strong ethical resistance. Such conflicts have happened in the context of biotechnology, where appropriate labelling would leave choices to the consumer. In the WTO labelling falls under the TBT agreement, but this needs further development to meet new consumer sensitivities. The Review of Implied Procedural Obligations The panel on beef-hormones held that SPS article 5.1 agreement contains an implied procedural requirement to establish the necessary risk assessment. The Appellate Body held that there is no legal foundation for such a requirement (para. 188) and that this in fact would impair using existing data, including those produced by international organizations (para. 190). The reason for this implied distinction by the panel can be found in considerations of standards of review. In the light of the fact that the standards set forth for the purpose of risk assessment necessarily comprise a considerable leeway, and in part are entirely a matter for the member in the stage of risk management, the review by panels should primarily focus on procedural requirements in risk assessing and turn to scientific and political assessment on substance only to the extent necessary. Whenever the standards of substantive law leave a large degree of discretion, remedies and disciplines should be sought in procedural guarantees. This is compensation by process. The fact that procedures prescribed are affected contains an inherent guarantee that all considerations, scientific and societal, are being considered and measures are not adopted unilaterally on the basis of specific and often protectionist economic interests. The elimination of implied procedural requirements and thus a procedural approach, leaves substantive and procedural requirements mixed and their relationship presently unclear. They should be distinguished, and it seems that the case law increasingly does so. The Appellate Body recognized in salmon an implicit obligation to determine the appropriate level of protection, even without an explicit requirement to do so (salmon, para. 206). In agricultural products, the Appellate Body emphasized and examined procedural requirements to meet the conditions for provisional SPS measures (precautionary principle) in article 5.7 SPS agreement (agricultural products, paras 86–94). A future review of the agreement would benefit from clearly defined procedural obligations which would be subject to full review and thus provide a main guarantee that national risk assessments are undertaken in accordance with the prescriptions of the agreement. This would also be in line with experience and practices by national courts (Wirth, 1994, p. 843).


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THE PROBLEM OF CONSISTENCY Consistency in overall sanitary and phytosanitary policy and measures is most important and an effective test in the examination of a specific measure. SPS article 5.5 merely contains references to classical prohibition of arbitrary and unjustifiable distinctions in different situations which must not result in discrimination or disguised restrictions on international trade. The panels and the Appellate Body have struggled with this open textured provision in connection with SPS article 2.3. The standard of review applied to the (cumulative) criteria of this provision is not clear. The Appellate Body considered this to be a programmatic provision (beef-hormones, para. 210), but nevertheless engaged, as did the panel, in a fairly detailed and diverging comparison of the products which can hardly be achieved on the basis of a reading of the text alone. It affirmed the ‘warning signals’ stemming from different standards as identified by the panel on salmon (para. 160). Indirectly, the level of protection, to be freely defined by members, was limited by the test of consistency; for example, it would be contrary to SPS article 5.5 to adopt a zero-risk policy in one field, while not doing so in a comparable field. The criteria on consistency and comparison provide the most important test in assessing policies for their sectoral economic protectionism. At the same time, the criteria set forth in SPS article 5.5 do not provide much guidance and should be supplemented by additional guidelines. Political and ethical criteria, and a proper methodology discussed above, could perhaps best be placed in the context of an examination of the wider consistency of SPS policies in a member state. As ethical and political concerns (as opposed to economic ones) are not divisible, consistency of application throughout the policies of a member may provide a strong test worth considering in assessing the legitimacy of a contested measure.

IMPLEMENTATION AND ENFORCEMENT Finally, the relationship of sovereignty and standard setting is defined by prescriptions requiring the implementation of decisions by the DSB, taken on the basis of the panel and Appellate Body reports. Under current practices, these reports do not generally specify the measures and steps which should be taken in order to remedy a situation which is inconsistent with the obligations under the SPS agreement. DSU article 19.1 allows for, but does not require, a panel to specify the measures to be taken. Generally, this matter is left to the country concerned. In beef-hormones, it remains unclear whether the EC is obliged to remove the measure, or whether it may remedy the situation by undertaking

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the necessary operations of risk assessment in conformity with the SPS article 5. The arbitration award did not specify further on these obligations. It held that the Appellate Body report did not primarily emphasize the absence of a suitable specific risk assessment, but that the measure was not based on a risk assessment (beef-hormones, Arbitration Award note 9, para. 37). It denied the need for additional studies in special circumstances which would justify granting an implementation period beyond 15 months. At the same time, the arbitrator affirmed that the undertaking of further studies can form part of the process of implementation: It would not be in keeping with the requirement of prompt compliance to include in the reasonable period of time, time to conduct studies or to consult experts to demonstrate the consistency of a measure already judged to be inconsistent. That cannot be considered as ‘particular circumstances’ justifying a longer period than the guidelines suggested in article 21.3(c). This is not to say that the commissioning of scientific studies or consultations with experts cannot form part of a domestic implementation process in a particular case. However, such considerations are not pertinent to the determination of the reasonable period of time. (ibid., para. 39)

The arbitration did not find the EC to be under an obligation to reverse the measure, but granted 15 months, until 13 May 1999, to implement the findings. Since the EC failed to meet that decision, the US introduced 100 per cent tariffs on selected EU exports, which poses a serious new threat to the multilateral trading system. The absence of specific conclusions is not peculiar to the SPS agreement. Except for one case,18 the panels and the Appellate Body have refrained from specific findings. This leaves the matter with the defendant which may either implement the report, seek transitional compensation or accept the withdrawal of concessions by the complainant. Conducting additional risk assessments is likely to exceed the reasonable period of time granted and thus result in compensation or withdrawal of concessions in complex SPS cases. Experiences gained from the implementation of decisions in the banana cases19 further complicate matters as the current legal regime on implementation shows considerable shortcomings. The parallel avenues of seeking and adjudicating compensation and withdrawal of concessions in SPS articles 22.1 and article 21.5 proved to be difficult to reconcile and clearly need to be revised.20 These weaknesses, as well as the absence of specific recommendations and rulings, are further forms of deference to members. They may well serve national sovereignty in setting health and food standards unimpaired, but operate to the detriment of the credibility of the international trading system as a rule-based system. The balance between rule-based and power-oriented polices has now shifted to the phasing and implementation of decisions, and much work will be needed in the real world to improve predictability of the law and decisions.


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CONCLUSIONS The entry into force of the SPS agreement and subsequent case law clearly show that disciplines for risk assessment and risk management in the field of food and health standards have been considerably enhanced. Governments are required to provide solid justification, both scientific and legal, in order to sustain measures having trade restricting effects. The measures challenged so far in dispute settlements all failed to stand the test, mainly because the necessary trials, scientific assessments and examinations had not taken place. The thorough examination of measures by scientific experts, panels and the Appellate Body cannot and will not remain without implications and feedback for national and regional authorities. In order to prevent costly disputes, the very existence of the WTO dispute settlement system needs to allocate sufficient and adequate resources to the elaboration and administration of quarantine measures and to research with a view to collecting necessary scientific evidence in order to support adopted levels of protection. The experience in dispute settlement has brought to light some deficiencies and weaknesses in the SPS agreement which should be considered in the review process during the next round of trade negotiations. In the light of the experience of panels, the following proposals should be examined with a view to revising and developing further the SPS agreement. • Clarification of the relationships of national or regional and international food and health standards under the SPS agreement are needed. Legal security and predictability can best be achieved by using and promoting international standards. This approach, however, implies that international standards are legitimate. It is not for the WTO to establish international standards itself. The matter is left to appropriate international organizations. However, the SPS agreement may develop further criteria which have to be met in order to render international standards binding and compulsory under the agreement. Conceptually, a difference between binding standards and recommendations should be elaborated, the two categories having different legal effects. • The SPS agreement should be revised and clarified in order to bring about a clear distinction between risk assessment based on scientific evidence and risk management. The latter should comprise economic, social and other factors, as well as scientific evidence. A proper methodology referring to the social sciences should be developed in the context of risk management. In particular, this includes inquiries into the social and political acceptance of an existing risk. Standards of review should be framed accordingly, and examination of scientific evidence and social and political criteria should be undertaken in consecutive steps. Except

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for provisional measures applied under the precautionary principle under SPS article 5.7, the establishment of a risk based on scientific evidence in the first place should be retained. Giving up such a primary requirement would amount to the equivalent of inviting economically protectionist policies under the guise of risk management. In the absence of scientifically established risk, governments should resort to labelling foodstuffs according to the TBT agreement, leaving decisions about value with the consumer. • The SPS agreement should distinguish substantive and procedural requirements more clearly, and standards of review should be framed accordingly. Review could essentially rely upon procedural requirements while leaving value judgements to governments. Examining whether a member has undertaken the necessary studies and trials before introducing separate standards would facilitate the assignment of panels and assist rational policymaking at home. • Such procedural obligations should also comprise an examination of all criteria set forth by the SPS agreement by governments. A requirement to examine SPS consistency at home will contribute to the prevention of international disputes. • A revised SPS agreement should seek to prescribe more specific remedies, in particular compensation in cases of renewed scientific trials exceeding the reasonable period of time for implementation, but for a defined extension of time. The withdrawal of the measure should be recommended where it can be shown that compliance with existing international standards satisfies the appropriate level of risk as defined by the member. Given the complex issues involved, many might consider these efforts a bridge too far. We are living in a period of scepticism, just as biotechnology is being increasingly employed, and recourse to national sovereignty may seem appropriate to many. Yet, given the potential for serious trade disputes in the field of biotechnology and its underlying social and cultural problems, the first experiences under the SPS agreement should not be forgotten. The next step should be towards a better structured SPS agreement and towards clarification and improvement of its inextricable components.

NOTES 1. WTO (1997), EC Measures concerning Meat and Meat Products (Hormones) – Complaint by the United States – Report of the Panel, WT/DS26/R/USA, 18 August, 1997 [appealed] and EC Measures concerning Meat and Meat Products (Hormones) – Complaint by CanadaReport of the Panel, WT/DS48/R/CAN, 18 August 1997 [appealed]. Without special indication, quotations in this chapter refer to the WT/DS48/R/CAN (Canadian complaint).


2. 3. 4. 5. 6. 7.

8.

9. 10.

11.

12.

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All reports of panels and of the Appellate Body, as well as arbitration awards are located at http://www.wto.org/wto/dispute/panel.htm, and reprinted in The International Trade Law Reports (1996), London, Cameron May. WTO (1998), Australia – Measures Affecting Importation of Salmon, Report of the Panel, WT/DS18/R, 12 June 1998 [appealed]. WTO (1998), Japan – Measures Affecting Agricultural Products – Report of the Panel, WT/DS76/R, 27 October 1998 [appealed]. WTO (1998), EC Measures Concerning Meat and Meat Products (Hormones) – AB-1997-4 – Report of the Appellate Body, WT/DS26/AB/R, WT/DS48/AB/R, 16 January 1998 [adopted]. WTO (1998), Australia – Measures Affecting Importation of Salmon – AB-1998-5 – Report of the Appellate Body, WT/DS18/AB/R, 20 June 1998 [adopted]. WTO (1998), Japan – Measures Affecting Agricultural Product – AB-1998-8 – Report of the Appellate Body, WT/DS76/AB/R, 22 February 1999 [adopted]. WTO (1998), EC Measures Concerning Meat and Meat Products (Hormones) – Arbitration under article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS26/15, WT DS48/13, 29 May 1998 [Award of the Arbitrator Julio LacarteMuro – granting a period of implementation up to May 13, 1999]; the date passed without implementation; WTO (1999), Australia – Measures Affecting Importation of Salmon, Arbitration under article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes, WT/DS18/9 23 February 1999 [Award of the Arbitrator Said-ElNaggar – Granting a period of implementation up to 6 July 1999]; WTO (1999), European Communities – Measures Concerning Meat and Meat Products (Hormones) – Recourse by the United States to article 22.2 of the DSU, WT/DS26/19, 18 May 1999, and WTO (1999), European Communities – Measures Concerning Meat and Meat Products (Hormones) – Recourse by Canada to article 22.2 of the DSU, WT/DS48/17, 20 May, 1999 [Award pending and due July 13, 1999]. See beef-hormones, para. 170 ‘Under article 3.2 of the SPS agreement, a Member may decide to promulgate an SPS measure that conforms to an international standard. Such a measure would embody the international standard completely and, for practical purposes, converts it into a municipal standard. Such a measure enjoys the benefit of a presumption (albeit a rebuttable one) that it is consistent with the relevant provisions of the SPS Agreement and of the GATT 1994’. The approach is comparable to the so called New Approach in technical standardization in EC law. See United States – Measures Affecting Alcoholic and Malt Beverages, para. 5.6 DS23/R, 19 June 1992, BISD 39th Supp. 206, 270/271. WTO (1998), United States – Import Prohibition of Certain Shrimp and Shrimp Products – Report of the Appellate Body, WT/DS58/AB/R, 12 October 1998 para. 185. (Upon concluding that the unilateral measures imposed by the United States amounted, under the facts of the case, to a violation of article XX GATT (chapeau) the Appellate Body held ‘We have not decided that the protection and preservation of the environment is of no significance to the members of the WTO. Clearly, it is. We have not decided that the sovereign nations that are members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should. And we have not decided that sovereign states should not act together bilaterally, plurilaterally or multilaterally, either within the WTO or in other international fora, to protect endangered species or to otherwise protect the environment. Clearly, they should and do.’) See also FAO (1998, p. 13) (‘It is noteworthy that the SPS and TBT Agreements both acknowledge the importance of harmonizing standards internationally so as to minimize or eliminate the risk of sanitary, phytosanitary and other technical standards becoming barriers to trade’). Beef-hormones, para. 172 (also para. 104). In para. 104 the Appellate Body confirmed that exceptions are not to be construed in a narrow sense: ‘In much the same way, merely characterising a treaty provision as an “exception” does not by itself justify a “stricter” or “narrower” interpretation of that provision than would be warranted by examination of the ordinary meaning of the actual treaty words, viewed in context and in light of the treaty’s

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13.

14. 15.

16.

17.

18.

19.

20.

Risk and the WTO object and purpose, or, in other words, by applying the normal rules of treaty interpretation.’ It should be voted that the Panel had no intention to construe article 3.3 narrowly. The obiter dictum of the Appellate Body is of importance and welcomed in light of previous functionalist practices to construe GATT exceptions, in particular article XX, in a narrow manner; see in particular United States Restrictions on Tuna, GATT BISD 39th supp. 155 para. 5.22 (1993), 30 ILM 1594, 1619 (1991). ‘[V]arious international tribunals, including the International Court of Justice, have generally and consistently accepted and applied the rule that the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof thereof. Also, it is a generallyaccepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defense. If the party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption,’ WTO, United States – Measures Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R para. 14 [adopted 23 May 1997], see also agricultural products, para. 121. Beef-hormones, para. 98, see also Japan – Agricultural Products, para. 122. The Appellate Body clearly follows rules of evidence in common and Anglo-Saxon law, while disregarding the power of courts in civil law to assess evidence under an investigating or inquisitional principle. Claims and arguments need to be made and presented by parties in order to be taken into account by panels and the Appellate Body. The Appellate Body held: ‘Panels are inhibited from addressing legal claims falling outside their terms of reference. However, nothing in the DSU limits the faculty of a panel freely to use arguments submitted by any of the parties – or to develop its own legal reasoning – to support its own findings and conclusions on the matter under its consideration. A panel might well be unable to carry out an objective assessment of the matter, as mandated by article 11 of the DSU, if in its reasoning it had to restrict itself solely to arguments presented by the parties to the dispute’ (beef-hormones, para. 156). The distinction can be found in the FAO/WHO definition of ‘A Risk Management: The process of weighing policy alternatives in the light of the results of risk assessment and, if required, selecting and implementing appropriate control options, including regulatory measures’. Risk assessment policy, however, is defined broadly to be ‘Guidelines for value judgment and policy choices which may need to be applied at specific decision points in the risk assessment process’, Risk Management and Food Safety – Report of a Joint FAO/WHO Consultation, Rome 27–31 January 1997, FAO, Food and Nutrition Paper no. 65 (FAO: Rome 1997, p. 4). See also, Wirth (1994, pp. 817, 833), ‘Although by no means universally accepted, one approach that expressly acknowledges this dichotomy prescribes a bifurcation of the regulatory process into two phases: “risk assessment”, which in principle establishes the strictly scientific basis for regulatory action, and “risk management”, which is the multidisciplinary process of choosing regulatory measures.’ WTO (1996), United States – Restrictions on Imports of Cotton and Man-made Fibre Underwear, Report of the Panel, WT/DS24/R, 8 November 1996, paras 8.1–8.3. The panel ruled in light of article 19.1 DS: ‘We, consequently, recommend that the Dispute Settlement Body request the United States to bring the measure challenged by Costa Rica into compliance with US obligations under the ATC. We find that such compliance can best be achieved and further nullification and impairment of benefits accruing to Costa Rica under the ATC best be avoided by prompt removal of the measure inconsistent with the obligations of the United States. We further suggest that the United States bring the measure challenged by Costa Rica into compliance with US obligations under the ATC by “immediately withdrawing the restrictions imposed by the measure”’ (para. 8.3). See WTO (1997), European Communities – Regime for the Importation, Sale and Distribution of Bananas. Report[s] of the Panel, WT/DS27, 22 May 1997; WTO (1997), Appellate Body – European Communities – Regime for the Importation, Sale and Distribution of Bananas, Report of the Appellate Body, WT/DS27, 9 September 1997. While the United States requested authorization to suspend concessions under article 22.2 DSU, leading to arbitration under article 22.6 DSU and the granting of an annual amount of


61

USD 191.4 million per year, Ecuador sought a review of new import measures by way of recourse to arbitration under article 21.5 DSU. The European Communities equally filed a complaint under this provision, arguing procedures under article 21.5 to be exclusive, thus impeding procedures to withdraw concessions under article 22.2 at the same time. The panel (composed of the same persons in all three simultaneous proceedings) denied such a request, and assessed the measures in all three proceedings simultaneously and necessarily disregarding diverging time periods of these procedures (article 22.6: 60 days; article 21.5: 90 days). The constellation caused considerable confusion, both procedurally and politically. See WTO (1999), European Communities – Regime for the Importation and Sale and Distribution of Bananas – Recourse to Arbitration by the European Communities under article 22.6 of the DSU – Decision by the Arbitrators, WT/DS27/ARB, 9 April 1999; WTO (1999), European Communities – Regime for the Importation, Sale and Distribution of Bananas – recourse to Article 21.5 by Ecuador – Report of the Panel, WT/DS27/RW/ECU, 12 April 1999; WTO (1999), European Communities – Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 by European Communities – Report of the Panel, WT/DS27/RW/EEC, 12 April 1999.

REFERENCES Atik, Jeffrey (1997), ‘Science and international regulatory convergence’, Journal of International Law, 17, 736–44. Barcel, John J. (1994) ‘Product standards to protect the local environment – the GATT and the Uruguay Round Sanitary and Phytosanitary Agreement’, Cornell International Law Journal, 27, 755. Cottier, T. (1998), ‘The WTO Dispute Settlement System: New Horizons’, Proceedings of the 92th Annual Meeting, Washington, DC: American Society of International Law, 89–91. Eggers, B. (1998), ‘Die Entscheidung des WTO Appellate Body im Hormonfall’, Europäische Zeitschrift für Wirtschaftsrecht, 9, 147–51. FAO (1998), FAO Technical Assistance and the Uruguay Round Agreements, 2nd edn, Rome: FAO, pp. 12–20. Hilf, M. and B. Eggers (1997), ‘Der Panel-Bericht im EG/US Hormonstreit: Anstoss zum grenzenlosen Weltbinnenmarkt für Lebensmittel oder Eigentor der WTO?’, Europäische Zeitschrift für Wirtschaftsrecht, 8, 559. Jackson, John H. (1999) reprinted, ‘The World Trade Organization: Constitution and Jurisprudence’, Chatham House Papers, London: The Royal Institute of International Affairs. James, Sallie and K. Anderson (1998), ‘On the Need for More Economic Assessment of Quarantine/SPS Policies’, Centre for International Economic Studies Seminar Paper 98–02, University of Adelaide, February 1998 (since published in the Australian Journal of Agricultural and Resource Economics, 42(4), 425–44). Kuhn, Thomas S. (1970), The Structure of Scientific Revolutions, 2nd edn, Chicago: The University of Chicago Press. Shin, Yukyan (1998) ‘An analysis of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures and its implications in Korea’, Journal of World Trade, 32, 85–119. Walker, Vern R. (1998), ‘Keeping the WTO from becoming the “World Trans-science Organization” – science, uncertainty, science policy, and factfinding in the growth hormones dispute’, Cornell International Law Journal, 31, 251.

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WHO (1998), Food Safety and Globalization of Trade in Food: A Challenge to the Public Health Sector, Food Safety Issues (WHO/FSF/FOS, 8 Rev.1.). Wirth, David A. (1994), ‘The role of science in the Uruguay Round and NAFTA trade disciplines’, Cornell International Journal, 27, 817, 854. WTO (1995), ‘The results of the Uruguay Round of multilateral trade negotiations’, The Legal Texts, Geneva: WTO Secretariat, 69–84.

5.

Applying SPS in WTO disputes Joost Pauwelyn*

This chapter provides an account of how WTO dispute settlement panels and the Appellate Body have interpreted the SPS agreement. (The SPS agreement is explained by Wilson and Gascoine in Chapter 11, this volume.) Commentaries on specific cases, in particular the high profile beef-hormones dispute, have also been written (Hurst, 1998; Charnovitz, 1997, 1998; Wirth, 1998). The focus here is on how the rights and obligations of WTO members in the SPS agreement have been clarified by decisions reached by the dispute settlement body (DSB). SPS provisions not yet invoked in disputes are not dealt with. Dispute settlement reports are only one source of SPS interpretations but represent a consistent approach (Roberts, 1998). It is an objective summary which raises some unanswered questions, while providing some guidance to health and quarantine regulators by addressing the intersection of trade and health protection. This assessment will focus on the three major SPS disputes agricultural products,1 beef-hormones2 and salmon.3 The three pillars of the SPS agreement have been addressed (human health in beef-hormones; animal health in salmon; and plant health in agricultural products). The clarifications and instructive statements made in these three cases use case law. This gives prominence to legal precedence which is not always used in systems of national law and could lead to new conflicts in the future. The SPS committee, established to monitor and clarify the SPS agreement, comprises all 135 WTO members. It finished its first review of the SPS agreement in 1999. It emphasized that the SPS agreement had contributed to improving international trading relationships with respect to sanitary and phytosanitary measures and welcomed the fact that a number of SPS-related trade matters had been resolved following discussion at formal meetings of the committee, or bilaterally (SPS Committee Report, 1999). Certain concerns were raised but no formal changes to the text of the SPS agreement were recommended, except some minor amendments to notification of procedures. *

Any opinions expressed are strictly personal and not to be attributed to my employer the WTO Secretariat. I am grateful for useful comments from William Davey, Oliver Landwehr, Gabrielle Marceau and Erik Wijkstrom. The usual disclaimer applies.

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This chapter addresses certain developments in substantive rights and obligations under the SPS agreement, and describes some of the more procedural elements in SPS disputes. It concludes with an assessment of how reports have been implemented.

NOTES ON SUBSTANTIVE RIGHTS AND OBLIGATIONS UNDER THE SPS AGREEMENT What is an SPS Measure and When Does the SPS Agreement Apply? Whether a specific measure is regarded as an SPS measure is a subjective question. It depends on the aim or purpose of the regulation. If it is enacted with a view to protect human, animal or plant life or health, it is an SPS measure (SPS annex 1). So far, this subjective criterion has not been controversial. In all three disputes, the defending party argued that health protection was the purpose of the measure challenged.4 What if a defendant argues that health protection is only one of the objectives, that consumer concerns or moral issues are relevant also? What level of health protection is enough for the measure to be an SPS measure? What if a defendant claims that it is not protecting health? Can a panel examine this matter of intent? Once it is established that the measure is applied to protect life or health, two additional (more objective) criteria have to be met. First, the measure needs to protect against either (1) so-called ‘food-borne’ risks (human or animal life or health) or (2) pest or disease-related risks (human, animal or plant life or health). The distinction between these two categories of risk is important for an SPS definition. The kind of risk assessment to be conducted is different for each of these risk categories (see below).5 In beef-hormones, the alleged risk was food-borne and related to human life and health; the risk related to contaminants (hormone residues) in foods (meat and meat products). In salmon, Australia claimed to protect its fish against the introduction of some 24 salmon diseases. In agricultural products, Japan wanted to avoid the introduction of the codling moth, considered to be a plant pest, by banning fruit imports from the United States. The second criterion for the SPS agreement to apply, is that the measure needs to ‘directly or indirectly affect’ international trade (SPS article 1.1). So far this criterion has not caused any controversy. In dispute settlement, two decisions have been taken about when the SPS agreement applies. First, the SPS agreement was found to apply to all SPS measures affecting international trade.6 Before the SPS agreement, health regulations only had to be justified if a prior violation of one of the GATT principles had been found.7 GATT article XX(b) (allowing measures ‘necessary to protect human, animal or plant life or health’) is only activated once a

Applying SPS in WTO disputes

65

violation of the non-discrimination provisions (GATT articles I or III) has been established. Under the SPS agreement, all disciplines apply regardless of whether a GATT violation exists. The second decision found that the SPS agreement applies. The SPS agreement applies not only to SPS measures enacted after 1 January 1995; but also to SPS measures introduced before the WTO commenced operation and still in force.8 This means that many WTO members need to re-examine their existing SPS measures, in light of SPS obligations.9 SPS Measures Based on Science SPS measures cannot be maintained ‘without sufficient scientific evidence’ (SPS article 2.2). (The exception to this rule is the possibility to enact provisional measures according to the precautionary principle, discussed below.) The only dispute where this requirement of ‘sufficient scientific evidence’ has been explicitly addressed, was agricultural products: The ordinary meaning of ‘sufficient’ is ‘of a quantity, extent, or scope adequate to a certain purpose or object’. From this, we can conclude that ‘sufficiency’ is a relative concept. ‘Sufficiency’ requires the existence of a sufficient or adequate relationship between two elements, in casu, between the SPS measure and the scientific evidence … we agree with the Panel that the obligation … that an SPS measure not be maintained without sufficient scientific evidence requires that there be a rational or objective relationship between the SPS measure and the scientific evidence. Whether there is a rational relationship between an SPS measure and the scientific evidence is to be determined on a case-by-case basis and will depend upon the particular circumstances of the case, including the characteristics of the measure at issue and the quality and quantity of the scientific evidence.10

Applying this test to Japan’s requirement that approval to import certain fruits has to be sought separately for each fruit variety (Japan’s so-called varietal testing requirement), the panel (as well as the Appellate Body) concluded that the requirement was not maintained with sufficient scientific evidence.11 What is a ‘Risk Assessment’? SPS article 5 requires that quarantine measures must be based on a risk assessment. A risk assessment to protect human beings or animals against ‘foodborne’ risks is easier to conduct than a risk to protect against pests or disease risk. Risks are defined as follows: • The evaluation of the potential for adverse effects on human or animal health arising from the presence of additives, contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs.

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Risk and the WTO

• The evaluation of the likelihood of entry, establishment or spread of a pest or disease within the territory of an importing member according to the sanitary or phytosanitary measures which might be applied, and of the associated potential biological and economic consequences. Additional principles have been developed through case law: • a risk assessment can either be quantitative or qualitative;12 • a risk assessment does not need to establish a minimum magnitude of risk; a WTO member may determine that its acceptable level of risk is ‘zero risk’;13 • the risk being assessed must be an ascertainable risk; theoretical uncertainty is not the kind of risk to be assessed; the existence of unknown and uncertain elements does not justify a departure from the risk assessment requirement; • a risk assessment needs to be specific; a separate risk assessment must be conducted for each substance, a generic risk assessment for a class of substances is not enough;14 also, the studies of a risk assessment need to be specific enough to address the particular kind of risk at stake;15 • a country imposing an SPS measure does not have to conduct the required risk assessment itself; it can use assessments carried out by others or by international organizations.16 A crucial distinction was, however, found between the risk assessment required for food-borne risks and that for disease or pest risks: While [a risk assessment for ‘food-borne’ risks] requires only the evaluation of the potential for adverse effects on human or animal health, the [risk assessment for disease or pest risks] demands an evaluation of the likelihood of entry, establishment or spread of a disease, and of the associated potential biological and economic consequences. (Salmon, Appellate Body report, note 19)

It is, therefore, not sufficient for a risk assessment on disease or pest risks to conclude that there is a possibility of entry, establishment or spread of diseases or pests and associated biological and economic consequences. A proper risk assessment must evaluate the likelihood (that is, probability) of the entry, establishment or spread of diseases or pests and associated biological and economic consequences. This evaluation of probability can be expressed either qualitatively or quantitatively. In beef-hormones, the panel applying the food-borne risk assessment definition followed a two-step analysis. First, did the EC identify adverse effects? Second, did it evaluate the potential of these effects to occur (ibid.,


67

paras 129, 134)? The Appellate Body in beef-hormones concluded that the EC had not actually undertaken such a risk assessment and found that the EC had violated the SPS obligations (ibid., para. 208). In salmon and agricultural products, where the disease or pest risk assessment definition was applied, the three requirements were specified: (a) identify the diseases whose entry, establishment or spread is being prevented within its territory, as well as the potential biological and economic consequences associated with the entry, establishment or spread of these diseases; (b) evaluate the likelihood of entry, establishment or spread of these diseases, as well as the associated potential biological and economic consequences; (c) evaluate the likelihood of entry, establishment or spread of these diseases according to the SPS measures which might be applied.17 In salmon, the Appellate Body found that Australia had not met requirements (paras 129, 134). In agricultural products, it found that (at least in respect of apricots, pears, plums and quince) the third requirement was lacking (paras 113–14). In both cases, violations of SPS article 5.1 were found. In salmon, it was found that if a measure is not based on a risk assessment, it can be presumed not to be based either on scientific principles nor to be scientifically justified.18 In legal terms, a violation of the more specific SPS article 5.1 presumes a violation of the more general SPS article 2.2. What Evidence is Relevant to Assessing Risk? SPS article 5 sums up specific factors to be taken into account in a risk assessment. The main issue is whether ‘non-scientific’ factors, such as consumer concerns, cultural or moral preferences and social values (not explicitly mentioned in the SPS agreement) can be used to determine whether a risk exists. The panel on beef-hormones was of the view that ‘an assessment of risks is, at least for risks to human life or health, a scientific examination of data and factual studies; it is not a policy exercise involving social values made by political bodies’.19 In its opinion non-scientific factors should not be taken into account in risk assessment but in risk management; that is, in determining the acceptable level of risk and the selection of the SPS measures to be used. The Appellate Body reversed the panel decision to conclude: There is nothing to indicate that the listing of factors that may be taken into account in a risk assessment of SPS article 5.2 was intended to be a closed list. It is essential to bear in mind that the risk that is to be evaluated in a risk assessment under article 5.1 is not only risk ascertainable in a science laboratory operating under strictly controlled conditions, but also risk in human societies as they actually exist; in other

68

Risk and the WTO words, the actual potential for adverse effects on human health in the real world where people live and work and die. (Ibid., para. 187)

The Appellate Body added that the object and purpose of the SPS agreement should justify the examination and evaluation of all such food-borne risks for human health whatever their precise and immediate origin may be (ibid., para. 206). Even though most commentators hold the view that SPS article 5 includes a closed list of factors which ‘can’ be considered, it does suggest factors which ‘shall’ be taken into account without indicating other factors can also be considered. Resolving this confusion will be important for the effective operation of the SPS agreement. When is an SPS Measure Based on Acceptable Risk Assessment? The SPS agreement not only requires member countries to conduct a risk assessment (or to refer to a risk assessment conducted elsewhere), but they also have to base any measures on a risk assessment.20 Yet, it does not involve a subjective or procedural examination of the regulator’s decision-making process. The Appellate Body in beef-hormones argued: ‘The requirement that an SPS measure be “based on” a risk assessment is a substantive requirement that there be a rational relationship between the measure and the risk assessment.’ The Appellate Body noted that even minority opinions could provide a rational relationship: We do not believe that a risk assessment has to come to a monolithic conclusion that coincides with the scientific conclusion or view implicit in the SPS measure. The risk assessment could set out both the prevailing view representing the ‘mainstream’ of scientific opinion, as well as the opinions of scientists taking a divergent view … In most cases, responsible and representative governments tend to base their legislative and administrative measures on ‘mainstream’ scientific opinion. In other cases, equally responsible and representative governments may act in good faith on the basis of what, at a given time, may be a divergent opinion coming from qualified and respected sources. By itself, this does not necessarily signal the absence of a reasonable relationship between the SPS measure and the risk assessment, especially where the risk involved is life-threatening in character and is perceived to constitute a clear and imminent threat to public health and safety.21

The Appellate Body rejected the panel’s view that there was a procedural requirement imposed on WTO members ‘to submit evidence that it took into account a risk assessment when it enacted or maintained its sanitary measure in order for that measure to be considered as based on a risk assessment’.22 The rejection of such a procedural requirement opens the door for ex post facto jus-


69

tification of SPS measures (Hurst, 1998, p. 13). In practice, only evidence submitted at the time of the panel proceedings matters; not evidence that was available when the SPS measure was first enacted or later re-examined and maintained. Provisional SPS Measures can be Taken Under SPS article 5.7, members can enact provisional SPS measures: (a) they are imposed where ‘relevant scientific information is insufficient’; and (b) they are adopted on the basis of available pertinent information (agricultural products, Appellate Body report, para. 89). Such provisional measures may not be maintained unless: (c) the instigator seeks to obtain the additional information necessary for a more objective assessment of risk; and (d) reviews the … measure within a reasonable period of time. The Appellate Body in agricultural products, where the defendant argued that its measure was a provisional one, found these four conditions to be cumulative. If one is not met, the measure will be found to be inconsistent with the SPS agreement. The Appellate Body also defined the option of provisional measures as a qualified exemption from the obligation to base SPS measures on sufficient scientific evidence (ibid., para. 80). Hence the party imposing a provisional SPS measure has to prove that it meets all four requirements. The Appellate Body added that: neither SPS article 5.7 nor any other provision sets out explicit prerequisites regarding the additional information to be collected or a specific collection procedure. Furthermore, article 5.7 does not specify what actual results must be achieved; the obligation is to ‘seek to obtain’ additional information. However, article 5.7 states that the additional information is to be sought in order to allow the member to conduct ‘a more objective assessment of risk’. Therefore, the information sought must be germane to conducting such a risk assessment. (agricultural products, Appellate Body report, para. 92)

Applying this requirement to Japan’s varietal testing procedures, the Appellate Body agreed with the panel that Japan did not seek to obtain the additional information necessary for a more objective risk assessment. The Appellate Body noted that the ‘reasonable period of time’ to review the provisional measures depends on the specific circumstances of each case,

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including the difficulty of obtaining the additional information necessary for the review and the characteristics of the provisional SPS measure (ibid., para. 93). The Appellate Body concluded that although the obligation to review the varietal testing requirement had only been in existence since 1 January 1995, Japan had not reviewed its varietal testing requirement ‘within a reasonable period of time’. Although Japan’s measure might be considered to be provisional and adopted in accordance with requirements (a) and (b) of SPS article 5.7, it did not meet the other two requirements of that article (ibid., para. 94). In beef-hormones, the EC did not claim that its import ban was a provisional measure, but it invoked the precautionary principle under SPS article 5.1 (risk assessment). The Appellate Body agreed with the panel that the precautionary principle (other than that expressed in SPS article 5.7 on provisional measures) did not override the obligation to base SPS measures on a risk assessment (ibid., para. 125). On the status of the precautionary principle in international law, the Appellate Body noted: it is regarded by some as having crystallized into a general principle of customary international environmental law. Whether it has been widely accepted by members as a principle of general or customary international law appears less than clear … We note that … the precautionary principle, at least outside the field of international environmental law, still awaits authoritative formulation. (Ibid., para. 123)

This remains controversial in many international agreements. WTO Members Set Their Own Levels of Risk Once a proper risk assessment has been conducted and an ‘ascertainable risk’ is detected, the member concerned has to make a social judgement whether to accept that risk.23 This decision will be made in accordance with a government’s decision on the acceptable level of risk or ALOP. If it can accept the risk, no SPS measures are required. If it cannot, then an appropriate SPS measure will be selected to reduce the risk to an acceptable level. The acceptable level of risk is a crucial part in determining whether an SPS measure is WTO consistent. It is an important concept of the SPS agreement, after ‘sufficient scientific evidence’ and ‘risk assessment’ has been decided. In salmon, the Appellate Body argued that the determination of the appropriate level of protection (para. 5 of SPS annex A) is a prerogative of the member concerned and not of a panel or of the Appellate Body (ibid., para. 199). The beef-hormones panel referred to the process of determining and applying the acceptable level of risk as part of risk management, where social value judgements (risk perceptions and consumer tolerance) are crucial.24 The Appellate Body in salmon implied that a member’s acceptable level of risk could even be set at zero risk.25


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How to Select SPS Measures with ‘Acceptable Level of Risk’ If an assessed risk is found to be unacceptable (based on ALOP), risk mitigating measures can be imposed to reduce the risk to that acceptable level. In respect of disease and pest risk, SPS measures that might be imposed should be examined in the risk assessment, remembering that measures should not be more trade-restrictive than required to achieve their appropriate level of quarantine protection. No Discrimination Among Markets or Products SPS article 2.3 includes the traditional GATT requirement of non-discrimination, provided in GATT article I and GATT article III. In addition SPS article 5.5 includes a prohibition on discriminations between situations or products, irrespective of their origin. In case law, three elements have been required for a violation of SPS article 5.5: (a) adopting different appropriate levels of sanitary protection in different situations; (b) evidence of arbitrary or unjustifiable differences in levels of protection (c) leading to ‘discrimination or a disguised restriction on international trade’.26 The most controversial element under the SPS objective of ‘consistency’ has been that an SPS measure results in discrimination or a disguised restriction on international trade. The Appellate Body in beef-hormones stressed that it is not enough for this to be met when there is an arbitrary or unjustifiable distinction between situations or products which results in a trade restriction. 27 In addition, acts of discrimination between imported and domestic production need to be established. For example, the Appellate Body after deciding that an arbitrary or unjustifiable distinction was involved in the way the EC treated hormones in cattle and antimicrobials in swine, concluded that no violation of SPS article 5.5 could be found.28 In salmon, on the other hand, the Appellate Body confirmed the panel’s finding of a violation of SPS article 5.5. Australia, by banning imports of salmon products but allowing imports of herring used as bait and live ornamental finfish, which represent similar risks of disease introduction, acted inconsistently with SPS article 5.5.29 Presumption of SPS Measure in Conformity with International Standards In beef-hormones, the Appellate Body stated that a member government wanting to impose an SPS measure has three options:

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(a) It can enact an SPS measure which conforms to an international standard. This meets all SPS disciplines, including the requirement of sufficient scientific evidence and risk assessment. (b) It may choose to base its SPS measure on an international standard. It will still be subject to full scrutiny under all SPS disciplines, in particular the obligation to base the measure on sufficient scientific evidence and a risk assessment. (c) It may decide to deviate from the international standard and to set its own different protection which requires a ‘scientific justification’.30 The beef-hormones panel found that any deviation from international standards is an exception to the general rule that SPS measures have to be based on international standards.31 It was up to the EC to prove that it met the conditions linked to that exception. In an important decision, the Appellate Body reversed the panel’s decision stating that the SPS agreement recognizes the autonomous right of a member to establish a higher level of sanitary protection than would be achieved by a measure based on an international standard. Transparency The SPS article 7 prescribes that all measures adopted (laws, decrees or ordinances) must be published promptly in such a manner that enables interested parties to become acquainted with them. In agricultural products, the Appellate Body noted that this obligation applied also to other instruments which are applicable generally and are similar in character to the instruments explicitly referred to (ibid., para. 105). The panel in that case had noted that a non-mandatory government measure is also subject to WTO provisions where compliance is necessary to obtain an advantage from the government. Accordingly, Japan’s varietal testing requirement, even though it was not mandatory, was found to violate the SPS agreement (agricultural products, Appellate Body report, para. 108).

NOTES ON WTO DISPUTE SETTLEMENT PROCEDURES RELEVANT TO SPS DISPUTES Terms of Reference A panel can only address those measures and legal claims sufficiently specified in the complaining party’s request for the establishment of a panel (that is, the


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request on the basis of which the WTO’s Dispute Settlement Body (DSB) establishes the panel).32 This document sets out a panel’s terms of reference. Moreover, a panel can only make findings in respect of the specific products which have been referred to in the panel request.33 Measures, claims or products not sufficiently specified in the panel request cannot be subject to a panel finding or Appellate Body consideration. Complainants must specify in the panel request precise and complete details of measures on which it wants panels to make legal findings. Once a legal claim is validly before a panel, the complainant can make any argument or submit any evidence under that claim, even if the argument or evidence had not been mentioned in the panel request. The panel may use its own legal arguments to come to a conclusion. In its report it is not required to address explicitly all arguments or evidence submitted to it by the parties or the scientific experts (beef-hormones, Appellate Body report, para. 133). Traditionally, once a GATT panel had found a violation in respect of one legal claim it did not address other legal claims, referring to the principle of ‘judicial economy’. The WTO dispute settlement system, with its appeals processes, means that panels tend to examine more than one claim.34 This approach ensures that the Appellate Body disposes of necessary factual assessments by the panel in case it reverses the panel’s first finding of violation. The Appellate Body cannot make findings of fact (DSU article 17.6). Who Has to Prove that there is a Risk/No Risk? The issue of which party bears the burden of proof has been very prominent in SPS disputes (Pauwelyn, 1998, p. 227). In most SPS cases there is scientific uncertainty. Is it then for the country imposing the restriction to prove that there is a risk (or sufficient scientific evidence to support the restriction)? Or is it for the challenger to prove there is no health risk (not sufficient scientific evidence)? In the beef-hormones case, it was decided that the initial burden rests with the complaining party, which must establish a prima facie case of inconsistency with a particular provision of the SPS agreement by a defending party. If that prima facie case is made, the burden of proof moves to the defending party, which must in turn counter or refute the claimed inconsistency.35 Elsewhere, the Appellate Body argued that the party who asserts a fact, whether the claimant or the respondent, is responsible for providing proof. It is generally accepted in civil law, common law and most jurisdictions that the burden of proof rests upon the party who asserts the affirmative of a particular claim or defence.36 In essence, the party in an SPS dispute asserting a fact (for example, the existence of a relevant international standard), claim (for example that an SPS

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measure is not maintained with sufficient scientific evidence) or defence (that the measure challenged is a provisional one according to SPS article 5.7),37 bears the burden to prove it. However, that party does not always need to provide complete proof of the fact, claim or defence to be accepted by the panel. Once it is able to establish a prima facie case or presumption that it is correct, it will be up to the other party to rebut that case. The Appellate Body has defined a prima facie case as one which, in the absence of effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour of the complaining party presenting it. The Appellate Body has argued that weighing of evidence by a panel falls outside the scope of appellate review.38 A Panel’s Investigation Panels have to make an objective assessment of the relevant facts. They cannot conduct a de novo review (that is, their own risk assessment). On the other hand, they cannot give complete deference to the findings of national authorities.39 In beef-hormones the Appellate Body referred to and applied the interpretative principle of in dubio mitius, in deference to the sovereignty of states. This principle states that if the meaning of a term is ambiguous, that meaning is to be preferred which is less onerous to the party assuming an obligation. Scientific Experts Panels are mostly composed of trade experts and academics. SPS disputes involve complex scientific questions. To make an objective assessment, all three SPS panels sought advice from scientific and technical experts using SPS article 11.2 and DSU article 13. These experts acted as individuals and were not required to put forward a consensus view. The panel questioned each individual expert, but their opinions were not binding on the panel. Parties to the dispute were able to comment on the experts’ answers and to meet with the experts and the panel to discuss answers and comments. In agricultural products, the Appellate Body noted that the comprehensive nature of a panel’s authority to seek information from external sources suggested that panels had a significant investigative authority. However, the Appellate Body also found that expert scientific evidence could not be used by the panel to establish an inconsistency with the SPS agreement if the complaining party itself had not first established a prima facie case of inconsistency. Apart from the scientists appointed by the panel, the disputing parties may themselves be assisted or represented by scientists of their choice. These


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scientists were allowed to attend panel meetings as part of a participating delegation.

THE STATUS OF IMPLEMENTATION OF THE PANEL AND APPELLATE BODY REPORTS IN SPS DISPUTES The reports in all three SPS disputes discussed here have been adopted by the Dispute Settlement Body (DSB). The adoption of reports is automatic unless a consensus against them is found (DSU articles 16 and 17). As required, the EC, Australia and Japan expressed their intentions to implement reports finding against them, consistent with their WTO obligations. Losing parties to a WTO dispute have to comply ‘immediately’ with the recommendations and rulings adopted by the DSB. If it is impracticable, they are granted a period for implementation (15 months is the normal maximum; see DSU article 21.3). In beef-hormones and salmon, no agreement could be reached on an appropriate period, so it was determined by an arbitrator (member of the Appellate Body who had not been involved in the cases). In beef-hormones, the Arbitrator decided that no additional time could be added for the EC to conduct a new risk assessment. The deadline for implementation was set at 13 May 1999. In salmon, the Arbitrator confirmed that no time could be allowed to conduct additional studies. Since Australia had originally asked for 15 months, and argued that most of that period would be used to conduct risk assessments, the Arbitrator decided that less than 15 months was needed. Australia was granted eight months which terminated on 6 July 1998. In agricultural products, parties agreed that the reasonable period of time to implement the reports was nine months and twelve days; that is, by 31 December 1999. The EC, Australia and Japan were obliged to submit a status report to each meeting of the DSB on the progress made in the implementation phase, starting six months after the decisions. In beef-hormones, the EC conceded that it failed to implement the decisions by 13 May 1999. As a result, but only following an additional arbitration dispute run by the original panel, the USA and Canada were authorized to take ‘retaliatory’ action against the EC – in the form of a 100 per cent tariff increase imposed on certain EC products entering the USA/Canada – for an annual trade value of up to, respectively, US$116.8 and CDN$1.3 million. Salmon was also not settled by the expiration of the deadline of 6 July 1999. In that case, Canada requested authorization to take ‘retaliatory’ action worth annually CDN$45 million. Australia objected, arguing that its new measure

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was SPS consistent. In February 2000, the original panel decided, however, that it was not (even though large parts of Australia’s new regime were upheld).

NOTES 1. WTO (1999), Japan – Measures Affecting Agricultural Products – Report of the Appellate Body, WT/DS76/AB/R [not yet adopted]. This report was issued as a result of an appeal by both Japan and the United States against the report of the panel (Japan – Measures Affecting Agricultural Products – Report of the Panel, WT/DS76/R, circulated on 27 October 1998 [not yet adopted]). 2. Reports of the panels and Appellate Body on [WTO (1998)] EC Measures Affecting Meat and Meat Products (beef-hormones) WT/DS26/R/USA and WT/DS26/AB/R – panel as a result of a complaint by the United States [adopted on 13 February 1998]; and WT/DS48/R/CAN and WT/DS48/AB/R – panel as a result of a complaint by Canada. 3. Reports of the panels and Appellate Body on [WTO (1998)] Australia – Measures Affecting the Importation of Salmon, WT/DS18/R and WT/DS18/AB/R – complaint by Canada [adopted on 6 November 1998]. 4. Beef-hormones, panel reports, para. 8.22 (US panel) and para. 8.25 (Canada panel); salmon, panel report, para. 8.32; Agricultural products, para. 8.12. 5. The correct classification of the measure at issue (is it protecting against ‘food-borne’ risks or pest or disease risks?) was discussed before the panel on salmon (paras 8.31–8.37). The panel found that even though the measure in dispute might cover both categories of risk, the objectives for which it was being applied were more appropriately covered by the definition of an SPS measure applied to protect against disease risk (the Appellate Body, agreed with this). As a consequence, the panel also applied the stricter definition of risk assessment which corresponds to this kind of SPS measure (at para. 8.68). 6. Beef-hormones, panel reports, para. 8.36 (US panel) and para. 8.39 (Canada panel). 7. See WTO (1990), Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes – Report of the Panel (DS10/R), 37S/200 [adopted on 7 November]. 8. Beef-hormones, panel reports, paras 8.24–8.28 (US panel) and paras 8.27–8.31 (Canada panel) and Appellate Body report, paras 128–30. 9. Beef-hormones, panel reports, para. 8.99 (US panel) and para. 8.102 (Canada panel) and Appellate Body report, para. 129; salmon, panel report, para. 8.56. 10. Agricultural products, Appellate Body report, paras 73 and 84 (footnote omitted). 11. Panel report, para. 8.43; Appellate Body report, para. 85. 12. Beef-hormones, Appellate Body report, paras 184 and 186; salmon, Appellate Body report, para. 124. 13. Ibid., respectively, in para. 186 and paras 124 and 125. 14. Beef-hormones, Appellate Body report, para. 201, confirms the panel’s finding in para. 8.257 (US panel) and para. 8.260 (Canada panel). The panel on salmon (para. 8.58) clarified, however, that some of the evidence and evaluations contained in a risk assessment for one product may be relevant for the risk assessment for other products, so that a completely new risk assessment for each product may not be necessary. 15. Beef-hormones required studies had to address the carcinogenic or genotoxic potential of hormone residues in meat derived from cattle to which hormones had been administered for growth promotion purposes; general studies showing the existence of a general risk of cancer were not enough (beef-hormones, Appellate Body report, para. 200). 16. Beef-hormones, Appellate Body report, para. 190 and salmon, Appellate Body report, footnote 68. 17. Salmon, Appellate Body report, para. 121 and agricultural products, Appellate Body report, para. 112. 18. Salmon, Appellate Body report, paras 137–8, panel report, paras 8.52 and 8.99. 19. Ibid., para. 8.94 (US panel) and para. 8.97 (Canada panel).


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20. It was failing this requirement that the EC was found to violate SPS article 5.1 (panel report, para. 8.156 (US panel) and para. 8.159 (Canada panel); Appellate Body Report, para. 208). 21. Ibid., para. 194. It reiterated this view in respect of SPS article 2.2, discussed above, in agricultural products, para. 77. 22. Ibid., para. 8.113 (US panel) and para. 8.116 (Canada panel). 23. Beef-hormones, panel report, paras 8.160 ff. (US panel) and para. 8.163 ff. (Canada panel). 24. Ibid., paras 8.95 ff. and 8.160 ff. (US panel) and paras. 8.98 ff. and 8.163 ff. (Canada panel). The use of risk management was, however, rejected by the Appellate Body on grounds that it has no basis in the SPS agreement (op. cit., para. 181). 25. Op. cit., para. 125. See also beef-hormones, Appellate Body report, para. 186. 26. Salmon, panel report, para. 8.108; Appellate Body report, para. 140. 27. Appellate Body, para. 240, reversing the panel report, paras 8.203, 8.216 and 8.241 (US panel) and paras 8.206, 8.219 and 8.244 (Canada panel). 28. Op. cit., para. 245. Hurst (1998) argued ‘the EC’s good intentions save its measures from an article 5.5 violation’. The Appellate Body transformed the analysis under SPS article 5.5 ‘into an unprincipled inquiry into the intent of the measure’. 29. Op. cit., paras 178 and 240. It is interesting to note that a violation of article 5.5 was presumed to constitute also a violation of article 2.3 (salmon, panel report, paras 8.109 and 8.160; Appellate Body report, paras 178 and 240). It was added, however, that ‘given the more general character of article 2.3, not all violations of article 2.3 are covered by article 5.5’ (panel report, para. 8.109). 30. In agricultural products, the Appellate Body noted that ‘there is a ‘scientific justification’ for an SPS measure, within the meaning of article 3.3, if there is a rational relationship between the SPS measure at issue and the available scientific information’ (op. cit., para. 79). 31. Op. cit., para. 8.87 (US panel) and para. 8.90 (Canada panel). 32. Refer to articles 6.2 and 7.1 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In salmon, the panel considered the measure at issue to be certain regulations in so far as they prohibit the importation of fresh, chilled or frozen salmon and, from a sanitary perspective, the heat-treatment requirements imposed by Australia which resulted in the import ban on these salmon products (op. cit., paras 8.19 and 8.95). The Appellate Body reversed the panel in this respect, finding that ‘the SPS measure at issue in this dispute can only be the measure which is actually applied to the product at issue’. Since the product at issue was ‘fresh, chilled and frozen salmon’, the measure at issue was the import prohibition imposed on these products; not the heat-treatment requirements which, according to the Appellate Body, only apply to smoked or heat-treated salmon (op. cit., paras 101–5). For a limitation put on the legal claims validly before the panel: salmon, panel report, para. 8.28; agricultural products, panel report, para. 8.4. 33. Salmon, panel report, para. 8.20; Agricultural products, panel report, para. 8.6. 34. Beef-hormones, panel report, paras 8.163 ff. (US panel) and paras 8.166 ff. (Canada panel), where the claim under SPS article 5.5 (consistency) was addressed, even though a violation in respect of the article 5.1 claim (risk assessment) had already been found. The same occurred in salmon, where the panel also examined Canada’s article 5.6 claim (op. cit., paras 8.103 ff. and paras 8.161 ff.). In agricultural products, the panel made a finding of violation of claims under article 2.2, article 5.6 (reversed by the Appellate Body, op. cit., paras 204 and 213) and article 7. 35. Beef-hormones, Appellate Body report, op. cit., para. 98. 36. Report of the Appellate Body on United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, adopted on 23 May 1997, WT/DS33/AB/R, p. 14. 37. Given that the Appellate Body in agricultural products, para. 80, found that ‘article 5.7 operates as a qualified exemption from the obligation under article 2.2 not to maintain SPS measures without sufficient scientific evidence’, article 5.7 is arguably an exception to be invoked by the defendant and for which the defendant bears the burden of proof. 38. Salmon, para. 261 and agricultural products, paras 98 and 136. 39. Beef-hormones, Appellate Body report, para. 117, referring to Article 11 of the DSU.

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REFERENCES Charnovitz, S. (1997), ‘The World Trade Organization, meat hormones and food safety’, International Trade Reporter, 14, 1781. Charnovitz, S. (1998), ‘Environment and Health under WTO dispute settlement’, The International Lawyer, 32(3), 901–22. Hurst, D. (1998), ‘Hormones: European Communities measures affecting meat and meat products’, European Journal of International Law, 9(1), 182 (www.ejil.org/journal/ Vol9/No1/sr1g.html [19/01/2000]) Pauwelyn, J. (1998), ‘Evidence, proof and persuasion in WTO dispute settlement’, Journal of International Economic Law, 1(2), 227–58. Roberts, D. (1998), ‘Preliminary assessment of the effects of the WTO agreement on sanitary and phytosanitary trade regulations’, Journal of International Economic Law, 1(3), 377–405. SPS Committee Report (1999), Review of the Operation and Implementation of the SPS Agreement, March (G/SPS/12). Wirth, D. (1998), ‘European Communities’ measures affecting meat and meat products’, American Journal of International Law, 92(4), 755–75.

PART II

Managing Risk in Policymaking

6.

Risk assessment and risk management in policymaking Marion Wooldridge*

INTRODUCTION: SOME THOUGHTS ON POLICY AND RISK Why do we Need Policies? Governments introduce policies to regulate human activities, presumably for the greater good. Free trade and market forces bring economic benefits to consumers and producers, and this is the basis of the WTO system. Therefore, if free trade and market forces were unfettered by any policies, would this allow everyone to benefit from advances in science and manufacturing, and improvements in trade facilities, as much as they wished and without coercion? What would happen without any policies to regulate imports, exports, methods of manufacture of the myriad different types of product available today, and uses of any new scientific discovery which might have a marketable application? There would be some advantages, for example: • consumers would have plenty of choice • manufacturers could utilize the cheapest production methods • new drugs, vaccines and technologies of all sorts could come quickly onto the market. But there would be no control over the outcomes from the use of these new products and processes. Many of these outcomes would be uncertain. The future, always unpredictable, would become much more so. With high levels of uncertainty and lack of knowledge, a common response is the generation of high levels of apprehension, followed possibly by fear and perhaps panic. This *

The final version of this paper has benefited from comments on an earlier draft offered by Gareth Davies MRCVS (Independent veterinary consultant to EU), R.A. (Robin) Bell MRCVS (Veterinary International Trade Division, MAFF), Ms Heather Blake and Mr Gary Larkman (International Trade and Tropical Foods Policy Division, MAFF), Dr Henri Belveze and Prof. Jean-Louis Jouve (EU Directorate General XXIV).

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is not very efficient, nor very comfortable – and is in fact the classic description of a risky situation, since risk refers to: • a situation where a number of different outcomes are possible • at least one outcome is unwanted • and which outcome(s) will occur is unknown. Therefore a key requirement of policymaking is risk management – to attempt to reduce the uncertainties (and anxieties) of the future. A Brief History of International Risk Management Trading started early in the history of the human race, but from the outset was not without its risks, real and perceived. The most obvious risks from contact with the tribes of strangers was probably plunder, theft and violence. If the risks of these were assessed as high, one obvious risk management method was to keep one’s own tribe armed at the ready. Increasing sophistication in international relationships and trade identified different potential risks, often closely connected with increasing travel. These included the spread of new and dangerous ideas, and the spread of disease – the latter by animals and goods as well as people. Often the barrier to disease was simply to put border or movement controls in place and ban the import of animals and goods, and the movement of sick people. This often works but it is restrictive, as all the benefits of trade are lost and other countries are likely to respond by taking the same approach. Today, rapid transport and mass transport means that infectious agents can easily travel around the world, safely within their hosts as undetected incubating diseases. Vectors of disease can be carried rapidly to distant continents, and even if they cannot adapt and survive, may live long enough to pass on disease. This is not restricted to tiny insects either; potentially rabid bats from the USA and other more exotic locations have happily arrived in the UK within aircraft cockpits and suitcases. Multinational companies mean that many individual products are also distributed worldwide, often rapidly and sometimes without great local awareness of their origins. This includes foods, vaccines and other biologicals, and drugs. These products may contain genetically modified (GM) products, toxins, residues and pollutants, which are then also widely distributed. Both direct and indirect effects can be hypothesized, the latter particularly from GMs and pollutants. The major drivers for this risky international movement in both goods and people is affluence, acquisitiveness and consumer demand. In summary, the scale, speed and potential global effects of international movements today make international risk management cooperation vital.

Risk assessment and management in policymaking

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RISK MANAGEMENT PROBLEMS, PRINCIPLES AND PRACTICE Some Common Risk Management Problems Given that a hazard has been identified and the risk assessed then, if everyone agreed what to do about it, risk management would be greatly simplified. But this is seldom the case. This leads to the first common problem – a clash of interests. It is often the case that those who benefit most from whatever risky endeavour is proposed are not those who run the greatest risks. For example in the case of the import of a new line of valuable and expensive breeding animals, it is likely to be the entrepreneurial importers who stand to benefit most directly and rapidly if the venture succeeds. However, if an exotic, serious and virulent disease is imported along with these animals, then the whole industry stands to lose both directly in terms of sick or dead animals, and indirectly as it is also likely that the export status of that industry will suffer long-term difficulties too. So how do risk managers make their decisions? The second common problem lies in the fact that generally and in ideal circumstances nobody wants to run any risks at all (unless in the name of sport!) – but zero risk is impossible to achieve. It is always possible (however unlikely) to hypothesize a series of events that will lead from the hazard of interest to the unwanted outcome. Even if there has been no outbreak or case recorded of cattle disease X in country Y since records began, and the risk of disease from an import from that country seems zero, someone right now could be transporting into that country on their shoe the bug responsible for that disease. The first outbreak could be headline news next week; a low probability maybe, but always a possibility. Sometimes the risk pathway is much more obscure, and it is difficult to convince people that zero risk is impossible. Heaping on safeguards will not produce zero risk however much it reduces the magnitude. So how far should the safeguards go? Other problems in managing risks include the prevalence of a short-term viewpoint, sometimes politically driven (the ‘not whilst I’m in office’ syndrome), perhaps coupled with a highly visible media campaign to ‘do something’ to guarantee that a particular outcome cannot occur. For example, ‘That rail crash last week which killed 157 people and injured hundreds more was horrific – we must have an inquiry; it must never be allowed to happen again’. Obviously – and sadly – this is impossible; zero risk just does not exist. But an intensive or highly politicized campaign may lead to erroneous perceptions about the magnitude of the risk which is out of all proportion to any known facts; people start seeing every train as an instant death trap despite available statistics showing quite the reverse. Managers react to an apparent

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urgency; all trains must be fitted with automatic warnings, new brakes, speed controllers and video cameras on long periscopes for seeing 100 miles up the track. So when does urgent action become necessary? Risk Perception Risk perception is mentioned in the preceding paragraph. It is hypothesized that how a risk is perceived affects one’s attitude to whether that risk is acceptable or not. Studies have been done on what affects people’s perceptions of risk. Major factors include: • whether exposure is voluntary or involuntary (Fischhoff et al., 1978) (cigarette smoking versus unidentified genetically modified soya in food, for example); • whether there is any control over the risk or not (risks run in many sports would probably be unacceptable if the participants did not feel in control, and driving a car is the classic example); • whether the person is knowledgeable on the subject or not (for example a study which showed that in general scientists working in the nuclear industry thought nuclear risks were much lower than did the general public, and recent public discussions amongst genetic engineers suggest a similar attitude there) (Frewer et al., 1997; Hunt and Frewer, 1997). Even when information on a particular risk is available, the amount of trust given to the source of that information affects the perception of the level of risk; again studies have shown that (at least in the UK) (Frewer et al., 1994; Frewer et al., 1996): • information from government sources and scientists is not greatly trusted; • information from environmental pressure groups and consumer organizations is much more highly trusted; • the media also rate more highly than the government in terms of trust. Thus, if the ‘Daily Rag’ says the level of chemical Z in your milk is going to give everyone itchy-left-leg syndrome, and the government scientist says the probability of this is exceedingly remote, there will still be a lot of scratching going on. Other major factors involved in risk perception are the severity of the consequences, and cultural differences. Risk Management Principles Some of the major problems in risk management have been highlighted, and this has resulted in a series of questions, but as yet no answers. However, risk


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managers must make decisions; even deciding to do nothing, which may be appropriate in some circumstances, is a decision. To aid their decision making, risk managers need information from many sources. But what is the fundamental decision which they need to make? Clearly, it cannot be in the first instance; ‘Which safeguards shall we put in place?’, but rather ‘What is the acceptable level of risk in this situation?’ This is a policy decision potentially influenced in differing degrees by many factors including the presence or absence of international agreements. Once this level has been decided upon (the difficult part), the risk manager selects safeguards to achieve risks at or below those accepted levels, and this again then becomes part of the policy in force. In some circumstances where consequences are considered so severe that no risks can be reasonably described as acceptable, the level chosen may be more appropriately described as a tolerable risk level. But what constitutes an acceptable level of risk? How is that level decided upon? And who else might be involved in that decision? Information Needed by the Risk Manager Effective risk management relies on information: • the risk manager needs to be aware of hazards, including new and emerging hazards, the risks resulting from those hazards, their magnitude, consequences, and which groups bear those risks; • the risk manager also needs to know what the benefits from the proposed activity are likely to be, as well as the magnitude of those benefits and who is most likely to receive them; • information on the costs of each potential course of action open to the risk manager are necessary, as well as who actually pays those costs. The information described so far might be considered to be the ‘facts’ of the case (although that word ‘facts’ must be used with care; bias creeps in almost everywhere). But one other area of information is crucial: • the risk manager needs information on what ‘the stakeholders’ (see below) actually want, and their perceptions of the risks under consideration. For the ‘factual’ part of the information, risk managers may call for formal risk assessments, either qualitative or quantitative, and formal cost–benefit and risk–benefit analyses. They may use expert systems to help predict the outcome of certain courses of action. For hazard identification, surveillance systems may be in place, dedicated ‘early-warning’ monitoring units such as that for the US Department of Agriculture at Fort Collins may have been set up, and

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‘what-if ...?’ brainstorming think-tanks may be utilized. But what about information from the stakeholders? Who are these stakeholders? How do we get information from them? And why should they be involved anyway? Is it not enough to have only the ‘facts’? Stakeholders Stakeholders refers to any individual, group or body involved with, affected by, or interested in a risk or a risk management decision, and this includes those generations not yet born (particularly relevant in environmental and genetic issues). Take as an example the proposed new import of meat product X, intended for human consumption, into country Y. ‘Private’ stakeholders include: • the potential consumers of the product (often including, but certainly not fully represented by, pressure groups with their own interests and agendas), • the potential importers and retailers of the product, • the farmers who supply the meat in the country of origin, • the farmers with similar livestock in the importing country, • the health professionals, both human and veterinary, who will have to deal with any human or animal health problems resulting from this import. ‘Public’ stakeholders include: • the government of importing country Y, which is responsible for legislation on national safety and international trade, and which in most countries (whatever the system of government) will also have at least an eye on its own popularity ratings; • the governments of the international trading partners of country Y, where at the least a perception of ‘liberal trade’ is necessary if trading is to be successfully maintained; • regulatory and standard setting bodies connected with that international trade (and specifically the World Trade Organization (WTO)) if any international agreements have been entered into through those bodies as a result of a desire to trade (examples here include the Sanitary and Phytosanitary Agreement (SPS), and the Technical Barriers to Trade Agreement (TBT)). And there may well be other groups one could identify as stakeholders here. From this, it might reasonably be concluded that in the realm of international trade, almost everybody in the world can be considered a stakeholder. This is


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particularly so if a decision reached in respect of one import or trade issue has the legal ability to set a precedent for future trade with other countries. Having identified some stakeholders, how do we go about involving them in the risk management and decision-making process? For this we need, not surprisingly, something that has been given the name of risk communication. At first sight this might sound simple, but like most risk management issues there are complexities. By definition, where there is a risk, there is uncertainty, and for some groups of people in some situations this can be a very difficult concept to convey effectively, particularly perhaps if they have a poor grounding in scientific method and a quantitative risk estimate is being given in isolation and out of context. Closely bound up with this is the issue of terminology, particularly specialized or scientific terminology. Most people want to know if the air is ‘safe’ to breathe, the water ‘safe’ to drink, the food ‘safe’ to eat and the transport ‘safe’ to use. Since we have already seen that there is no such thing as zero risk, what is the meaning of the word safe? P = 1 × 10–3? P = 1 × 10–20? It seems unlikely that most people think in those terms. Perhaps in any case it means different things to different people. As previously discussed, prior media reports, trust and the way in which risk has already been perceived will have affected communication on risk perceptions. But any type of risk communication will influence risk perception in some way; the simple fact that a hazard is being discussed for some people may result in the perception that ‘It must be very risky or why is anyone bothering with it?’. And existing risk perception in its turn leads to a bias in how incoming information and communications are ‘processed’, as does the level of trust in the risk communicator or the body or group which they represent. Any stakeholder who participates in any form of risk communication, whether formally or informally, has some motive for doing so (even if only curiosity) or they would not take part. With any issue we can be pretty certain that some stakeholders actually want to ensure a particular outcome and this is likely to affect the way they take part in communications. So maybe risk communication is not as easy as it first appeared. It is clear that risk communication must be a two- (or even multi-) way process, but the format depends to a certain extent upon the purpose of that communication, which differs at different stages of the risk management process. The major purpose may be, for example, to obtain information from scientists or consumers on estimated or acceptable risk levels, costs and benefits, or to give information to consumers (and get feedback) on the results of these analyses, or to discuss management options and safeguards with a range of stakeholders. Potential methods include: • working parties both national and international with some or all of policymakers, technical experts, consumer and industry representatives selected in some way;

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• • • • •

joint meetings between policymakers and specific interest groups; public meetings, focus groups and ‘juries’; dedicated helpdesks and interactive websites; leaflets, both targetted and freely available; more lengthy discussion documents.

But given this multiplicity of possibilities, how is the best and most appropriate method selected in any particular circumstance? The recognition of the importance of risk communication is relatively recent, and assessing the best approach in each type of situation is an area of active research. Examples include: • in the UK, the Health and Safety Executive have recently asked for proposals for a project to investigate how best to select ‘experts’ for working parties, and once selected how best to elicit and use the information they are able to give; • the Waste Policy Institute at Blacksburg, Virginia, USA have a unit devoted to the very applied aspect of devising public communication strategies and assessing how to maximize their effectiveness. This ranges from methods for the successful organization of public meetings to reviewing and improving the design of simple information pages for their website; • the Institute of Food Research in the UK has a risk communication research unit which is more academic in nature, and projects include those looking at how the media affects risk perception, and how risk perception affects decision making. Members of my department also collaborate with them in the latter research area. One idea largely intended to improve international risk communication which is currently being floated in the European Union (EU) is a management course for public sector veterinarians which would bring together, and improve understanding between, what are effectively risk managers from the very varied cultural backgrounds of the EU. Involving stakeholders in any meaningful way in a process takes time, effort and money. In addition, it often requires a massive cultural shift in an organization to undertake the process effectively. Some of the advantages are also immediate, and include: • the fact that the process is democratic, and is seen to be; • the risk manager’s understanding of the issues involved is increased resulting in a better ability to gauge opinions on what are considered acceptable risks by different groups in society;


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• it increases the manager’s overall knowledge base on the subject. However, many of the advantages are long term in nature and less intuitively obvious: • the overall time and expense of decision making is reduced, as unexpected challenges (both legal and practical) are also vastly reduced and have much less chance of popular support or legal success; • decisions reached with broad consensus generally require less regulatory enforcement or ‘policing’ and are therefore less costly to uphold; • when stakeholders have been involved at all stages, the necessity for huge public enquiries long after the event and at massive public cost is removed; • the transparency of the process improves the credibility of, and trust in, agencies that manage risk.

INTERNATIONAL RISK Risk Communication International risk communication is in essence no different from national and local risk management, and is vital if international agreements are to be effective, but there are some additional factors which may affect successful communication: • different native languages are an obvious source of potential misunderstanding, but it is probably the subtleties and nuances in all languages which are the true danger here, and these can be missed even by experienced translators; • countries may have different priorities and different political influences and levels of stability affecting their ability or willingness to communicate freely; • some cultures are more risk-averse than others, and whilst this can be true within any one country, it is likely to be accentuated internationally, as well as by any difference in economic importance of the product or industry involved; • commonly accepted standards of purity, safety and thus risk are also likely to depend heavily upon the wealth and regulatory infrastructure of the countries concerned.

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Finally on this topic, it must be remembered that although all viewpoints may be sought, all opinions listened to, and all weighed up in the final decision, if there are diametrically opposed requirements from different groups of stakeholders (as is very often the case), then it will be impossible to find a risk management strategy which fully satisfies all. This is often forgotten by those stakeholders who are least satisfied by the outcome, who may then complain bitterly that their opinions were sought only to be ignored. It is therefore essential to emphasize at an early stage the impossibility of pleasing everyone completely in such circumstances. Requirements of International Risk Management The general principles of international risk management are consistency, equivalence, fairness, transparency, feasibility and trust. Many of these principles are enshrined in WTO agreements, including the SPS agreement and a later paper will deal with this in considerable detail. However, some points require expansion here. The first is that of consistency which, in practice, means that for a given importing country a broadly similar level of import risk should be equally acceptable (or equally unacceptable) whatever the country of origin of that risk. However, the only way to know whether risks are of broadly similar level or not is to undertake some form of risk assessment. And, both from a theoretical and methodological viewpoint as well as a legalistic one, such a risk assessment should be based on up-to-date scientific knowledge. That a risk management policy should be feasible is obvious, and for this to be the case the risk mitigation measures required must be practicable. But common sense suggests these safeguards should also be proportional to the risk assessed. Demanding eight months quarantine when the longest known incubation period for the disease in question is two weeks is plainly out of proportion. However, what about a month – is this out of proportion? Here is possibly an area for negotiation. The Precautionary Principle At this point it is appropriate to mention the precautionary principle, about which there is currently a lot of interest, at least in the EU. Effectively what this says is that when the risk manager believes, on the basis of an initial examination of the evidence, that there is a risk of serious (and possibly irreversible) consequences contingent upon a given hazard, steps should be put in place to minimize that risk whilst a more thorough risk analysis (including a risk assessment) is performed. One difficulty is deciding what constitutes the cutoff point for the initial examination of the evidence – the precautionary principle


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could potentially be invoked very widely to ban an import or process on flimsy evidence, perhaps for other reasons. A second difficulty is deciding what is a reasonable time limit for the performance of the more thorough risk analysis. Again there could be non-risk-related reasons for delaying the completion of such an analysis, used as an excuse to keep precautionary measures in place. That said, there is clearly a reasonable case for the existence of the precautionary principle for use in appropriate circumstances. Trust is not something which any agreement can by itself provide, but it is nevertheless the basis of successful international trade. Trust is built on communication and understanding, underpinned by monitoring and experience. Acceptable Risk The concept of acceptable risk has been mentioned, but what does actually constitute an acceptable risk? It should by now be clear that there is no single value which can be quoted, no simple number or rule of thumb. In any given case, the risk manager must decide, based on all the information to hand. This includes information on the risks, including assessed level of risk from the hazard in question and the context in which this risk exists. This means looking at other sources of the same risk (for example are low levels of medical radiation significant in the overall risk of radiation exposure?), other risks from the same source (for example do these chickens carry only Campylobacter, or do they carry Salmonellae as well?). It means checking for risks which develop as a result of mitigations taken to reduce the initial risk. It also includes information on the costs, benefits, local conditions, culture and community values, including political and ethical values. In short, the decision as to what constitutes an acceptable risk is a balancing act, with no correct answer, merely a functional one.

RISK MANAGEMENT The major phases in risk management are summarized in Figure 6.1. Good risk management comprises: • • • • •

using the best information using multisource information is feasible – and benefits are related to costs is effective uses alternative to ‘command and control’, if possible; for example by making recommendations, which may then have an effect on market forces

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• is sensitive to political and social situations • includes incentives.

The problem and its context Evaluation of decisions and actions

Bring the stakeholders into the process

Actions

Hazards and risks

Options for management Decisions

An iterative process Figure 6.1

The major phases in risk management

RISK ASSESSMENT IN POLICYMAKING Risk assessment has been mentioned on many occasions. What exactly is it, and what can it do? The main features of a risk assessment pertinent to risk management and policymaking need to be reviewed. What Risk Assessments Do (and Do Not) Provide • Risk assessment provides information for risk managers. A risk assessment may be qualitative or quantitative, and answers the question; ‘What is the risk of ...?’ Qualitatively, the probability is given in words, for example the probability may be high, low, negligible and so on. Quantitatively, point values of probability may be given, or if stochastic methods have been used a result such as ‘We can be 99 per cent certain that P is less than value y’ can be obtained. • Risk assessment does not give a totally accurate prediction of the future!


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This is obvious when confidence limits are given, but less so with point value estimates, and this is sometimes forgotten. • Risk assessment does not give information clearly accessible to the public. Uncertainty is present, whether implicit or explicit, and most people prefer certainty in sources of information and decision making. It is an iterative process, and new information leads to an updating of the risk estimates. Such changes can be difficult to accept and handle. Risk results refer to populations, and most people are interested in their own personal safety; a risk assessment will tell them nothing about this. These factors may be barriers to understanding the results from a risk assessment unless carefully presented. What Risk Assessment Does (and Does Not) Do • Risk assessment is a useful decision making aid. • Risk assessment is used in conjunction with other information for risk management. It is not necessarily the most important information in reaching a final decision on management strategy. • Risk assessment does not answer the question ‘Is this risk acceptable?’ • Assessed risk must be clearly differentiated from acceptable risk in risk management and policymaking. • Risk assessment can help select effective safeguards. Once an acceptable risk level is decided, if the assessed risk is above that level, then a quantitative model can be used to test the effect of each considered safeguard on the level of assessed risk. Risk Assessment in International Policy • Risk assessment is necessary to underpin an international position in a trade dispute based on risk. If safeguards more stringent than accepted international safeguards are required in a particular situation, and result in a barrier to trade or a trading dispute, then a risk assessment is necessary to underpin its legality. That risk assessment must meet established international standards; in the SPS agreement the standards applied to animals and their products are set by the Office International des Epizooties (OIE).

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A SUMMARY OF RISK ASSESSMENT AND RISK MANAGEMENT IN POLICYMAKING Key points are: • • • • • •

Agreed policies reduce conflict Risk management is at the heart of policymaking Effective communication is vital Risk management balances assessed risk, acceptable risk and other factors Risk assessment provides necessary information Risk assessments underpin risk management and policymaking.

BIBLIOGRAPHY AND REFERENCES Selected general references: Risk Analysis The Commission (1997), The Presidential/Congressional Commission on Risk Assessment and Risk Management: Final Report. Volume 1: Framework for Environmental Health Risk Management. Volume 2: Risk Assessment and Risk Management in Regulatory Decision Making, Washington, DC: The Commission. Wooldridge, M., T. Bernardo, L. Audige, W. Hueston, D. Pfeiffer and D. Pritchard (1997), Risk Analysis and Animal Health: A Course Manual, Collated by R. Ruppaner for an International Training Course in Bubendorf, Switzerland: 13–18 July 1997.

Quantitative Assessment Methodology Vose, D. (1996), Quantitative Risk Analysis: A Guide to Monte Carlo Simulation Modelling, Chichester, England: John Wiley & Sons Ltd.

Specific References Fischhoff, B., P. Slovic, S. Lichtenstein and B. Combs (1978), ‘How safe is safe enough? A psychometric study of attitudes towards technological risks and benefits’, Policy Studies, 9, 127–52. Frewer, L.J., M. Raats and R. Shepherd (1994), ‘Modelling the media: the transmission of risk information in the British quality press’, Journal of the Institute of Mathematics and its Applications to Industry, 5, 235–47. Frewer, L.J., C. Howard, D. Hedderley and R. Shepherd (1996), ‘What determines trust in information about food-related risks? Underlying psychological constructs’, Risk Analysis, 16(4), 473–86. Frewer, L.J., C. Howard, D. Hedderley and R. Shepherd (1997), ‘The elaboration likelihood model and communication about food risks’, Risk Analysis, 17(6), 759–70. Hunt, S. and L.J. Frewer (1997), ‘Public perception of naturally occurring radiation risks’, Proceedings of the Society for Risk Analysis Europe, Stockholm.

7.

Allowing for risk in setting standards Michael J. Nunn

Risk analysis has been recognized only recently as a formal study in its own right. Several attempts have been made to develop a standardized nomenclature in, for example, disciplines such as animal health (Hathaway, 1991; Ahl et al., 1993; Kellar, 1993; MacDiarmid, 1993; OIE, 1994; North, 1995) and food safety (Codex, 1993; ANZFA, 1996; Notermans and Mead, 1996). However, there is still some confusion about the precise definition of the elements in risk analysis (Krewski and Birkwood, 1987; Covello and Merkhofer, 1993). For example, some authorities use ‘risk management’ instead of ‘risk analysis’ for the overall term (for example SA/SNZ, 1995) while others use ‘risk analysis’ more narrowly as including elements such as risk identification, assessment and evaluation but excluding risk management and communication. Despite such variations in terminology, the basic principles are the same across all disciplines (Nunn, 1997). Risk analysis is used here as the overall term to encompass elements of risk assessment, risk management and risk communication. Risk assessment is the process of identifying and estimating the risk associated with an option, including evaluation of the likelihood of an event and of the consequences if that event were to occur. Risk management is the process of identifying, documenting and implementing measures to reduce risk (either the likelihood of occurrence or the consequences). Risk communication is the process of interactive exchange of information and opinions concerning risk between risk analysts and stakeholders. This terminology helps avoid the mistake of treating risk communication as the process of risk analysts advising stakeholders (such as policymakers or the general public) of the result of their risk assessment and their proposed risk management strategies. Such a limited approach implies that communication is primarily one-way and occurs only after the risk assessment and management steps have been completed, ignoring the need for two-way communication and consultation throughout the whole process, which is fundamentally iterative in nature. This chapter examines how standards relating to trade allow for risk. Its primary focus is on international obligations and standards that apply to import risk analysis used by quarantine authorities in the development of sanitary and 95

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phytosanitary measures against the spread of disease. However, it also considers how risk might be allowed for in other standards relating to trade, in areas such as genetically modified organisms.

INTERNATIONAL OBLIGATIONS The WTO agreement has two annexes with particular relevance to quarantine and trade – the SPS agreement and the TBT agreement (see Wilson and Gascoine, Chapter 11, this volume). The SPS agreement defines the basic rights and obligations of member countries with respect to ‘sanitary and phytosanitary measures’ to protect human, animal or plant life or health, and the TBT agreement covers food standards such as labelling and nutritional requirements. WTO members are obliged to ensure their quarantine 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. For many years, the Office International des Epizooties (OIE) and the International Plant Protection Convention (IPPC) and the Codex Alimentarius Commission (Codex) have advocated the use of risk analysis principles in animal quarantine, plant quarantine and food safety, respectively. Through annex A of the SPS agreement, WTO recognizes these organizations as the custodians of the international standards, guidelines and recommendations for sanitary and phytosanitary aspects of international trade. Risk assessment and risk management are included in the SPS principle of ‘control, inspection and approval procedures’ as fundamental to the application of sanitary and phytosanitary measures to international trade. Risk communication is implicit in the SPS agreement, particularly in relation to its principle of transparency, which obliges members to notify changes of their quarantine measures, and in the consultative processes used by OIE, IPPC and Codex to develop their international standards, guidelines and recommendations. Thus risk analysis – including risk assessment, risk management and risk communication – is integral to international trade rules in the WTO.

PRINCIPLES The SPS agreement defines a number of principles governing sanitary and phytosanitary measures that affect international trade – basic rights and obligations; harmonization; equivalence; risk assessment; regionalization; national treatment; transparency; control, inspection and approval procedures;

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technical assistance; and special and differential treatment (see appendix). Similar principles apply to risk analysis in other disciplines, as reflected in approaches adopted to food safety (ANZFA, 1996) and environmental sciences (Beer, 1996). With respect to import risk analysis, a major review of Australian quarantine – the Nairn review (Nairn et al.,1996) examined the process used in Australia (AQIS, 1991) and recommended changes designed to increase consultation while continuing to meet international obligations. Its recommendations were largely adopted (DPIE, 1997) and are now in operation (AQIS, 1998). The Nairn review advocated early consultation with stakeholders to help obtain consensus on priorities, the scope and type of risk assessment, and the risk management strategies required to ensure any proposed import does not jeopardize the importing country’s animal and plant health status or have a negative effect on its natural environment. It argued that import risk analysis should be based on consultation, science, transparency, consistency and harmonization, and be subject to external review (Nairn et al., 1996). Risk analysis should be based on science. In particular, risk assessment should be ‘essentially a scientific endeavour based on experimentation and observation’ (ANZFA, 1996, p. 2), independent of policy or political considerations. In contrast, risk management ‘involves policy decisions based on a balance of scientific, social and economic considerations’ (ANZFA, 1996, p. 2). In recognition of this, some countries (including the United States) separate the regulatory application of risk analysis by assigning official responsibility to different agencies for risk assessment (its scientific or technical component) and for risk management (its policy or political component). From a regulatory perspective, risk analysis should be consistent with both government policy and international obligations. It should take account of international standards, guidelines and recommendations so that it is harmonized as much as possible with international practice. However, a government may in some circumstances elect to use criteria that are more rigorous than international practice, and international agreements may provide for such a decision. For example, SPS article 3.5 acknowledges that to meet its appropriate level of sanitary or phytosanitary protection, a country may impose risk management strategies or measures that are more stringent than international standards, guidelines and recommendations that are scientifically justifiable and otherwise consistent with international obligations. The need for appeal through both administrative and judicial approaches was confirmed in a recent report on the use of risk analysis in a wide range of regulatory agencies in the United States (CRARM, 1997). In international trade, the WTO’s Dispute Settlement Body oversees a formal system for resolving disputes related to among other things, quarantine and trade.

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DETERMINING THE TYPE OF RISK ANALYSIS The complexity of the issue is a primary determinant of the type of risk analysis that needs to be undertaken – simple cases can often be assessed quite quickly. For example, the vast majority of import access requests are routine and can be readily approved or rejected on sound scientific grounds. Requests that might be readily approved include those for importing a commodity from a source with a similar health status to that of a source already approved for imports of the same commodity. Alternatively, an import access request involving possible or likely contamination with an agent of a disease of concern that it is known cannot be removed or inactivated by the application of current risk management strategies can be readily rejected on sound scientific grounds. In more complex cases, detailed risk assessment is required before a scientifically sound decision can be made. For example, complex import access requests in Australia are assessed by formal risk analysis panels, which appoint or contract expert working parties to complete specific components of a detailed risk analysis. Risk analysis panels comprise appropriate experts – particularly in science for conducting detailed risk assessments and considering risk management options, and in economics for examining the potential economic loss of the introduction or establishment of any diseases of concern (AQIS, 1998).

METHODS FOR RISK ASSESSMENT The fundamental steps in risk assessment are the identification of the risks or hazards of concern, the assignment of a probability of occurrence of each risk and an estimation of the consequences resulting from the occurrence of each risk. There are several published reviews of methods used in import risk assessment (for example, Kellar, 1993; MacDiarmid, 1993; OIE, 1994 and Vose, 1997 for animal health and quarantine) and such papers and individual assessments should be examined for discussion of the details of specific approaches. In summary, the initial step in quarantine import risk assessment is to determine which diseases in the country of origin of a proposed import do not occur in the importing country and are of sufficient concern to warrant measures to exclude them. The assessment establishes a scenario tree or outline of the pathway or pathways of entry and establishment of unwanted diseases that might be associated with a proposed import. In qualitative approaches, emphasis focuses on the key points in the pathway where risk management factors can be applied to eliminate (for example, by heat treatment of a product) or reduce (for example, by vaccinating or testing live animals) the risk of


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importing diseases of concern. In semi-quantitative approaches, numerical values (for example, the prevalence of the disease of concern) are applied at each point for which data are available. In fully quantitative approaches, such data are applied at all points of the pathway of entry and establishment. Data used in the assessment are extrapolated from information on the biology and pathology of the disease of concern in countries where it occurs. Such information may be readily available in published scientific literature, may require specific investigation with the assistance of countries where the disease occurs, or in some cases may not be available and must be obtained by additional field or laboratory studies. In the case of genetically modified organisms, there is a relative lack of such information because of the difficulty of obtaining data on the effect of releases while at the same time ensuring the protection of the environment from any potential harmful effects (Wyndham and Evans, 1998).

QUANTIFICATION In many disciplines, there has been a marked trend towards the use of more quantitative methods of risk assessment over the past decade. For most import risk assessments, data gaps ensure that fully quantitative risk analyses are the exception rather than the norm. It is only in relatively simple cases that reliable quantitative data are available for all steps in an import risk assessment (that is, for all points in the potential pathway or pathways of entry and establishment of a potential disease of concern). In addition, in complex situations with multiple possible scenarios that each have only an extremely small probability of occurrence (as is often the case in import risk assessments), the mathematics of fully quantitative assessment is problematic and not yet well defined. Such situations are assessable only by qualitative or semi-quantitative approaches even if good data are available for all points in a scenario tree. From a practical perspective, it should also be appreciated that even when they are possible, more quantitative approaches are extremely resource-intensive, requiring skilled staff, large amounts of data, sophisticated computing resources and a large investment of time. Thus although quantitative approaches to risk analysis have some application in evaluating selected import access requests, semi-quantitative and qualitative approaches are more appropriate for the vast majority of import risk analyses. With the trend to increasing use of quantitative approaches to risk assessment, there has been a tendency to consider that more quantitative approaches are necessarily ‘better’ or ‘more scientific’ than less quantitative approaches. However, the ‘perception held in some quarters that quantitative approaches are inherently “better” or “more scientific” than qualitative approaches is

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misguided – a poor quantitative risk assessment (e.g. one using poor data or using inappropriate quantitative techniques) can be quite misleading and far less scientific than a good semi-quantitative or qualitative assessment’ (Nairn et al., 1996, p. 106). Quantitative approaches to risk assessment have been criticized for a perceived lack of objectivity resulting from the use of expert judgements that allegedly reflect not only scientific knowledge but also factors such as ‘policy values and cultural values’ (Breyer, 1993; Pollack, 1996). Some commentators have expressed concern that scientific judgement involved in risk assessment is not as objective as it may seem because assessments can have a large variability and uncertainty, particularly when applied to environmental problems. For example, one study of various estimates of the potential carcinogenicity of a particular chemical showed that quantitative assessments could vary by as much as eight orders of magnitude, a variation characterized as ‘clearly a dubious basis for issuing permits, setting clean-up levels, and setting standards’ (Ginsburg, 1993). However, explicit and clear acknowledgement and discussion of assumptions and data used in risk assessment should minimize any concerns regarding lack of objectivity, and permit more careful consideration of the need for obtaining better data where necessary. The use of stochastic rather than deterministic methods can also help to describe the uncertainty in risk estimates. Deterministic assessments assign a single number (for example, an amount or a probability) to each point in a scenario tree so that assessment leads to a single value, ignoring the fact that variation is an integral component in all natural systems. In contrast, stochastic methods assign a probability distribution to each point and determine a net probability density distribution by using techniques such as Monte Carlo simulation (Cohen et al., 1996; Vose, 1996).

SENSITIVITY ANALYSIS Simple scenario trees can be analysed in a semi-quantitative or quantitative manner even where there are some gaps in data. For example, an extreme value may be assumed for data missing at a particular point (for example, that the prevalence of a pathogen in the population of origin is 100 per cent) and the simulation run. Alternatively, expert opinion can be used to provide a ‘best guess’ of the value for a particular data point (for example using the Delphi technique). Such approaches enable the analyst to conduct sensitivity analyses to determine whether or not the particular parameter for which data are not available has a major effect on the overall risk. Sensitivity analysis often demonstrates that only a few critical points have a significant effect on the overall probability, so that if good data are available for these points the analyst can be confident that the assessment is robust.


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Conversely, if good data are not available for these critical points, robust risk analysis is not possible until further information is available to fill these gaps. Risk analysts reaching this conclusion might encourage research providers to commission or conduct appropriate research to fill the gaps identified, use a less quantitative approach, or focus on appropriate risk management options to reduce the risk.

THE PRECAUTIONARY PRINCIPLE In some cases, a risk analysis may determine that there are significant gaps in information that need to be filled by further research before a scientifically based decision can be made on a particular issue. Analysis might also lead to recommendations that specify the gaps and define the research needed to fill them. For example, a number of submissions to the Nairn review argued that where there is significant uncertainty or where there are significant gaps in knowledge needed to conduct a risk assessment, quarantine authorities should take a conservative approach. Some submissions went further and advocated adoption of the precautionary principle (or a variant of it) in cases they deemed involved significant uncertainty, probable delayed identification or reporting of incursions, or inadequate or no means of containing, controlling or eradicating incursions. The precautionary principle has been defined in various ways but may be simply seen as the principle of adopting a conservative approach when the relevant information needed to make an informed decision is limited – the greater the uncertainty, the more conservative should be the decision. Import risk analysis provides a good example of the valid application of the precautionary principle. Although the SPS agreement does not use the term precautionary principle, article 5.7 states that ‘in cases where relevant scientific information is insufficient’ member countries may provisionally adopt ‘sanitary or phytosanitary measures on the basis of available pertinent information’. However, the SPS agreement also states that in such cases, member countries ‘shall seek to obtain the additional information necessary for a more objective assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time’. Thus member countries’ international obligations preclude the ongoing or indefinite use of the precautionary principle as grounds for not taking a decision on any import access request. (For an EC view on the precautionary principle see the Appendix.)

DECIDING THE APPROPRIATE LEVEL OF PROTECTION Different stakeholders can have widely divergent perceptions of the risk associated with a decision. This divergence is often the result of disagreement

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about the level of risk associated with a particular option, in which case consensus can be approached through improving the underlying risk assessment. However, the disagreement is often more fundamental and rests on different perceptions of what level of risk a decision maker, stakeholder or society as a whole is prepared to accept. For example, despite statements by major reviews of quarantine (Australian Senate, 1979; DPIE, 1998) and the Australian Quarantine and Inspection Service (AQIS) itself (AQIS, 1991; Wilson and Banks, 1993), a significant number of individuals and organizations believe Australia has (or should have) a ‘no risk’ quarantine policy. The expression of this view was sufficiently frequent for the 1996 Senate Report on AQIS to state that it was ‘concerned about the persistence of the view that “no risk” is a viable option for quarantine policy, despite consistent and unequivocal dismissal of this approach by previous reviews’ (Australian Senate, 1996, p. xi). Similarly, the Nairn review concluded that ‘the continued perception in some quarters that there ever has been or ever can be a “no risk” quarantine policy for any country – let alone a major agricultural trading nation such as Australia – reflects a fundamental misconception that needs to be corrected in an ongoing awareness campaign’ (Nairn et al., 1996, p. 83). Improved risk assessment can improve the accuracy of the estimate of the risk associated with a decision, but does not help in deciding what constitutes an ‘acceptable risk’ (or in SPS terms, the ‘appropriate level of protection’). Improved risk communication and agreed guidelines or standards can help in reaching consensus, but ultimately what constitutes an acceptable risk is based not on science but on judgement – whether of an individual person, stakeholder group, community or country (see Deane, Chapter 8, this volume). Some authorities attempt to determine an appropriate level of protection by comparing the risk of a particular decision option with risks in other areas (for example, comparing the potential risk of death from ingesting a contaminant with the average risk of death from other causes such as aeroplane or automobile accidents). Others have argued that with appropriate consultation, a team undertaking a risk assessment should assess risks associated with a particular risk analysis and examine appropriate risk management strategies that might be used to reduce the level of risk to one that is ‘manageable’. For example, the Nairn review concluded that for quarantine risk analysis the pertinent concept is one of ‘manageable risk’ – not ‘no risk’ (which is unachievable). It acknowledged that a certain amount of judgement is implicit in this concept, but argued that consistency of application can be achieved by reference to existing national policies and procedures, by reference to relevant international standards, guidelines and recommendations, and through the contribution of experienced risk analysts (Nairn et al., 1996).


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BENEFITS OF A MULTIDISCIPLINARY APPROACH Risk assessment (particularly using more quantitative approaches) is an extremely demanding, complex and resource-intensive process. It involves consideration of scientific and economic factors, often requiring the use of multidisciplinary teams. In complex risk analyses of areas such as quarantine or genetically modified organisms, risk assessment teams may need to include specialists with skills in disciplines such as communications, mathematics, statistics, computer modelling, ecology and environmental science in addition to those in risk analysis, animal or plant health, and economics. There is also a need to include specialists in law, especially in international and trade law, to ensure that the risk analysis process meets statutory obligations domestically and that it takes account of all relevant international obligations. It can be expected that future consideration of issues related to risk and trade will require detailed risk analysis using a consultative approach similar to that now used for import access requests in Australia following the Nairn review. Some of these issues will require detailed scientific risk assessments, which will tend to use more quantitative approaches if only to provide a basic sensitivity analysis and comparison of the effect of different risk management options. Many will also require detailed economic assessment of the potential effects. For example, in import access requests economic assessment may be required of both the specific cost of the potential establishment of an exotic disease (for inclusion in the import risk analysis itself) and of more general economic effects of the trade on prices and markets (for consideration in possible industry adjustment measures or other policy options), and some issues will also require detailed environmental risk assessment. Similar needs for multidisciplinary input will also occur in other areas of risk analysis related to trade (for example, trade in genetically modified organisms). The standards, guidelines and recommendations provided for sanitary and phytosanitary measures (by WTO, the SPS agreement and TBT agreement, and the use of OIE, IPPC and Codex) provide a sound framework for the application of risk analysis to international trade in animals, plants and their products. This framework, although still evolving and imperfect, offers a practical and tested approach to the complexities of evaluating risks related to international trade. It is certainly worth careful consideration in the development of similar standards, guidelines and recommendations in other areas of risk analysis related to trade. There is thus an opportunity for greater interdisciplinary collaboration to develop better improved methods for risk assessment and better standards, guidelines and recommendations for risk analysis across all areas of potential risk related to international trade.

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REFERENCES Ahl, A.S., J.A. Acree, P.S. Gipson, R.M. McDowell, L. Miller and M.D. McElvaine (1993), ‘Standardization of nomenclature for animal health risk analysis’, Revue scientifique et technique de 1’Office International des Epizooties, 12, 1045–53. ANZFA (1996), Framework for the Assessment and Management of Food-related Risks, Canberra: Australian and New Zealand Food Authority. AQIS (1991), The Application of Risk Management in Agricultural Quarantine Import Assessment: A Discussion Paper, Canberra: Australian Government Publishing Service. AQIS (1998), Handbook on the AQIS Risk Analysis Process, Canberra: Department of Primary Industries and Energy. Australian Senate (1979), The Adequacy of Quarantine, Canberra: Australian Government Publishing Service. Australian Senate (1996), Australian Quarantine and Inspection Service. Report of the Senate Rural and Regional Affairs and Transport Legislation Committee, Canberra: Senate Printing Unit, Parliament House. Beer, T. (1996), ‘Risk assessment for environmental management’, in T.W. Norton, T. Beer and S.R. Dovers (eds), Risk and Uncertainty in Environmental Management: Proceedings of the 1995 Australian Academy of’ Science, Fenner Conference on the Environment, Canberra: Centre for Resource and Environmental Studies, Australian National University, pp. 74–83. Breyer, S. (1993), Breaking the Vicious Circle: Toward Effective Risk Regulation, Cambridge, MA: Harvard University Press. Codex (1993), Risk Assessment Procedures used by the Codex Alimentarius Commission and its Subsidiary and Advisory Bodies, Geneva: Codex Alimentarius Commission, Food and Agriculture Organization. Cohen, J.T., M.A. Lampson and T.S. Bowers (1996), ‘The use of two-stage Monte Carlo simulation techniques to characterize variability and uncertainty in risk analysis’, Human and Ecological Risk Assessment, 2, 939–71. Covello, V.T. and M.W. Merkhofer (1993), Risk Assessment Methods: Approaches for Assessing Health and Environmental Risks, New York: Plenum Press. CRARM (1997), Risk Assessment and Risk Management in Regulatory DecisionMaking, Final report (Volume 2) of the Presidential/Congressional Commission on Risk Assessment and Risk Management, Washington. DPIE (1997), Australian Quarantine: A Shared Responsibility – The Government Response, Canberra: Department of Primary Industries and Energy. DPIE (1998), Australian Quarantine Requirements for the Future: Report of the Quarantine Review Committee, Canberra: Australian Government Publishing Service. Ginsburg, R. (1993), ‘Quantitative risk assessment and the illusion of safety’, New Solutions (Winter), 8–15. Hathaway, S.C. (1991), ‘Risk assessment and its application to veterinary regulatory decisions’, Surveillance, 18, 24–8. Kellar, J.A. (1993), ‘The application of risk analysis to international trade in animals and animal products’, Revue Scientifique et Technique de 1’Office International des Epizooties, 12, 1023–44. Krewski, D. and P.L. Birkwood (1987), ‘Risk assessment and risk management: a survey of recent models’, in L.B. Lave (ed.), Risk Assessment and Management, New York: Plenum Press, pp. 399–406.


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MacDiarmid, S.C. (1993), ‘Risk analysis and the importation of animals and animal products’, Revue Scientifique et Technique de l’Office International des Epizooties, 12, 1093–107. Nairn, M.E., P.G. Allen, A.R. Inglis and C. Tanner (1996), Australian Quarantine: A Shared Responsibility, Canberra: Department of Primary Industries and Energy. North, D.W. (1995), ‘Limitations, definitions, principles and methods of risk analysis’, Revue Scientifique et Technique de 1’Office International des Epizooties, 14, 913–23. Notermans, S. and G.C. Mead (1996), ‘Incorporation of elements of quantitative risk analysis in the HACCP system’, International Journal of Food Microbiology, 30, 157–73. Nunn, M.J. (1997), ‘Quarantine risk analysis’, Australian Journal of Agricultural and Resource Economics, 41, 541–78. OIE (1994), ‘Import risk analysis’, Update to the International Animal Health Code, Mammals, Birds and Bees, Paris: Office International des Epizooties, pp. 27–28/1 0. Pollack, R.A. (1996), ‘Regulating risks’, Journal of Economic Literature, 33, 179–91. SA/SNZ (1995), Australian/New Zealand Standard. Risk Management, AS/NZS 4360:1995, Homebush and Wellington: Standards Australia/Standards New Zealand. Vose, D.J. (1996), Quantitative Risk Analysis: a Guide to Monte Carlo Modelling, Chichester: John Wiley and Sons. Vose, D.J. (1997), ‘Risk analysis in relation to the importation and exportation of animal products’, Revue Scientifique et Technique de 1’Office International des Epizooties, 16, 17–29. Wilson, D.B. and D.J.D. Banks (1993), ‘The application of risk assessment in animal quarantine in Australia’, Revue Scientifique et Technique de 1’Office International des Epizooties, 12, 1121–33. Wyndham, A. and G. Evans (1998), ‘National biosafety legislation and trade in agricultural commodities’, BINAS News, 4, 2–6.

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Public perceptions, risk communication and biotechnology Christine R. Deane

INTRODUCTION Modern biotechnology is a powerful, rapidly advancing technology, with the capacity to alter our way of life. It is viewed as an important tool, with the potential to improve living standards, but also as potentially hazardous and open to abuse. Individual attitudes to biotechnology are formed by complex interactions of socioeconomic factors, personal values, education and the attitudes of the society to which each individual belongs. Advances in biotechnology are accompanied by apprehension about safety, legal, ethical, social and economic concerns. This leads to debate among the ‘stakeholders’, and gives rise to emotive campaigning. As with any technology, biotechnology is neither inherently good nor bad, it simply provides a set of tools for the genetic manipulation of organisms. It is the application of this technology that determines whether it is beneficial or harmful. How biotechnology is applied to agriculture and medicine is a question for society as a whole. Biotechnology can help to solve many problems. For example, farmers encounter increasing demands from consumers for improved quality and to reduce chemical residues. There is also a demand to achieve more sustainable agriculture, and biotechnology can make a major contribution to this. The impact of the first genetically modified crops has already been observed. The US agrichemical industry has recorded reductions in herbicide sales following the introduction of transgenic herbicide tolerant crops. Medical applications of biotechnology have paved the way for treating many serious ailments. Diagnostic tests are being developed that can identify carriers of genes linked to serious heritable diseases such as cystic fibrosis, and advances in gene therapy and tissue engineering have opened new avenues of treatment and brought hope to many sufferers. Public opinion surveys indicate a shift towards acceptance of biotechnology in many developed countries. An extensive study carried out in Canada in 1993 highlighted three distinct attitudes: 25 per cent of respondents expected more benefit than danger from biotechnology; 24 per cent expected the reverse; while 39 per cent believed it may be equally beneficial and dangerous (Espey, 1993). 106

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A more recent survey of Canadian attitudes (Environics Research Group, 1997) found a high level of respondents (87 per cent) were positive about biotechnology and specifically that they agreed ‘[Canada] must pursue opportunities presented by new technologies to maintain current quality of life’. Similarly, two surveys carried out in Japan indicate a general increase in support for agricultural biotechnology between 1995 and 1998 (Hoban, 1998). Surveys of public attitudes towards biotechnology in the US throughout the 1990s found consistently positive attitudes toward agricultural biotechnology. More than half of US respondents to surveys in 1994 and 1997 believed that biotechnology already provided benefits for them, while almost three-quarters of respondents believed that they would benefit from biotechnology in the future (Hoban and Katic, 1998). Conversely, comparisons of the 1996 ‘Eurobarometer’ survey with those of 1991 and 1993 indicate that optimism in Europe about the contribution of biotechnology to improving the quality of life has declined (Wagner et al., 1997). In Australia, a 1994 study detected generally positive to neutral attitudes to biotechnology, with just a small number opposed (Kelley, 1995). However, a 1998 study found that ‘most ordinary Australians’ were concerned and fearful of genetic engineering and cloning (French, 1999). Similarly, low levels of optimism about biotechnology have been found in New Zealand (Macer, 1998). Extensive research, using surveys and interviews, has highlighted the main factors influencing public opinion on biotechnology. Cultural, gender and age differences influence priorities, and the relative importance attached to each factor varies. However, the issue of risk ranks consistently as the major determinant of opinion on biotechnology.

RISK PERCEPTION Scientists and the general public have quite different concepts of risk. Risk assessment is the scientific evaluation of risk, comprising the identification and characterization of hazards, the probability of their occurrence and the consequences of their occurrence; risk management is concerned with identifying, documenting and implementing measures taken to reduce risk. The public, on the other hand, is less concerned with probabilities and tends to focus on the consequences for them personally, should the risk materialize. Risks are viewed according to the magnitude of their potential, unwanted consequences. This fundamental difference in formulating a view of risk is not simply due to a failure to produce clear explanation, as more precise explanations of risk do not necessarily lead to greater acceptance. Hance et al. (1990) gives a pertinent example of this. They cite a case in which an assistant com-

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missioner for a state agency was explaining to a public meeting that the hazardous waste incinerator proposed for their community posed a minimal risk. He explained that the incinerator would, at most, lead to the risk of one additional cancer case in a population of one million over 70 years. To which the audience responded ‘we hope that you are the one’. It has been proposed for some time that risk perception is socially constructed (Fischoff et al., 1978). Risk perception has been described from both a psychological (Slovic, 1987) and a cultural perspective (Douglas and Wildavsky, 1982). The former suggests that risk itself is deterministic in generating perceptions, while the latter maintains that it is the characteristics of the perceiver, rather than the risk itself, that is the critical factor. The theory of social amplification of risk (Kasperson et al., 1988) presents a combined view of social, cultural and individual factors in risk perception. It is a complex interaction of these factors that determine individual perceptions of risk.

BENEFIT The public’s view of risk associated with biotechnology depends on many factors in addition to probability and harm (Thompson, 1997; Frewer, 1997). Research over the past decade has focused on the factors contributing to risk perception in biotechnology. Primary among those is the question of benefit. The public’s view of risk is moderated by the benefits. Different societies perceive the risks associated with biotechnology differently because the benefits have different implications for them. As the perception of risk varies when weighed against the benefits, consideration of the benefits is a critical factor when judging the level of risk acceptable to the public. It is important to highlight the benefits of a particular application of biotechnology when communicating the risks associated with it. For example, the benefit of increased food resources may outweigh environmental risks when considering the introduction of genetically modified crops into a country in which food is in short supply. In Western societies, food supply is not restricted, so the benefit of increased food carries less importance. If, on the other hand the introduction of genetically modified organisms is perceived as a threat to the food supply the reaction is quite different. This may partly explain the opposition in developing countries to the proposed use of the technology protection system or ‘terminator’ technology in genetically modified crops. The use of such technical methods of protecting intellectual property has been viewed as a threat to the traditional practice of saving seed from each harvest to ensure continuation of the food supply.


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Where the benefit of a particular application of biotechnology is obvious, support tends to be more forthcoming than when it is unclear or minimal. A 1993 survey indicated that almost two-thirds of the German public were opposed to genetic engineering, yet just less than three-quarters of the same respondents were in favour if it were to treat disease (Bayertz, 1995). In general, support for biotechnology is higher for medical than agricultural applications (Durso, 1996). A 1994 study of public attitudes towards genetic engineering in Australia revealed that support is high for medical uses but much lower for genetically modified foods (Kelley, 1995). In Canada, the public expressed a strong preference for biotechnology over conventional technologies when it replaces the use of chemicals in the environment (Espey, 1993). In the UK, transgenic animals are more acceptable if the benefits afforded by them are viewed as offsetting the perceived risks (Frewer et al., 1997). The question of to whom the benefits accrue is also important when considering the introduction of a particular application of biotechnology. The public is unlikely to accept additional risk if the benefits are reaped primarily by industry or by a limited number of stakeholders.

VOLUNTARY OR IMPOSED RISK Whether the risk is voluntary or imposed is a significant factor in shaping people’s perceptions of risk (Powell, 1996; Thompson, 1997). People are more concerned about risks that are imposed than those accepted voluntarily. Concern about labelling products containing genetically modified organisms is driven by the public’s desire for choice. The issue of labelling has become of great public concern in Europe, and more recently in Japan and Australia. Public opposition to genetically modified soybeans imported into Europe from the US in the mid 1990s was greatly exacerbated by the absence of labelling of the food products it was used in. The public had been primed by the media and special interest groups to distrust official assurances about the safety of the produce. They believed that there were significant risks involved. The absence of segregation and labelling caused the perceived risks to be imposed rather than voluntary. This increased the level of risk people believed to be associated with the soybeans. The recent decision to label products containing genetically modified organisms in Australia may reduce public concerns by offering a choice of whether or not to purchase such products, and making the perceived risks voluntary rather than imposed. However, labelling products which are derived from genetically modified crops, but biochemically identical to conventionally produced foods, for example sugar, is scientifically unsound and could lead to a challenge under the WTO’s TBT agreement.

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CONTROL People also judge risk according to their perception of those controlling it. If those in control have a history of secrecy, or if they are perceived to influence regulatory and public policy decisions, the perceived risks are amplified (Hamstra, 1992). Public concerns have been expressed through consumer associations and other non-government organizations that the control over the development of biotechnology is held by a small number of large transnational companies. Collaborative agreements and cross-licensing between these companies leads to further consolidation within the entire biotechnology sector. Given their fundamental importance, control of the key enabling technologies such as DNA delivery systems and promoters, is of vital strategic importance and could lead to an effective monopolization of the sector. Although competition law deals with these issues, the high level of mistrust of large companies among the public helps create the impression that biotechnology may be controlled by a small number of very large, powerful companies that are beyond national influence or control, and that this power may be abused.

ETHICAL CONCERNS Ethical standards and fundamental beliefs have a profound effect on people’s attitudes towards any new technology, particularly biotechnology. Perceptions of risk and benefit in biotechnology cannot be dissociated from ethical issues (Straughan and Reiss, 1996). Survey respondents routinely voice ethical reservations regarding the technology when answering questions about risk. Within biotechnology, ethical concerns vary according to the specific application. Gene transfers involving plants are generally regarded as more acceptable than those involving animals (Espey, 1993; Couchman and Fink-Jensen, 1990; Norton, 1998). Frewer and Shepherd (1994) found that within the UK ethical concerns about biotechnology were greatest for applications involving transgenic animals, particularly for the purpose of food production. The use of transgenic animals in medicine is generally associated with a lower level of ethical concern. People who hold strong religious beliefs tend to be more opposed to biotechnology. Sparks et al. (1995) observed a significant relationship between respondents’ fundamental beliefs and their attitude towards gene technology in food production. There are many examples of scientific knowledge representing a challenge to what was thought to be certain or natural, such as the shape of the earth and the movement of the planets around the sun. In demystifying many natural phenomena, science may sometimes be perceived as a threat to people’s traditional beliefs.


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IMPACT OF PUBLIC OPINION It is clear that the public draws on broader influences than simple mathematical probability when formulating a view of risk associated with the products of biotechnology. Safety, especially food safety, is so politically sensitive it has had a considerable impact on policy decisions in biotechnology. This has been particularly evident within Europe, where biotechnology has emerged as a significant public policy issue over the past decade. Consumer perceptions of risk associated with genetically modified crops have resulted in the suspension of approvals for release in France. In February 1997 the French government suspended the distribution of GM maize, despite the fact that it was France which submitted the original request for EU-wide marketing. Late in 1997 the future policy position was linked to the results of a consensus conference. Following the conference in June 1998 the government imposed a two-year moratorium on marketing. Another pertinent example of the impact of public opinion on biosafety policy is in the interpretation of EU Directive 220, which covers the deliberate release of genetically modified organisms. The directive leaves both the definition of ‘evidence for safety’ and ‘acceptability’ open to interpretation by the individual member states. Public opinion on genetically modified organisms has been reflected in various countries’ policy decisions regarding the implementation of the directive. Austria, where public attitudes towards biotechnology are negative (Zechendorf, 1994; Hoban, 1998), has interpreted the scope of the directive to include ‘compliance with social institutions and conventions’ (sozial vertraglichkeit) as well as safety (Schomberg, 1998). On the other hand, Belgium, where there is a greater acceptance (Zechendorf, 1994), limits the scope to ‘safety concerns in relation to the purpose of the release’ (Schomberg, 1998). There is, of course, a place for public concerns within the decision making process. However, this should be outside the actual process of assessing safety and should form part of the broader framework for the introduction of biotechnology. The UK House of Lords report on European Communities (House of Lords, 1998) recommends that while regulatory judgements should be made solely on the grounds of safety, public attitudes towards genetically modified foods and crops should be accommodated in the operation of the regulatory system.

COMMUNICATION STRATEGIES Clearly there is a need to develop and implement a strategy to address public concerns. The adoption of public communication programmes has been

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effective in increasing acceptance of biotechnology among consumers. The Canadian Food Inspection Agency introduced a communications strategy for biotechnology in 1990. This focused on responding to consumer demands (identified through surveys) for accurate understandable information about the technology, public consultation and accountability of regulatory bodies and product developers. As a result, attitudes of the Canadian public towards biotechnology shifted from the majority believing biotechnology to be either dangerous or equally dangerous and beneficial in 1993 (Espey, 1993) to the majority of consumers being in favour of biotechnology by 1997 (Environics Research Group, 1997). The common factors found to be successful in communication strategies adopted by various countries are: • Education • Consultation • Provision of a transparent, scrupulously independent, regulatory system. Education Biotechnology is often poorly understood by the public. Judgements are frequently made on the basis of inaccurate information, which leads to a magnification of the perceived risks. To establish an informed opinion on any aspect of biotechnology it is necessary to have a basic understanding of the techniques used and an awareness of the range of applications. Raising an individual’s awareness of the fundamental nature of the technology can alter his or her perspective. Two US studies indicate that a better understanding of science can shift opinion in its favour. Doble and Johnson (1990) found that after respondents had been shown an explanatory film about particular scientific issues, their attitudes had changed and were similar to that of leading scientists in the field. The authors credit this change not only to increased scientific knowledge but also to an understanding of the complex policy issues involved. In a similar study, Miller (1994) found that understanding science and the nature of scientific inquiry contributes to a more positive attitude towards issues such as the use of animals in biomedical research. A study of attitudes towards genetic engineering, in which groups of scientists, farmers, science teachers and the general public were questioned, found that the greater the knowledge of science and technology evinced by the respondent, the higher the level of support. However, greater knowledge of the subject does not always lead to increased support for biotechnology. Although in some instances education shifts public opinion towards a more positive stance on the issue, public opinion is influenced


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by other factors. Disapproval of certain applications of biotechnology may remain despite respondents becoming well versed in the subject. A study of data from a British survey conducted in 1988 reveals that respondents who were most knowledgeable about biotechnology held the firmest opinions, whether in favour or against. Evans and Durant (1995) found that increased knowledge may further polarize views rather than increase acceptance. Credibility Any presentation of information on biotechnology is received against a background of a hierarchy of credibility, operating within the minds of the public. The public clearly differentiates between various sources of information on scientific issues (Slovic, 1993) and this is particularly true in biotechnology (Macer, 1995; Frewer and Shepherd, 1994; Environics Research Group, 1997). The credibility of the source is a critical element in communicating with the public, and the trust placed in that source is as important as the content of the message itself. Frewer and Shepherd (1994), examining public attitudes towards genetically modified food in the UK, investigated the credibility of public information for respondents. Sources that respondents rated highly were TV programmes, consumer organizations, some newspapers and scientific publications. Information disseminated by the food industry and the government was seen as considerably less trustworthy. A study carried out in New Zealand (Couchman and Fink-Jensen, 1990) on attitudes towards genetic engineering revealed that two-thirds of respondents were either ambivalent or sceptical about information provided by scientists on the safety of genetically modified organisms. A Canadian survey demonstrated that doctors, environmental groups and consumer associations command a significantly higher degree of public trust than scientists, biotechnology companies and government regulators (Espey, 1993). Furthermore, university scientists hold higher levels of public trust than scientists associated with biotechnology companies. This may be due to the perceived motivation of biotechnology companies and to food scares, such as BSE and dangerous strains of E. coli, which have further reduced public confidence and trust in the food industry. The low level of trust accorded to scientists, in general, could be linked to the image the public have of the scientists. An analysis of how scientists are represented in popular culture (literature, films, television and so on) has revealed some recurring stereotypes. Scientists are often portrayed as obsessive or maniacal, helplessly losing control over their inventions. Solomon et al. (1994) studied the images of scientists held by 11–14-year-old children, most of whom had had no contact with scientists. There was a pervasive impression of the scientist as someone blundering about in a laboratory, performing experiments without considering the consequences. However, another more positive image was also detected, of the scientist providing authoritative

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information through participation in television documentaries. Frewer (1997) notes that the negative impact of low source credibility can be mediated somewhat, but that attitudes are difficult to change through information provision among those with extreme negative or positive attitudes towards the technology. Public Consultation Public consultation and participation in the development of policies affecting biotechnology encourages a more positive attitude towards it. It has been demonstrated that the greater the perceived lack of involvement, the more likely the public is to believe that biotechnology holds more danger than benefit to society. During the 1980s in the US, a network of guidelines, commissions and institutions was established to promote transparency with the public on the emerging technology of gene therapy, long before it came into clinical use. This is thought to have contributed to the consistently high levels of acceptance of biotechnology in the US, as indicated in surveys throughout the 1990s (Hoban, 1998; Hoban and Katic, 1998). Structures have been put in place in several EU countries in an attempt to promote dialogue and public participation. Since the late 1980s, ‘Consensus Conferences’ have been organized by the Danish parliament. A representative sample of 14–16 people is selected to interview various people involved in socially sensitive new technologies. The panel then publishes a report on the outcome. Similar initiatives have been introduced in the Netherlands, UK, New Zealand and Australia. Furthermore, promoting opportunities for more informal contact between the scientific community and the public may enhance both trust and communication. Government Regulation A transparent, scrupulously independent regulatory process is vital in gaining the confidence of the community. In addition to its desire to be involved in the process, the public favours a high degree of government regulation. This is true even in countries where the public are very positive about biotechnology. In the US, where biotechnology has consistently high approval ratings (Hoban, 1998; Hoban and Katic, 1998) the majority of the public believe that gene therapy must be subject to strict regulation (Bayertz, 1995). A 1991 European study indicates that although significant national differences exist in support of various applications of biotechnology, the wish for governmental control was uniformly high across all respondents. Informing the public of the regulations and safeguards to prevent abuse may assuage public concern on this point and influence the level of support. The UK Royal Society point out that while it is unnecessary for the public to be aware of the details of the regulatory process, its fundamentals, and the process of product development,


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selection, testing, regulation and monitoring should be available for scrutiny. The regulatory process must also be perceived to be completely independent of industry. The public is generally mistrustful of large transnational companies and expresses concerns about the influence that such companies are perceived to have on the government. Biotechnology offers great potential for agriculture and medicine. Many issues have accompanied the transfer of this technology from the laboratory to the marketplace. Biotechnology will not succeed without a sound basis of public approval. Improved public communication and consultation are vital in achieving this.

REFERENCES Bayertz, K. (1995), Ethics, Genetic Engineering and the Public, Switzerland: Genethics, Ciba Communications. Couchman, K. and K. Fink-Jensen (1990), ‘Public attitudes to genetic engineering in New Zealand’, DISR Crop Research Report 138, Christchurch, NZ: DISR Crop Research. Doble, J. and J. Johnson (1990), Science and the Public, New York: The Public Agenda Foundation. Douglas, M. and A. Wildavsky (1982), Risk and Culture, Berkeley: University of California Press. Durso, T.W. (1996), ‘Biotechnology still struggling to gain a public-awareness foothold’, Scientist, 10(22), 1. Environics Research Group (1997), Canadian Biotechnology Strategy Task Force Public Opinion Research, Ottawa, Canada. Espey, J. (1993), Canadian Institute of Biotechnology Report on Attitudes Towards Biotechnology, Ontario, Canada. Evans, G. and J. Durant (1995), ‘The relationship between knowledge and attitudes in the public understanding of science in Britain’, Public Understanding of Science, 4, 57–74. Fischoff, B., P. Slovic, S. Lichtenstein, S. Read and B. Combs (1978), ‘How safe is safe enough? A psychometric study of attitudes towards technological risks and benefit’, Policy Sciences, 9, 127–52. French, P. (1999), ‘Biotechnology in Australia’, Federation of Australian Scientific and Technological Societies Occasional Paper Series no. 1, http://www.usyd.edu.au/su/ fasts/1999/biotech.html (2/02/2000). Frewer, L. (1997), ‘Consumer aspects of public understanding and acceptance of transgenic animals’, Transgenic Animals in Food Production, Proceedings of the International Workshop, Stockholm, May 1997. Frewer, L.J. and R. Shepherd (1994), ‘Attributing information to different sources: effects on perceived qualities of information; on the perceived relevance of information and on attitude formation’, Public Understanding of Science, 3, 385–402. Frewer, L., C. Howard and R. Shepherd (1997), ‘Public concern in the UK about general and specific applications of genetic engineering; risk, benefits and ethics’, Science Technology and Human Values, 22(1), 98–124.

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Hamstra, A. (1992), ‘Consumer research on biotechnology’, Biotechnology in Public, London: Science Museum. Hance, B.J., C. Chess and P.M. Sandman (1990), Industry Risk Communication Manual: Improving Dialogue with Communities, Boca Raton, Fla.: Lewis Publishers. Hoban, T.J. (1998), ‘Japanese Consumers’ Awareness and Attitudes about Biotechnology’, Proceedings APEC Third Biotechnology Workshop; Capacity Building and Public Acceptance/Risk Communication, Kuala Lumpur, Malaysia. Hoban, T.J. and L.D. Katic (1998), ‘American consumer views on biotechnology’, Cereal Foods World, 43(1), 20–22. House of Lords – European Communities Committee (1998), EC Regulation of Genetic Modification in Agriculture – 2nd Report, London: UK Parliament. Kasperson, R.E., O. Penn, P. Slovic et al. (1988), ‘The social amplification of risk: a conceptual framework’, Risk Analysis, 8(2), 177–87. Kelley, J. (1995), Public Perception of Genetic Engineering in Australia in 1994, Canberra: Department of Industry, Science and Technology, Australia. Macer, D. (1995), ‘Biotechnology and bioethics: what is ethical biotechnology?’, in H.J. Rehm and G. Reed (eds), Biotechnology: A Multi-Volume Comprehensive Treatise, Vol. 12, rev. edn, Weinheim, New York: VCH, pp. 115–54. Macer, D. (1998), Attitudes to Biotechnology in New Zealand and Japan in 1997, Tsukuba, Japan: Eubios Ethics Institute. Miller, J.D. (1994), ‘The relationship between biomedical understanding and public policy’, Proceedings of Education for Scientific Literacy Conference, London: Science Museum. Norton, J. (1998), ‘Throwing up concerns about novel foods’, in Richard Hindmarsh, Geoffrey Lawrence and Jane Norton (eds), Altered Genes: Reconstructing Nature, St Leonards, NSW: Allen & Unwin. Powell, D. (1996), An Introduction to Risk Communication and Perceptions of Risk, University of Guelph, Canada. Schomberg, R. (1998), An Appraisal of the Working in Practice of Directive 90/220/EEC on the Deliberate Release of GMOs, STOA, European Parliament. Slovic, P. (1987), ‘Perception of risk’, Science, 236, 280–285. Slovic, P. (1993), ‘Perceived risk, trust and democracy’, Risk Analysis, 13(6), 675–82. Solomon, J., J. Duveen and L. Scott (1994), ‘Pupils’ images of scientific epistemology’, International Journal of Science Education, 16(3), 361–73. Sparks, P., R. Shepherd and L.J. Frewer (1995), ‘Assessing structuring attitudes towards the use of gene technology in food production: the role of perceived ethical obligation’, Journal of Basic and Applied Social Psychology, 16, 267–85. Straughan, R. and M. Reiss (1996), Improving Nature? The Science and Ethics of Genetic Engineering, Cambridge: Cambridge University Press. Thompson, P.B. (1997), ‘Public understanding and acceptance: ethical aspects. Transgenic animals in food production’, Proceedings International Workshop, Stockholm, May 1997. Wagner, W. et al. (1997), ‘Europe ambivalent on biotechnology’, (Editorial) Nature, 387(6636), 845–7. Zechendorf, B. (1994), ‘What the public thinks about biotechnology’, Bio-Technology, 12(9), 870–871, 873–5.

PART III

Negotiating Experience with Risk

9.

Accounting for risk in multilateral negotiations Aynsley Kellow

Should we forbid international travel, given the certain knowledge that our quarantine procedures are quite unable to hinder the importation of exotic diseases? (Joshua Lederberg, 1975)

In December 1998, the Royal Society for the Protection of Birds was leading a campaign by European wildlife groups urging shoppers not to buy wines from the Australian producers Rosemount and Tollana because they used new plastic stoppers in a bid to reduce the risk of cork taint – a move made in response to the demands of the British market. The motivation for this action was the possible impact of the plastic stopper on the demand for cork, which was expected to result in Spanish and Portuguese cork farmers planting fewer forests or not maintaining existing woodlands which provided habitat for more than 40 different species of birds, including the rare imperial eagle. The Society was lobbying supermarkets and wine retailers (the very people who had asked for plastic stoppers) to insist on labelling that would allow shoppers to identify the offending bottles and refuse to buy them. Simultaneously, the cork producers were mounting a public relations campaign in Australia to counter the move to plastic stoppers, extolling the virtues of cork and downplaying the risk of cork taint. Not all such campaigns find their way into either effective boycotts or policy action on the part of governments, but this example demonstrates the increasingly complex interactions between obscure environmental risk, single-issue lobby groups and trade worth millions of dollars. In a classic example from chaos theory, the flapping of the wings of a butterfly in the Amazonian rainforest could result in a hurricane in the Caribbean. Butterflies, as the result of the possible risks to monarch butterfly larvae from GM corn, have also featured in international concerns over GM foods, but it is a mark of the extent of globalization that the flapping of the wings of an imperial eagle in Portugal can threaten the wine trade between Australia and Britain. Much larger storms have arisen over the management of quarantine and environmental risks. France seized upon the risks associated with BSE to ban 119

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imports of British beef even after the European Commission lifted restrictions, despite evidence of BSE in its own herds. France has led the charge within the European Union to place restrictions on the importation of genetically modified foods, an area where the US appears to have market leadership. Do such actions reflect different assessment of risk, or merely economic convenience? Trade liberalization has brought benefits from improved efficiency and economic growth, but those unable to adapt to competition have sought new forms of protection using standards and regulations, including environmental protection – either at the national level or by using MEAs. Occasionally, there has been more than a hint that environmental concerns might be secondary to the trade advantage. This mix of interests and environmental protection is not new. Concerns that national standards on pesticide residues in food would be used as trade barriers were central to the development of the Codex Alimentarius (Paarlberg, 1993). Trade advantages also dominate the history of international chemical regulation. The US saw the focus on the registration of new chemicals as uneven in its impact, since this was an area where its chemical industry enjoyed advantage. It therefore pushed for international regulation to be extended to existing chemicals, an area where the chemical industry in the European Union was seen as having advantage (Schweitzer, 1983). What seems more novel is the use of what David Vogel (1995) has referred to as the ‘California effect’: setting higher standards of environmental protection or safety and then gaining market advantage either by exporting those standards or by allowing the consumer to recognize the origin of goods as a mark of quality. The approach can also be seen in the development by Germany of the precautionary principle as part of what is variously known as ‘ecological modernization’ or ‘green Keynesianism’ and its subsequent export (Boehmer-Christiansen, 1994, p. 56). But even this device is perhaps more venerable than appears at first sight. After all, the German Purity Law of 1516 has done much the same for German beer exports, with many brands referring to the law as being emblematic of quality. This intertwining of economic and environmental interest is often a source of disappointment on the part of both the trade and environmental communities. The trade community regards any trade-distorting measure with suspicion, seeing all international politics as interest driven, while the environmental community adheres to a much more idealistic view of international relations, or at least wishes that politically correct norms would trump economic interests. In a way, the trade community also exhibits a degree of idealism, because it wishes for environmental policy that is not trade-distorting. This is a vain hope on both sides, but opportunity costs of specific actions need to be considered. Public policies (and the problems that give rise to them) cannot be confined to neat categories, and even if they could be confined in terms of conceptual cat-

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egorization, nations and international organizations are likely to advance them in different arenas (Pistorius, 1995). Any environmental policy will impact in some way on economic interests, and such policies must inevitably be developed by processes in which the representation of interests is likely to be an important, if not a dominant factor. Shue (1995) explains that the key question is not whether norms or interests prevail, but how they interact: whether norms and interests clash or reinforce each other. Yandle (1989) has colourfully suggested a ‘Baptists and Bootleggers’ theory of environmental regulation: that most environmental policies are adopted precisely because they involve a mix of interests and norms which reinforce and mask interests. (Baptists want alcohol banned on normative grounds, while bootleggers can make monopoly profits if it cannot be sold legally.) Not all advantages created by policies relate to criminal activity, so Yandle’s theory is an overstatement. Its fundamental insight, however, is that norms alone are rarely likely to be sufficient to produce environmental policy, while interests seem to be a necessary part of any issue. Both norms and interests pervade the process of risk management, to the extent that it is a mistake to assume that an ‘objective’ assessment of risk can be used either as the basis for multilateral negotiations to deal with issues posing transboundary or global risks, or as a criterion against which the actions of parties under the provisions of GATT article XX can be measured. It is preferable to perhaps recognize the inevitably subjective nature of risk, and to craft international measures which take this into account than to try to operate as if risk could be specified objectively. This is because reductionist approaches to risk inevitably favour certain interests, and the interests thus tend to contaminate the science. Instead of our evaluations of risk being based upon the best possible science, our science becomes based upon the most influential interests. Science is weakened, and we are less able to separate norms, interests and science. Assuming that risk management is solely a matter of science, which we will refer to as reductionist risk management, this invites a contamination of the processes of science with interests. But while we must acknowledge that risk assessments inevitably involve factors which render them social constructions, so that different actors will see risks differently, we should not feel driven towards a relativism which requires us to treat all assessments as equally valid. At the national level, governments must make a collective determination of risk and act upon it in developing policy. Simply granting equal validity to all constructions of risk associated with, say, toxic chemicals, is simply not an option, since the act of policy choice privileges one assessment over all others. While the constructivist understanding of risk helps us understand differences, it cannot serve as a basis for international risk assessment. Where trade involves risks, a constructivist approach would simply allow nations to

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claim constructions of risk which would serve as little more than ‘flags of convenience’ under which trade protectionists could sail, permitting them to ‘cherry-pick’ the benefits of liberalized trade for their exporters while abusing the trade rules to provide protection from imports. And in the multilateral context, the constructivist approach provides no way forward in reaching agreement on risks which confront two or more nations. It might help us understand why they differ, but (inasmuch as it supports relativism), such an approach tells us little about how a shared assessment of risk might be reached.

RISK AND PUBLIC POLICY The normative dimension to risk is perhaps more apparent with environmental problems than with quarantine, but is present to some extent in both. The notion of ‘pollution’ is not one which depends upon some technical or objective assessment, but is culturally dependent (Douglas, 1966). Similarly, risk and hazard are qualities which reside not in substances and technologies, but in human agents interacting with substances and technologies (Wildavsky and Douglas, 1981). Risk management therefore involves social, political and economic issues, and cannot be reduced to science; nor can it be left solely to scientists. In fact, many would go beyond this position and argue that even systems of scientific classification cannot be stripped of their cultural meanings. This was certainly the case with attempts at habitat classification within the European Union (Wateron and Wynne, 1996), and it is important to note that science free of the influence of interests, norms and cultural assumptions is, for many, elusive. To take the example of toxic chemicals, in theory all chemicals are toxic. To paraphrase Paracelsus five centuries ago, the dose makes the poison. In practice we must focus on exposures to such toxic substances in amounts that can cause harm, the probability of such exposure occurring and the hazards they pose. And if we wish to manage or reduce the risks associated with hazardous chemicals, we must consider the costs as well as the benefits of such an action, where costs include opportunity costs, as well as any risks associated with the use of any substitute or pursuit of any alternative practice. This requires an understanding of the risk management process which is taken here to involve hazard identification, risk estimation, risk evaluation and risk management (Krewski and Birkwood, 1987). Hazard identification involves the use of science to establish the nature of some adverse effect. The notion of risk involves both the hazard and the probability of its occurrence, and risk estimation thus involves this probabilistic dimension. Hazard identification and risk estimation for chemicals involve


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primarily the use of toxicological and epidemiological data as their primary sources of knowledge, although structure/activity analysis may also be used in the case of chemical hazards. Analogous research is required for biohazards. Risk estimation must involve some consideration of human activities – the uses to which chemicals are put, the form in which they are used and so on. To use the example of lead, the form in which lead is used has considerable consequences for an estimation of its risks. Used in paint, it poses a high risk to humans – especially children. Lead metal used as sheathing for underground cables, on the other hand, is in a form which is less likely to become mobile, and is well isolated from exposure to humans or the natural environment. Yet lead shot used for recreational hunting is likely to find its way into the environment, and lead anti-knock additives in automotive fuel are readily inhaled by populations at risk. (The chemical species of lead is also of great importance for its mobility, bioavailability and effects (IPCS, 1977).) The next stage, risk evaluation, moves to the domain of social science, with public policy considerations becoming paramount in the evaluation of advisory, economic or regulatory options using the formal tools of programme evaluation, ‘tempered by the public’s perception of the risk involved as well as prevailing socio-political factors’ (Krewski and Birkwood, 1987, p. 404). Finally, risk management involves the implementation of the control strategy selected – again, a process which has more to do with the social sciences than the natural sciences. Risk evaluation involves both the notion of risk as a social construct and the consideration of economics. Importantly, trade-offs must be considered. We cannot live in a risk-free world, and any alternatives we might consider also carry risks. There is a warning in the fact that CFCs were developed in 1928 as substitutes for inflammable and noxious refrigerants (Downie, 1995, p. 171), while their threat to the ozone layer was not identified until 1974. We must perform a hazard identification and risk estimation for alternative chemicals or courses of action we might wish to substitute for substances such as lead. Few substitutes carry zero risk. It is clear from this model that good science must lie at the base of any risk assessment. If drastic actions were taken on the basis of poor science, the costs could be immense. But risk-relevant science is complex, not always performed well, and almost never entirely pure, since it takes place within a social context which is shaped by – among other things – differing political and economic interests. Any ambiguity in the science will be exploited to the full by interests which stand to benefit from one conclusion or another. The tobacco industry, for example, has been adept at exploiting the very small amount of residual uncertainty over the risks of smoking in fending off regulation. But interests do not always work to make risks appear smaller.

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Science does not provide simple answers. Some chemicals are both necessary for life and pose a hazard, so risk assessment is not just a matter of deciding if the risks of one particular use of a chemical are outweighed by the benefits, as if all were unambiguously hazardous or toxic. Some inorganic minerals, such as calcium, zinc and copper, are both essential to life yet – in some circumstances – constitute a hazard to it (Rodricks, 1992, p. 12). Toxicity also depends not just upon laboratory conditions, but on the characteristics of the individual and the presence of other chemicals with synergistic or antagonistic properties. To a large extent, risk management policies reflect the methodologies selected to estimate risks and evaluate them. In the United States, different methodological approaches produced assessments of socially acceptable risk for radiation different than for chemicals, and this difference was an artefact of the methodologies employed. Permissible occupational exposure to radiation in the United States would have led to an additional lifetime probability of death of well in excess of one in 100; typical limitations on exposure to chemical carcinogens corresponded to an increased probability of about one in 1000 (Brown, 1992, p. 2336). These differences reflected the histories of the two regulatory approaches. Radiation risk management evolved under the assumption that risks should be balanced against the benefits of radiation and radiation-producing technologies and ‘taking into account the unavoidable natural sources of background radiation’ (Brown, 1992, p. 2336). Chemical risk management developed from assumptions that public health could be completely protected, and assumed – because the programme was dealing primarily with screening new chemicals for registration – there were no significant natural sources of the chemicals. Similarly, methodologies for screening new chemicals using massive doses on test animals which had often been bred for their susceptibility to cancer, turned up so many false positive results that the Delaney Amendments to the US Food and Drug Act (banning the sale of food containing carcinogens) had to be abandoned. (Many chemicals occurring naturally in foods turned out to test positive.) Political institutions, political culture, power and interests all affect the development and implementation of risk management processes (Brickman et al., 1985; Fischoff et al., 1981; Jasanoff, 1986). In one notorious example, at one stage in the US, an apple sprayed with chemical could be passed as fit for human consumption by the US Department of Agriculture, but could not be deposited in landfill according to the US Environment Protection Agency (Wynne, 1987, p. 49). If institutional factors can lead to inconsistencies within nations, such as that above, it can certainly produce inconsistencies from one nation to the next. There are dangers in trying to reduce the risk assessment of chemicals to toxicological science and ignore cultural and institutional factors (Schrader-


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Frechette, 1991). Chemicals pose hazards which have been estimated epidemiologically. Drinking water chlorinated to the maximum level permitted by the US EPA carries an annual probability of death of 0.8 per 100 000, but the risks of unchlorinated water are usually considered higher (Rodricks, 1992, p. 218). Peruvian officials once decided to follow the lead of the US EPA and not chlorinate the water from wells and the ensuing cholera epidemic killed more than 3500 (Anderson,1991, p. 255). General public health conditions in the United States make the probability of cholera remote, and cancer is likely to loom larger in a risk assessment of chlorinated water there than in Peru. Differences in values and interests thus make scientific reductionism in the regulation of toxic chemicals not just an inadequate paradigm, but a highly dangerous one. A risk management approach to environmental problems calls for the following steps to be taken: (i)

Before taking action to regulate an environmental problem, an assessment of scientific knowledge must indicate that exposure to the pollutants of concern may represent a significant danger to human health or the environment. (ii) To make efficient use of resources, environmental problems should be ranked in order of priority by some formal or informal ‘comparative risk’ process. (iii) The proposed action should reduce the risks of targeted pollutants by a greater degree than they increase other risks to public health and the environment. (iv) The economic costs of the action must be balanced against the expected benefits of risk reduction. Such balancing might be quantitative or monetary (where possible) but in many cases might be more qualitative and judgemental (Graham and Hartwell, 1997). Such steps – difficult enough at the national level – often prove too challenging beyond the level of the nation-state, where uses and values are more likely to vary. Within the European Union, for example, the demands of implementing a regulation on the evaluation and control or the risks of existing substances (EC 793/93 in Bennett, 1992), meant a reductionist computer model had to be used to produce priority lists for risk assessment. The result was that copper metal was ranked more highly than methyl isocyanate and this somewhat perverse result had to be corrected by political lobbying. Copper is widely used as a roofing material in Europe, while galvanized iron is used in Australia in ways unknown in Europe. While international statements of hazards can be made, variations in use patterns make international assessments of risk problematic. Galvanized roofing products will have a totally

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different economic value in Australia compared with Europe, and different use patterns will give rise to different environmental exposures. Further, the varying national dispositions towards risk will mean the same effects with the same dollar values will be evaluated differently in one nation from the next. This poses a very real problem for multilateral agreements which seek to deal with transboundary risks, and for agreement on national determinations of risk in the WTO system. Just as we saw that institutional differences and differences in policy histories produced inconsistent approaches to risk in the US, so too does the US approach to risk (incorporating a heavy emphasis on economics) clash with the approach in Europe, which is based more upon the precautionary principle developed in Germany. It is little wonder that the US and the EU do not see eye-to-eye on hormone-treated beef and GMOs, and the fact that these differences coincide with European interests under the CAP and US comparative advantage in agricultural production helps sustain them with a ‘Baptist-and-Bootlegger’ coalition. The challenge is to resolve the problem of divergent risk assessments without allowing them to serve as trade barriers – or, perhaps more realistically, minimizing the extent to which diverging risk assessments are employed as impediments to trade, since any technical specification (such as the required curvature for bananas or cucumbers) can serve as the basis for de facto protection.

RISK IN MULTILATERAL NEGOTIATIONS In the absence of common use patterns and values, the temptation at the international level will be to try to find unanimity in science. Thus objectivist and scientifically-reductionist theories of risk are commonly employed at the international level in the hope that they will provide a basis for agreement. In other words, it will be convenient to try to reduce risk management to a matter of science or technical specifications, upon which agreement can be reached, or failing that, on the basis of hazards. The key problem in securing agreement in multilateral negotiations is how consensus can be generated. International policy, usually developed in multilateral treaties, is slow to develop and the results are often disappointing. This is especially so when national perspectives diverge markedly, and the very factors which can speed up the process are likely to increase the subsequent sense of disappointment over outcomes (Kellow, 1999). Reductionism and moral suasion are indeed capable of producing agreement,1 but the kind of agreements concluded are likely to be less than fully effective in delivering practical outcomes to minimize risks.


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Brenton has pointed out that scientific consensus, especially when coupled with or packaged with the normative arguments of NGOs can help produce consensus (Brenton, 1994, p. 252). But even at the domestic level, normative consensus appears limited in the extent to which it can drive the development of workable policy (Jokinen and Koskinen, 1998), and national interests inescapably pervade the science employed in the international policy process (Skolnikoff, 1993, p. 241). The utility of science and norms appears to be limited largely to the initiation of negotiating processes (or the negotiation of a framework convention); science and moral outrage are less helpful when the process moves on to the crafting of detailed policy instruments (often in a protocol to the framework convention) (Hanf and Underdal, 1998). Support for these observations is evident in the way two MEAs have developed. Within the FCCC, the IPCC is an attempt to provide a scientific consensus on the hazards, although many of the criticisms of that body’s reports have centred on the extent to which the science reflects the risk dispositions of its principal actors, or the extent to which IPCC scientific consensus substitutes for risk assessment. These objections aside, the Kyoto Protocol negotiation of necessity became a negotiation of interests (much to the chagrin of the NGOs) precisely because the details of climate change policy required a different kind of information than was useful in developing the FCCC. Parties in Kyoto signed on for commitments they thought reasonable given their national circumstances, and their perceptions of national interest undoubtedly reflected not only the consequences of any reduction measures, but also their assessment of the risks of climate change. Indeed, their risk assessments were inevitably affected by interests: nations with access to cheap coal were understandably less risk-averse than those with extensive nuclear programmes to support. With the Basel Convention, however, the ‘blame and shame’ approach which helped generate support for the agreement carried over into the decision to ban trade even for recycling, eventually adopted as an amendment, and only in the definitional work of a ‘technical’ working group was the potential impact on the recycling trade limited. In our terms above, hazard issues carried over into risk management. The amended Basel Convention is still less than ideal law, but it is infinitely better than it might have been if the subsequent definitional work had not given it a more practical dimension than the sponsors of the ban intended (Kellow, 1999). In this case, this process was almost certainly affected by the ease with which waste traders can be demonized, which served to at least partially disenfranchise relevant industries which bring not just their economic interests, but their detailed knowledge of the trade. Industry frequently enjoys less influence at the international level than it does in domestic policymaking, and being labelled

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toxic criminal by Greenpeace did little to enhance that influence (Levy and Egan, 1998). The basic flaw with the Basel amendment ban can be seen as this: the Convention put in place a prior informed consent regime for hazardous wastes, which allowed parties to cease export of certain classes of hazardous wastes on the basis of their assessment of the possible risks posed by such trade in countries of transit or destination. The ban decision sought to impose blanket risk management decisions on the basis of hazard assessment – a very blunt instrument indeed – and still does nothing to control trade between non-parties, as the dumping of toxic waste from Taiwan in Cambodia in December 1998 demonstrated. As that case demonstrated, effective control of such trade requires a national capacity which is currently lacking in Cambodia, where economic vulnerability and bribery can undermine enforcement, no matter how rigid the international convention. (This case also demonstrated the dangers of exaggerated risk perceptions across boundaries: while the WHO and Médecins Sans Frontières subsequently cleared the waste from any implication with two suspicious deaths, the alarm created over the dumping resulted in the death of one official in Sihanoukville, as protesters sacked offices of local officials they blamed for allowing its import. Four other people died in a panicked exodus of more than 10 000 residents fearing contamination.) Similar problems with attempts to impose uniform risk assessments have arisen with the Convention on International Trade in Endangered Species (CITES) in relation to elephant populations. While East African elephant populations are at risk, Southern African herds require culling lest they cause considerable havoc through over grazing. The CITES ban failed to discriminate between the two situations, and diminished the economic value of Southern herds by restricting the sale of their ivory. The different risk perceptions of the Southern African nations have resulted recently in relaxation on the blanket ban on trade. How, then, should risk management be integrated with MEAs? These cases point to the significance of diverging national assessments of risks and the dangers of imposing some internationally-determined risk assessment without regard for national circumstances. This reinforces the need for an international version of the subsidiarity principle in both international regulation in general and risk assessment in particular. This would suggest that problems should be dealt with at the lowest possible level at which they can be addressed, and dealt with in multilateral negotiations only when their nature makes that essential. International risk assessments will be likely to do considerable harm or amount to the imposition of the hegemony of others in either trade or quarantine or environmental policy (or both), and if the hazards are national, then the risk management should also be national. Transboundary problems should be dealt


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with at the regional level, and global problems should be dealt with at the full multilateral level since they cannot be resolved at any lower level. Modest objectives are best in international risk management, and international environmental policy in general. Anthony King once remarked that, contra Bismarck, politics is the art of the impossible: our wonder should be not that government is done badly, but that it is done at all. If that holds at the domestic level, it holds in spades at the multilateral level, where the capacity for governance is a fraction of that of even a modestly endowed nation-state. In short, the capacity to govern is in short supply at the international level. It is difficult enough to develop effective instruments in multilateral arenas to deal with problems which are global or have such broad transboundary characteristics that they merit a multilateral response. The international system should not be taxed by attempts to manage risks which can and should be dealt with much more effectively at a lower level. As the UNEP regional seas programme and the UNECE work on acid rain demonstrate, issues which have transboundary implications which stop short of being global concerns are best dealt with at the regional level. Even then, the divergent risk assessments between polluters and the sufferers of pollution make the negotiation of effective instruments difficult enough, and there is inescapably potential for interests to pervade risk assessments. In the Baltic case, for example, Sweden had advantage with the technology for the oxygen bleaching of paper pulp and moves to phase out chlorine bleaching advantaged its national interests against those of Finland (Auer, 1996; Keohane et al., 1993). But moving to the multilateral level for regional problems, by adding to a negotiating process parties who have what is at best a tenuous connection to the causes and effects of the problems under consideration, clearly detracts from both the pace and quality of negotiations. Few would argue that the UNCLOS negotiations were improved by involving landlocked nations or the Convention on Desertification by going beyond those nations which actually have deserts. Developing shared assessments of risk constitutes such a challenge that it should be reserved for those instances where it is necessary because problems cannot be tackled at a lower level of governance. This is likely to narrow the ambition of much of the current agenda for international risk management, but it might also produce a broader scope for action than many might prefer. For example, concern over the risk that routinely adding antibiotics to poultry food might aid the development of disease-resistant organisms might lead states to restrict imports. What is wrong here is the unilateral nature of the action: any such risk is effectively one to a global public good since we would all suffer from the loss of the effectiveness of such drugs; hence the problem should be dealt with multilaterally. This process might be painfully slow, but it can be

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hastened if the multilateral system is required to deal less with issues which do not involve global public goods. Even then, we should expect divergent risk assessments to lead to differentiated responses to risks. As the chlorinated water example demonstrates, it is inevitable that nations at different stages of development, with different potential exposure pathways, economic uses and dispositions toward risk and other cultural values should reach different decisions about GMOs or chemicals. The environmental risks of DDT look substantially different to a poor tropical nation with malaria than they do to an affluent temperate nation with peregrine falcons, and it is an enormous challenge to incorporate both perspectives into multilateral negotiations. Here is a dilemma for the negotiation of MEAs: risk analysis, which highlights local differences in exposures and economic and other values, is likely to exacerbate differences rather than produce consensus, so will be eschewed by those seeking to progress multilateral agreements. Yet agreements which fly in the face of national assessments of risk are less likely to be implemented faithfully. The need is to find ways in which this dilemma can be addressed. It is a dilemma which would also appear to be relevant to issues of quarantine in the trade system: if quarantine risk assessments must inevitably reflect local exposure conditions, cultural values and economic values (read interests), how can their use for trade protection be minimized? (Note the modest ambition here: elimination is likely to be a pipe dream.)

SUGGESTIONS FOR REFORM There are some lessons to be drawn from the chemicals’ regime which might be applicable to other areas, such as quarantine and biosafety. The work of the intergovernmental forum on chemical safety has been valuable in producing internationally agreed statements of hazard which quite deliberately stop short of attempting risk assessment. Its Environmental Health Criteria documents are peer-reviewed surveys of the available science, and they set out not just toxicity data but information relevant to a consideration of exposure pathways. Politics can never be kept out of such matters completely, especially as selecting candidates for evaluation is essentially an agenda-building exercise, and this is a highly political undertaking. But such a process tends to keep values and interests out of the ‘hazard end’ of the risk management process to a much greater extent than has been the case with, for example, the IPCC. While the Biosafety Protocol agreed in January 2000 insists on science-based risk assessment which is sensitive to local exposures and risks, it establishes no similar mechanism for producing agreed hazard assessments. Because each


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GMO will require an individual risk assessment, there appears to be no basis for arbitrating between the interpretations of relevant science by exporting and importing parties. The Codex Alimentarius and the International Office for Epizooites are international bodies able to both reduce costs of assembling data and producing hazard assessments which reflect not just an international, but a scientific consensus. But it is a mistake to think that the products of such international institutions amount to risk assessment which take into account varying national uses or exposures. It is similarly dangerous to permit such bodies an overtly political role as the IPCC is granted by the Framework Convention on Climate Change, which commits parties to undertake action on the basis of IPCC reports, which are consequently the result of a process which is highly-charged politically. Rather than attempting the impossible goal of ‘objective’ risk management, and yielding to the temptation to reduce the subjective elements to technical formula, the two need to be integrated into the risk management process but kept as distinct as possible (Bradbury, 1989, p. 381). While science inevitably becomes ‘contaminated’ by interests to some extent, adherence to the scientific canons of reproducibility of results and publication after anonymous peer review provide our only protection against normative and interest-based ‘science’, where the protagonists are only too happy to muster evidence in support of theories. And while society pays the immediate costs for poor policymaking, there is a price to be paid by science as well. As Douglas has noted, ‘When science is used to arbitrate in these conditions, it eventually loses its independent status, and like other high priests who mix politics with ritual, finally disqualifies itself’ (Douglas, 1992, p. 33). The likely result, when ‘objective’ science is used to mask evaluative questions, is that the different sides to any dispute will simply engage their own experts, and science will be debased. An expectation of ‘scientific’ risk management is dangerous if it reflects not ‘objective’ research, but the biases of the scientist.2 Rather than trying to keep interests (and economists and other policy analysts) out of risk management, they need to be included at the appropriate stage, and made explicit. Simultaneously, values need to be kept out of science to the extent that is possible. This requires care in the crafting of institutions. The Codex Alimentarius provides a useful model of how nationally-based risk assessments might be conducted in a way which minimizes their use as trade barriers, because it sets out a process which should be followed. It seems much more likely that agreement is possible at the multilateral level on a harmonized process than on harmonized outcomes. But harmonizing processes would make for transparency and force the discipline of a common risk assessment process on parties, which would be preferable to allowing interests and norms to contaminate science.

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Disagreements would continue to surface, but it seems preferable that the arguments take place from the same premises, and a risk-assessment process common to both the trade and environment regimes might actually reduce conflicts between the two. This is because MEAs would more rarely embody risk assessments which reflected one set of hegemonic interests or values which (for parties to the MEA) would trump the trade rules. An agreed risk assessment process at the national level could serve as the basis for national actions under GATT article XX and as the basis for national action in accordance with an MEA, such as the Basel Convention. A risk assessment which could meet the required standard (potentially tested in a WTO dispute resolution panel) would have much less potential to serve as a trade barrier, and the attraction of misusing MEAs for this purpose would be lessened. Inevitably, sometimes a global assessment of risk must be made. When this is the case, it is essential to make sure it is shared as widely as possible or favours particular interests to the least extent possible. To this end, it should favour outcomes, not particular substances or technologies, since substances or technologies are likely to be the subject of intellectual property rights (or even comparative advantage) and such measures will favour one ‘bootlegger’ or another. Even here, a harmonized process, which differentiates as much as possible between the stages where science should be paramount and those where norms and interests rightly belong, would seem preferable than allowing the two to become entangled as they have so often in the negotiation of MEAs.

NOTES 1. Reductionism refers to the assumption that problems can be reduced to their components, and each understood in isolation. It is, ironically, a charge often levelled by ecology against other modes of science. It is used here to refer to the assumption that problems can be understood solely on the basis of natural science, in isolation from their social, political and economic contexts. Reductionism can, of course, be useful in simplifying complex phenomena. 2. As Cranor (1995) argued ‘Treating the identification and regulation of toxic substances mainly as a problem to be addressed by “objective” science will exacerbate current problems . . . and is to be avoided.’ See also Robert Formaini (1990), who argues convincingly from epistemological grounds that neither benefit–cost analysis nor risk management can achieve objectivity.

REFERENCES Anderson, Christopher (1991), ‘Cholera epidemic traced to risk miscalculation’, Nature, 354(6350), 255. Auer, Matthew R. (1996), ‘Negotiating toxic risks: a case from the Nordic countries’, Environmental Politics, 5, 687–99.


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Bennett, A.E. (1992), ‘The EEC viewpoint of the environment’, in J.A.G. Drake (ed.), The Chemical Industry – Friend to the Environment, Cambridge: Royal Society of Chemistry. Boehmer-Christiansen, Sonja (1994), ‘The Precautionary Principle in Germany – Enabling Government’, in Timothy O’Riordan and James Cameron (eds), Interpreting the Precautionary Principle, London: Earthscan, p. 56. Bradbury, Judith A. (1989), ‘The policy implications of differing concepts of risk’, Science, Technology and Human Values, 14, 380–399. Brenton, Tony (1994), The Greening of Machiavelli: The Evolution of International Environmental Politics, London: Earthscan. Brickman, Ronald, Sheila Jasanoff and Tomas Ilgen (1985), Controlling Chemicals: The Politics of Regulation in Europe and the United States, Ithaca, NY: Cornell University Press. Brown, Stephen L. (1992), ‘Harmonizing chemical and radiation risk management’, Environmental Science and Technology, 26, 2336–8. Cranor, Carl F. (1995), ‘Toxic Substances and Agenda 21: Ethical and Policy Issues in the Science and its Implementation’, in John Lemons and Donald A. Brown (eds), Sustainable Development: Science, Ethics and Public Policy, Dordrecht: Kluwer. Douglas, Mary (1966), Purity and Danger: An Analysis of Concepts of Pollution and Taboo, London: Routledge. Douglas, Mary (1992), Risk and Blame, London: Routledge. Downie, David Leonard (1995), ‘UNEP and the Montreal Protocol’, in Robert V. Bartlett, Priya A. Kurian and Madhu Malik (eds), International Organizations and Environmental Policy, Westport, CT: Greenwood Press. Fischoff, Baruch, Sarah Lichtenstein, Paul Slovic, S. Derby and R. Keeney (1981), Acceptable Risk, New York: Cambridge University Press. Formaini, Robert (1990), The Myth of Scientific Public Policy, New Brunswick: Transaction. Graham, John D. and Jennifer Kassalow Hartwell (1997), ‘The Risk Management Approach’, in John D. Graham and Jennifer Kassalow Hartwell (eds), The Greening of Industry: A Risk Management Approach, Cambridge, MA: Harvard University Press. Hanf, Kenneth and Arild Underdal (1998), ‘Domesticating International Commitments: Linking National and International Decision-Making’, in Arild Underdal (ed.), The Politics of International Environmental Management, Dordrecht: Kluwer. IPCS (International Program on Chemical Safety) (1997), Lead (EHC3), Geneva: PCS. Jasanoff, Sheila (1986), Risk Management and Political Culture, New York: Russell Sage Foundation. Jokinen, Pekka and Keijo Koskinen (1998), ‘Unity in environmental discourse? The role of decisions makers, experts and citizens in developing Finnish environmental policy’, Policy and Politics, 26, 55–70. Kellow, Aynsley (1999), International Toxic Risk Management: Ideals, Interests and Implementation, Cambridge: Cambridge University Press. Keohane, Robert O., Peter M. Haas and Marc A. Levy (1993), ‘The Effectiveness of International Environmental Institutions’, in Robert O. Keohane, Peter M. Haas and Marc A. Levy (eds), Institutions for the Earth: Sources of Effective International Environmental Protection, Cambridge, MA: MIT Press. Krewski, D. and P.L. Birkwood (1987), ‘Risk Assessment and Risk Management: A Survey of Recent Models’ in L. Lave (ed.), Risk Assessment and Risk Management, New York: Plenum.

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Levy, David L. and Daniel Egan (1998), ‘“Capital contests” national and transnational channels of corporate influence on the climate change negotiations’, Politics and Society, 26, 337–61. Paarlberg, Robert L. (1993), ‘Managing Pesticide Use in Developing Countries’, in Peter M. Haas, Robert O. Keohane and Marc A. Levy (eds), Institutions for the Earth: Sources of Effective International Environmental Protection, Cambridge, MA: MIT Press, pp. 313–14. Pistorius, Robin (1995), ‘Forum Shopping: Issue linkages in the Genetic Resources Issue’, in Robert V. Bartlett, Priya A. Kurian and Madhu Malik (eds), International Organizations and Environmental Policy, Westport, CT: Greenwood Press. Rodricks, Joseph V. (1992), Calculated Risks: Understanding the Toxicity and Human Health Risks of Chemicals in our Environment, Cambridge: Cambridge University Press. Schrader-Frechette, Kristin (1991), ‘Reductionist Approaches to Risk’, in Deborah G. Mayo and Rachelle D. Hollander (eds), Acceptable Evidence: Science and Values in Risk Management, New York: Oxford University Press, pp. 218–48. Schweitzer, Glenn E. (1983), ‘Toxic Chemicals: Steps Towards Their Evaluation and Control’, in David A. Kay and Harold Jackson (eds), Environmental Protection: The International Dimension, Totowa, NJ: Allanheld, Osmun. Shue, Henry (1995), ‘Ethics, the environment and the changing international order’, International Affairs 71, 453–61. Skolnikoff, Eugene B. (1993), The Elusive Transformation: Science, Technology and the Evolution of International Politics, Princeton: Princeton University Press. Vogel, David (1995), Trading Up: Consumer and Environmental Regulation in a Global Economy, Cambridge, MA: Harvard University Press. Wateron, Claire and Brian Wynne (1996), ‘Building the European Union: science and the cultural dimensions of environmental policy’, Journal of European Public Policy, 3, 421–40. Wildavsky, Aaron and Mary Douglas (1981), Risk and Culture, Berkeley: University of California Press. Wynne, Brian (1987), Risk Management and Hazardous Waste: Implementation and the Dialetics of Credibility, Berlin: Springer-Verlag. Yandle, Bruce (1989), The Political Limits of Environmental Regulation, New York: Quorum Books.

10. Reducing chemical risks: OECD and lead Kaye Dal Bon INTRODUCTION As with any risk reduction activity, key considerations for international chemicals management are identification and selection of target chemicals; assessment of associated risks; and determination of the need and form of risk reduction strategies. This chapter outlines the rationale and general character of international chemicals management and challenges facing international risk reduction drawing on experience with lead risk reduction in the Organization for Economic Cooperation and Development (OECD).

BACKGROUND In 1992, the UN Earth Summit1 (UNCED) identified two major barriers to sustainable chemicals use, particularly in developing countries. One was the lack of sufficient scientific information for assessment of risks posed by the many chemicals now in use, and the other the lack of resources for assessment of those chemicals for which data is available. An underlying principle of the international chemicals management programme outlined in UNCED Agenda 21, Chapter 19 is the need to avoid duplication and to maximize use of existing resources through harmonization and cooperative international effort. The potential for internationalization of hazard assessment is evident in the focus in Agenda 21 on accelerating the cooperative assessment of chemical risks, developing a globally harmonized chemical hazard classification and labelling system, and formalizing information exchange, including voluntary arrangements for prior informed consent for the import of hazardous chemicals.2 The need for complementary regulatory frameworks and technical capacity in toxicity testing and exposure analysis at the national level underlies the focus on capacity building. While recognizing that risk reduction is primarily a national responsibility, the potential for acting cooperatively on problems that are international in scope 135

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is demonstrated in proposals to establish broadly-based national risk reduction programmes, on developing common criteria for determining candidate chemicals for concerted activities, and on facilitating regional and international cooperation to phase out or ban chemicals that are toxic, persistent and bioaccumulative3 or that otherwise pose unreasonable and unmanageable risks (programme area D). In large measure, Chapter 19 of Agenda 21 was based on the concerns and experience of OECD countries, where cooperative efforts were directed initially at assessing hazards and harmonizing regulatory control of chemicals of general concern in the 1970s and 1980s,4 and later to harmonizing methodologies for testing and assessing chemical hazards, and testing and assessing the hazards of high production volume chemicals. These cooperative efforts attracted wide support within the OECD, including special budgetary contributions, and they delivered health and environmental benefits, economic efficiencies for the international chemicals industry and resource dividends for member countries through ‘burden sharing’. Concerted risk reduction was seen as a logical extension of these activities with scope to yield similar benefits in an increasingly internationalized chemicals market. In the event, the OECD pilot programme on lead risk reduction exposed several weaknesses in the underlying rationale for concerted action as a means of addressing ‘shared’, as distinct from ‘global’, problems. The most significant was the need for agreed criteria for selection of candidate chemicals and open and transparent processes to progress concerted activities; the complexities of moving from international hazard assessment to international risk assessment; and costs of attempting to impose prescriptive, ‘one-size-fits-all’ solutions to risk management for environmental, health, economic and administrative efficiency. The international chemicals management programme is scheduled for major review by the UN Commission for Sustainable Development in 2002 (Earth Summit + 10 years) and this will provide opportunities to build on the OECD experience. It should increase national capacity development and integrate chemicals risk management with health and environmental protection.

OECD LEAD RISK REDUCTION Genesis of the Risk Reduction Programme The OECD risk reduction programme had its genesis in 1989, when Sweden proposed5 adoption of the ‘substitution principle’ whereby chemicals considered incompatible with sustainable development (‘sunset chemicals’) and identified according to generally accepted criteria would be phased out totally, or restricted

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to use in certain circumstances when safer alternatives become available. An ad hoc OECD meeting hosted by Sweden in 1990 recommended a two-tier approach with efforts directed initially at risk reduction for a few important chemicals, followed by the development of a broad framework for risk management and criteria for application to specific chemicals.6 Member countries agreed to proceed on a ‘learning by doing basis’ and selected five chemicals, including lead, for a pilot project,7 on the grounds that they were of mutual concern to more than one country, were well documented and had a sponsoring country to steer them through the OECD process.8 The agreed objective was to prepare a status report for each chemical including the rationale for undertaking the study, the various uses, sources, environmental fate and pathways, essentiality of uses, availability of substitutes, and possible strategies for risk reduction at national, and as appropriate, OECD-wide levels. Concurrently, cooperative work on the assessment of existing chemicals and proposed extension to risk reduction was brought to the attention of the council, and an OECD council act decision–recommendation9 was adopted committing member countries to establish national risk reduction programmes, and recommending that member countries develop common criteria for selection of candidate chemicals and, where appropriate, undertake concerted action to reduce chemical risks by using a broad range of policy instruments encompassing regulatory and non-regulatory measures. The USA initiated work on lead in 1990, and was joined by Australia, Canada and Germany the following year. They formed a ‘clearing-house’ responsible for refining the report on the status of lead (later published as an OECD monograph)10 and for exploring opportunities for concerted actions. To build confidence in the completeness and value of the strategy documents, comments were sought from other government portfolios, non-governmental organizations, labour organizations, producers and users, although this interaction fell short of a partnership approach. This was the beginning of a six-year process, involving at times intense negotiations at 21 international meetings.11 They resulted in the adoption of a ministerial declaration on lead at the OECD environment ministers meeting in February, 1996. This experience accelerated the concurrent development of a policy framework for future OECD risk reduction activity and stimulated redesigning the work programme. The latter process is ongoing. Key Stages in the Lead Risk Reduction Process The limitations of this chapter do not permit a detailed narrative or analysis of the political dynamics and negotiating strategies throughout the process. Nor would that be appropriate here, although reference to specific country concerns

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and objectives is included to give meaning to the discussion of the issues. Critical stages in the process were: (a) Selecting candidate chemicals for the pilot trial which reflected strong US interests in the case of lead. (b) The monograph on lead risk reduction took over two years to prepare and exposed lack of consensus on the need for, and form of, any concerted risk reduction activity. During the negotiation process, contentious text in the monograph (see note 10) was edited out, leaving a hazard assessment and statements of national actions, either implemented or in-train. The effectiveness of these were measured by declining air, water and blood lead levels in all countries for which relevant data were available. While some entries pointed to the need for further work to manage national exposure from historical use, the monograph did not provide a basis for harmonizing existing control actions nor for further action at an OECDwide level. (c) In the absence of an agreed rationale, the decision to proceed with development of an OECD council act on lead risk reduction, an instrument of treaty status, led to re-examination of issues side-stepped in the monograph. These included identification of exposure pathways and risks that are transboundary in character (rather than trade in products per se) and which are appropriately managed by the OECD as distinct from other regional or international fora. (d) The Toronto workshop with wide government, industry and NGO participation (some 180 participants) examined possible transboundary exposure and risks, and scope for concerted action from nine products/uses of lead.12 The workshop concluded that, with the exception of the use of lead shot in wetlands, transboundary risks were limited or negligible in OECD countries, and were being addressed at national and regional levels. It was thought that exposure risks from products imported from non-OECD countries, while not significant, were best managed through development of international standards by the appropriate international body (for example, International Standards Organization). The workshop exposed trade considerations underlying some national positions, differences in philosophies informing national risk management responses and the significance of exposure problems in some non-OECD countries.13 (e) Renewed US pressures for a council act following the Toronto workshop were supported by the European Commission, which led to lengthy negotiations to achieve consensus on some output from the process to justify resources expended. A number of permutations and combinations were considered, the final options being a legally binding US/EC sponsored council act on lead restricted to existing legislation and strategies in


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member countries, or a politically binding ministerial declaration, wider in scope, providing greater flexibility in implementation, and including a voluntary, industry-funded action plan, targeted at international harmonization of product standards and capacity building/technical assistance for non-OECD countries. In the event, the ministerial declaration was chosen.14 (f) Under pressure from Australia and Canada, supported by a number of EU member countries,15 a policy framework for future OECD activity was developed at a meeting in Rome which defined programme objectives and articulated ‘Principles for Concerted OECD Risk Reduction Measures’ (known as the ‘Rome principles’). These contained a rationale for concerted measures, proposed selection criteria, OECD risk reduction measures, costs and benefits, and trade and environment considerations.16 Australia played a key role in developing the ‘Rome principles’ by preparing a number of background papers for the meeting.17 Subsequent meetings in Rome and Washington reviewed the work programme and voluntary approaches to risk reduction by industries.

ACCOUNTING FOR RISK IN INTERNATIONAL CHEMICAL AGREEMENTS Accounting for risk in international chemical agreements involves a mix of scientific and political considerations. The rationale for concerted action, selection of candidates, approaches to risk assessment, approaches to risk reduction, accountability for compliance and processes employed all have to be weighed. With this in mind, the issues raised in the course of OECD negotiations on lead risk reduction are discussed below. Rationale for Concerted Risk Reduction Differing rationales for concerted risk reduction emerged during the course of OECD negotiations. At the outset of those negotiations, Sweden argued for adoption of the ‘substitution principle’, a concept underlying domestic policy which requires that ‘all who import, manufacture or otherwise handle a chemical product are obliged to avoid such products that may be replaced by less hazardous ones’ (KEMI Report).18 The KEMI report goes on to say that, as many target chemicals are contained in products manufactured abroad, application of the ‘substitution principle’ requires: an international understanding so that they can be tackled at source i.e. when a product is manufactured. ... Import regulations concerning these substances or properties can

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have only limited effects owing to the presence of large quantities in goods ... At the same time, one must weigh the resources required to implement import regulations. Regulations which may be as conflicting with Swedish commitments under GATT may result in protracted negotiations with the EEC and other bodies.

As a matter of policy therefore, Sweden saw concerted OECD action as a means of giving effect to national policy preferences without concomitant trade disadvantage or border control costs. As noted in the monograph, political empowerment domestically was a background consideration,19 as was potential trade advantage.20 In early discussions leading up to the drafting of the 1990 OECD council act on the cooperative investigation and risk reduction of existing chemicals, three rationales were mentioned: • ‘sharing the burden’ of analysing and developing risk reduction strategies; • ‘the level playing field’ ensuring that one country, acting alone, does not impose added cost on its industry not faced by other countries; • ‘transboundary pollution due to the nature of releases into the environment or its trade in international markets’. The 1990 OECD council act, representing the consensus view of member countries is more circumspectly prescient than the discussion in the preamble claiming that: cooperative international efforts constitute an efficient and innovative way to apply economic and regulatory approaches for systematic investigation and reduction of risks of hazardous existing substances. ... cooperative work now under way on selected chemicals of concern to member countries to assess, to develop risk reduction strategies, and where appropriate, to take actions to reduce their risks will be of further value in this regard.

The foreword to the monograph on lead risk reduction drafted by the Secretariat is more expansive, revealing organizational ambitions in relation to carriage of Agenda 21, programme area D, and notes that: The risk reduction process normally begins at the national level. However, the international character of the use and marketing of chemicals, and the mobility of chemicals in the environment, have given risk reduction activities an international dimension. The new work on risk reduction in the OECD is a major step towards greater international cooperation, consistency and, ultimately, harmonization. It is designed to enable member countries to use a variety of instruments flexibly as part of a coordinated international initiative to reduce risk. … Where common interests emerge, the development and implementation of measured and consistent responses to unacceptable health and/or environmental risks can be facilitated.


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US sponsorship of lead, and intense pressure for an OECD council act, can be attributed to a number of factors. There were difficulties in managing domestic political pressures for action on lead, nationally and internationally, and in steering proposals for further domestic regulation through the US Congress. Also, in the case of lead, US commercial interests were aligned with environmental/public health interests providing a win–win solution for the United States at the cost of other member countries.21 EU member states were cautious about action throughout the OECD empowering the European Commission, but were conscious of forthcoming Swedish entry to the Union, and wished to avoid more rigid approaches. France and Italy also had health concerns with existing EC directives on the phase-out of lead in gasoline and were not inclined to empower the Commission further. Other member states were concerned that OECD processes did not set a precedent for managing risk reduction or for harmonizing risk reduction strategies for lead within the Union. There was considerable internal debate on carriage of the issue within the OECD. Although member states expressed their views freely within the meetings, carriage rested with the Commission, provided any proposed action was consistent with existing EC directives and did not raise new policy issues. Australia and Canada declared their interests as primary lead producers, drew attention to the GATT responsibilities of OECD member states, and supported cooperative action on transboundary exposures posing significant risks, rather than concentrating on trade in products per se. Even in the event of significant transboundary risk exposure, the case for ‘concerted’ as distinct from ‘national’ action needed to be justified. In this context it was noted that transboundary air pollution in Europe from the use of lead in gasoline, a legitimate concern, was already being addressed within the UNECE. When a prescriptive council act on lead risk reduction proposing concerted bans/phase-outs/restrictions on products containing lead was pursued in the absence of significant transboundary exposure risks requiring concerted action as agreed at the Toronto workshop, or in some cases in the absence of any significant exposure risk from the product, the expenditure of substantial resources to navigate the political shoals was hardly surprising. It put to rest claims that cooperative risk reduction is necessarily an efficient course of action, although the emergence of the industry action plan was innovative. With their thinking coloured by the lead risk-reduction experience, and having regard for the improbability of OECD-wide transboundary pollution, member countries agreed, in the ‘Rome principles’, that proposals for concerted action should be based on three criteria: • a sound assessment of the immediate and longer-term risks;

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• articulation of clear environmental/health goals considering national circumstances; and • that options for risk reduction should be considered in light of the need to obtain consensus within the OECD, the relative impact of options on environmental and health protection, and the requirement for national responses based on national exposures. The focus on national responsibility and flexibility, on ‘ends’ rather than ‘means’, and on proportionality of responses have wider international application. Pollution of the global commons is a collective matter, requiring burden sharing. These criteria were designed to minimize the influence of domestic political and trade agendas, including the use of multilateral fora for the export of national policy approaches. They have yet to be tested within the OECD and may well result in the transfer of national agendas to international fora where the concept of ‘shared responsibility’ for health and environmental protection was recently introduced in the Convention on Prior Informed Consent for the Importation of Hazardous Chemicals (PIC). This may provide greater scope for concerted action. Selection of Candidate Chemicals To the extent that any conclusions can be drawn about the benefits of lead risk reduction, neither national ‘hit lists’ nor a ‘chemical-centred’ approach proved particularly productive. Chemical hazard-centred criteria such as ‘toxic, persistent and bioaccumulative’ currently being translated into scientific terms in the context of negotiations for a convention on persistent organic pollutants (for example, toxicity end points, half lives and so on), and chemical riskcentred criteria such as ‘unreasonable and unmanageable risks’ are unlikely to resolve the dilemma. ‘Risk’ and hence risk reduction is a social/political/cultural construct as much as a scientific one and judgements are relative, depending on circumstances, rather than absolute. Issues such as the nature of exposure (voluntary or involuntary), attitudes to risk, costs and benefits, management capacity and alternatives come into play. Transboundary exposure risks affecting the global commons is a more useful starting point for consideration as was the case with ozone-depleting substances where financial support was provided for developing countries. Given the resource-intensive nature of risk assessment and finite resources available, priority considerations are relevant. This is particularly important for developing countries where competition for resources between national and international priorities is involved. In the interests of sound management of chemicals globally, linkage of transboundary exposure with significant health and environmental effects and consideration of the relative contributions from local and


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distant sources would moderate the political imperatives of major players and international organizations to ‘internationalize’ problems. The ‘Rome principles’ move away from chemical hazard criteria to environmental/health risk criteria as a basis for selection of candidates for concerted action within the OECD and impose ‘significance’ thresholds on the risks posed and the benefits gained, as well as ‘mutual advantage’ and ‘commitment’ thresholds. Arising from the lead experience they are equally relevant to chemicals risk management at the international level, given the costs of convention development. While as yet untested within the OECD, there is a body of regional and international experience with the management of chemicals in the context of air and water quality and land-based marine pollution to draw from. This has the benefit of promoting more holistic and integrated approaches outside the narrow confines of chemicals legislation. Selection criteria for future concerted risk reduction within the OECD now require that candidates be chosen on the basis that they pose significant risks, there is agreement they offer opportunities for OECD-wide measures and there is agreement to act. Decisions depend on the following: • an agreed risk assessment, preferably internationally accepted but, failing that, acceptable to OECD members; • chemists selected should have broad interest among OECD members who can contribute significantly to risk reduction; • problems targeted should have shared, transboundary or global ramifications and focus on risk exposure. The focus on careful definition of the problem at the outset is particularly important and avoids the ‘solution chasing a problem’ scenario encountered in lead risk reduction. Approaches to Risk Assessment The subject of risk assessment is complex and there are numerous opinions regarding both the methodology and its value. However, the generally agreed steps in the risk assessment process are hazard assessment and characterization, exposure assessment and risk characterization. Importantly, many multilateral forums now require some form of risk assessment as a prerequisite for international action. While Agenda 21, Chapter 19 recognizes the potential for internationalization of hazard assessment, this course is by no means straightforward. Science is not value free and selective use of hazard data sets as a means of achieving a political agenda for concerted risk reduction is not acceptable. For this reason, OECD has applied considerable effort to harmonize methodologies and

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standards for hazard assessment to ensure scientific rigour, independence, transparency and peer review. Also, work is proceeding in cooperation with the WHO International Programme for Chemical Safety (IPCS) to ensure the international acceptability of IPCS Environment Health Criteria documents, which provide hazard assessments and suggest appropriate exposure standards. On completion of this joint project, individual nations will, in future, be able to access agreed, scientifically rigorous hazard assessments as a starting point for national risk assessment. In contrast, the process of interpreting hazard and exposure information to provide a meaningful estimate of risk is best conducted at the national level.22 There is great diversity in both exposure and risk tolerance, at individual, population and society levels. For this reason the level of acceptable risk is recognized as a national prerogative,23 albeit that national standards employed to manage risks are subject to GATT considerations. The OECD lead monograph acknowledges this, noting that: the relative importance of any single source of exposure is difficult to predict. It will vary with geographic location, climate and local geochemistry. Similarly intensity of exposure can vary as a function of age, sex, occupation, socioeconomic status, diet and cultural practices ... Countries develop positions on the need for risk reduction only after they have analysed the hazard and the significance of certain exposures and have factored in local social, economic and political considerations. These positions are usually arrived at after considerable debate on the numerous factors involved and thus are not consistent across member countries ... Risk assessments that have led countries to take action are national in character and although some countries have taken the same set of risk reduction actions, no two countries have adopted the same set of risk reduction measures. This variance reflects in part the disparate sources of releases, exposures, concerns and priorities within countries.

International harmonization of risk assessment methodology for chemicals has attractions and work is proceeding through a joint IPCS/OECD project. However, early agreement is unlikely and the project has to clear greater hurdles than harmonization of hazard assessment methodology due to differences in underlying ethical and value preferences in the models employed. For historical reasons, philosophies applied to assessment of chemical risks differ from those in other fields. Unlike other areas of public policy where risks are balanced against benefits, chemicals risk management evolved from an assumption that public health could be completely protected. This became apparent when the US EPA attempted to apply chemicals risk assessment approaches to management of radiation risks.24 Thus ‘traditional’ methods of chemicals risk assessment rely on conservative methods to calculate exposure in a quest for safety in setting health/environmental standards. The utility of this approach has been challenged on the grounds of:


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• false precision which masks the wide range of uncertainty hidden behind confident numeric indicators of risk while qualitative information and empirical data are ignored;25 • false consistency arising, for example, from standard assumptions in models on high to low dose extrapolation in carcinogenicity tests when different carcinogens have different dose response curves; • lack of transparency arising from hidden choices or assumptions made about exposure. While new tools are available to analyse the uncertainties surrounding risk assessment and to take account of the critical nature of the ‘context’ of exposure, including consumer/public perceptions, their adoption at national levels is by no means widespread. However, application is being stimulated by new questions about the costs and benefits of regulation, the health and environmental gains per dollar invested, and the scope for increased returns from sensible risk comparisons and decisions by consumers and governments. As the risks posed by lead were never in dispute, assumptions underlying national risk assessment models were not challenged in the pilot project. Even assuming that methodologies are harmonized, ‘international risk assessment’ as a basis for international action remains a challenge, given national differences in exposure risks. In the absence of OECD leadership in this area, hazard-based approaches, and/or risk management actions by key developed countries, are likely to continue to dominate the international chemicals agenda. Approaches to Risk Management As with risk assessment, decisions on the need for and form of risk management action are closely linked with national circumstances and are taken after extensive debate. At the Toronto workshop it was agreed there was virtually no basis for concerted action on lead other than the possible development of international standards, responsibility for which rested elsewhere. There was no opportunity for harmonization of control actions as pressure for an OECD council act post-dated implementation of diverse strategies tailored to national circumstances. Moreover, exposures of continuing concern were national in character and did not provide a basis for cooperative endeavours (for example, historical site contamination and in some cases historical use of lead piping in domestic water reticulation systems and/or use of lead sheeting as a roofing material). Nor would concerted control action have been more cost-effective, given that member states were neither seeking to manage the ‘same’ problem domestically, nor in the ‘same’ way. While there was scope for harmonizing outcomes from lead risk reduction in the form of measurable health and/or environmental criteria, with national

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decision making on implementation strategies and policy instruments, this course was not pursued. Moreover, the need for OECD leadership vis-à-vis developing countries was met by means other than a council act of international treaty status, thereby avoiding counterproductive impacts on the economies and environments of developing countries.26 The strength with which opposing views within the OECD were held, and the time and resources consumed by the lead debate, demonstrate that in chemicals risk management, as with other areas of public policy, the ‘politics’ usually reside in the ‘means’ rather than the ‘ends’. As noted earlier, the preferred ‘means’ is closely linked with the rationale for concerted risk management, explicit or otherwise. While to some extent the debate reflects Yandle’s ‘Baptists and Bootleggers’ theory of environmental regulation, other factors are also at play.27 The OECD experience with lead highlighted differing choices by member countries in relation to their vantage point, rules, frameworks and processes for policy development. The vantage point from which chemicals risk management is viewed within OECD countries may be ‘chemical’-centred, ‘use’-centred or ‘public health/environment’-based. The choice of rules varies from utility based, through to rights-based and technology-based.28 The choice of policy frameworks is situated along the spectrum from traditional regulatory command and control models emphasizing compliance with inputs and processes (‘how to’), through to use of ‘beyond regulatory approaches’ harnessing industry expertise and innovation to achieve outcomes (‘what to’). Chemical management frameworks may be integrated with broader environmental health legislation frameworks or ‘stand alone’, and implemented through a unitary or federal system of government, influencing the policy instruments employed (regulatory, economic, voluntary industry measures). Measures vary from producer to consumer focused and are developed from adversarial through to consensual processes, with varying degrees of inclusiveness, transparency and accountability. While these differences are a product of the surrounding cultural milieu, in the case of lead risk reduction they were also driven by practical considerations. For example US federal government approaches to lead abatement in older housing involved some direct funding but also relied on extensive rule making (licensing and accreditation of workers engaged in paint removal, specification of paint removal processes and disposal of waste, disclosure in property contracts and so on) which added significantly to costs (estimated at $US40 000) per dwelling. In Australia, the Commonwealth Government adopted a pragmatic approach enlisting the cooperation of stakeholders (painters and contractors, paint manufacturers and distributors, hardware chains and so on). They developed a basic specification for lead removal to be used when giving quotes and for supervisory purposes. Practical advice to home renovators


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(the major market in Australia) was translated into community languages and widely distributed at the point of sale through hardware stores. With the phaseout of lead in petrol, practical considerations were influential. US circumstances favoured the use of an economic instrument, whereas in Australia the composition of the vehicle fleet, the derivative nature of vehicle standards and the fuel distribution system dictated a different course. These differences were pivotal to the rejection of the ‘one size fits all’ approaches to lead risk reduction within the OECD, and apply with even greater force at the international level. They were partially resolved through the ‘Rome principles’ which define the vantage point as agreed health/environmental goals, and adopt a utilitarian approach which recognizes the difficulties posed by rights-based approaches in the absence of an overarching jurisdiction and favours the competitive advantage and trade considerations associated with technology-based rules.29 Application of these principles has yet to be tested within the OECD or at the international level and poses the same dilemma as the ‘internationalization’ of risk assessment. For this reason current negotiations for a legally binding Convention on Persistent Organic Pollutants are watched with interest. Whereas methodologies for cost/benefit analysis have been developed at the national level following intensive debate,30 and theoretically could be harmonized, their international application is likely to be fraught with difficulties. There are significant differences between cost/benefit calculations at national and international levels, and there is no institutional structure to arbitrate trade-offs in the distribution of costs and benefits. Rather, countries seek to protect national interests through an intergovernmental negotiating committee process weighted in favour of major donors and trading blocks. Compliance and Accountability Mechanisms Clearly, the rigour attached to the selection of candidates, risk assessment, analysis of risk management approaches and processes employed, and the willingness of countries to agree to international chemicals management action, is a function of the obligations entailed and exposure to litigation both domestically and abroad. Put simply, the higher the burden, the higher the hurdle and the greater the insistence on justification for international action and open, transparent and inclusive processes. As experience with international negotiations accumulates, countries, including developing countries, are becoming increasingly wary of uncritical acceptance of international agendas promoted by major players. Even issues as apparently straightforward as information exchange can pose problems when elevated to the status of an international requirement as was the case with negotiations for a PIC convention. Whether the returns from the

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convention justify the effort remains to be seen, particularly in the absence of parallel national capacity building in developing countries. In the OECD context member countries are bound by membership criteria, operate on a consensual basis and are subject to OECD review and commentary on their performance (peer review). However, they are not accountable to the OECD in a political sense, although in the lead debate the use of the OECD as a mechanism for enhancing the accountability of governments was a recurring theme, as is sometimes the case with international negotiations.

DISCUSSION The OECD lead risk reduction experience is by no means unique and characterizes the issues, uncertainties and interests surrounding international risk management for chemicals. As noted in other conference papers, similar considerations apply to accounting for risk in other international environmental agreements and there is scope for harmonization. Progressive evaluation of international environment agreements and experience with implementation of GATT provisions for environmental protection are likely to stimulate the distillation of key principles and more disciplined approaches. In this context the value of the OECD experience lies in the subsequent development of a set of principles for concerted risk-reduction action (the ‘Rome principles’) which have wider international relevance. These principles call for an adequate understanding of the ‘real world’ problem from the outset followed by a scientifically rigorous and mutually acceptable risk-assessment process to enable the solution to be tailored to the problem rather than vice versa (that is, the specific nature of the health and environmental risks; the circumstances surrounding national chemicals use that give rise to them, including interactions with surrounding economic, social and cultural spheres; the relative significance of the risks posed; and international exposure pathways). This facilitates both the development of more effective solutions and commitment to action through information dissemination and confidence and/or capacity building. Where there is broad consensus on the risks posed and the need for action, the principles require the setting of specific environmental and/or health goals. These include analysis of solution pathways including the nature of international trade in the chemical under consideration, options for reducing exposure risks, and the scope for national responses based on national exposures, the relative contribution to specified goals and associated costs and benefits including distributional effects. Where substitution of alternative chemicals and/or processes is contemplated, a comparable assessment of substitutes is required to minimize unintended effects, including problem transfer. The principles recognize the need for qualitative assessment where data are not


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available, and invoke the precautionary principle, intra- and inter-generational equity and community right to know. Selection of the course of action must take efficiency and effectiveness into account, operate at the appropriate levels of government, provide national flexibility in the choice of policy instruments and, as far as practicable, use market forces and/or existing instruments or legislative frameworks. Where trade measures are deemed essential to the achievement of agreed goals, the principles require adoption of the least trade-restrictive measure, with any proposed product standards developed by the recognized international body with the appropriate expertise. By imposing transparency on the definition of the problem and analysis of solution pathways, the OECD principles aim to enhance the effectiveness of international responses while moderating capture of the agenda for reasons of policy hegemony or national economic advantage. While they appear onerous, supporting processes provide for a two-step process with detailed analysis preceded by an initial broad overview to identify the need for, and commitment to, concerted action.

CONCLUSIONS The ‘learning-by-doing’ approach to lead risk reduction within the OECD, while open to criticism, has made a valuable contribution to international chemicals risk management by crystallizing the issues involved. Cost-effective chemicals management at the international level requires agreed ‘ground rules’ and processes that recognize national differences and engender commitment to action where significant transboundary exposure risks of a global nature are involved. The OECD ‘Rome principles’ provide a framework for chemicals risk reduction at the international level and have wider application to risk analysis in other international agreements, albeit with fine tuning to the particular circumstances. Their further development and wider adoption would minimize environmental protectionism and facilitate sensible and more effective international responses to transboundary risks of a global nature. The OECD is well placed to provide international leadership in this regard as part of the current review of the international chemicals management programme, outcomes of which are scheduled for consideration in 2002.

NOTES 1. United Nations (1992), Report of the United Nations Conference on Environment and Development vol. 1, Rio de Janeiro, 3–14 June 1992, resolutions adopted by the Conference (United Nations).

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2. Negotiations for the Convention on Prior Informed Consent for Certain Hazardous Chemicals in International Trade (the PIC Convention) were completed in 1998. 3. Development of a Convention on persistent organic pollutants commenced in 1998. 4. Cooperative hazard assessments were prepared for cadmium, asbestos, mercury, polychlorinated biphenyls and chlorofluorocarbons resulting in OECD council acts on polychlorinated biphenyls (decision) and on mercury (recommendation). 5. The 13th Joint Meeting of the OECD Chemicals Group and Management Committee, 1989. 6. In 1992 a further ad hoc meeting in Sweden convened to consider criteria for selection of candidate chemicals, recommended that at least two countries must be in agreement on the need for cooperative risk reduction, and should a significant number (that is, 25 per cent) of OECD countries wish to pursue a cooperative programme, the Secretariat would need to be involved on the authority of the joint meeting. As other recommendations relating to the work programme were disputed, the joint meeting did not pursue the matter pending completion of the pilot programme. 7. Chemicals selected were lead (US), cadmium (EC), mercury (Nordic Countries), brominated flame retardants (Netherlands) and methylene chloride (Sweden and Switzerland). 8. Most activities within the OECD chemicals programme are undertaken voluntarily by member countries, with the Secretariat providing coordination support. 9. OECD (1990), Decision–Recommendation of the Council on the Cooperative Investigation and Risk Reduction of Existing Chemicals C(90)163/FINAL [adopted by Council at its 750th Session on 31 January, 1991]. 10. OECD (1993), Risk Reduction Monograph No 1: Lead – Background and National Experience with Reducing Lead Risk, Paris: Environment Directorate. 11. The process involved 16 meetings convened by the OECD Chemicals Group and Management Committee, one meeting of the Pollution Prevention and Control Group, two meetings of the Environment Policy Committee’s Steering Group for the Environment Ministers’ Meeting, two meetings of the Permanent delegation to the OECD, numerous conference calls and bilateral meetings. 12. The products/uses examined were lead shot and fishing sinkers, lead-based gasoline additives, lead glazes in ceramic ware, lead stabilizers in plastics, lead dyes in paints and inks, lead in water faucets/coolers, lead crystal, lead solder in food cans, and lead in municipal solid waste. 13. The workshop agreed that transboundary air pollution in the Northern hemisphere from leadbased gasoline additives is best managed by current UNECE deliberations within the framework of the UNECE Convention on Long Range Transport of Air Pollution, since concluded in the form of a protocol to the convention; that while not a significant exposure problem, any harmonized standards to prevent leaching of lead from ceramic ware, faucets, canned food and crystal should be safety based, not production-process based, and developed by the appropriate international body; and that there is scope for information exchange, including with non-OECD countries and harmonization of some terminology and testing methodologies. 14. Ministers adopted a Declaration on Risk Reduction for Lead on 20 February 1996, and endorsed an associated resolution linking countries’ declaration to the OECD which was subsequently adopted by the OECD Council. 15. Italy and the UK in particular were strong supporters. 16. Subsequently endorsed by the [OECD] 24th Joint Meeting of the Chemicals Group and Management Committee, February 1996, document no. ENV/MC/CHEM(96)9. 17. Four papers were prepared by the Australian delegation: Australian Proposals for Future OECD Approaches, The Role of the OECD in Chemicals Risk Management – A Strategic Perspective, Environmental Policy Aspects of Risk Reduction, Risk Assessment: Concepts and Critical Factors and Limitations, and Trade Aspects of Chemical Risk Reduction. 18. The Swedish National Chemical Inspectorate (KEMI) and the Swedish Environmental Protection Agency (SNV) (1991), Risk Reduction of Chemicals – A Government Commission Report. 19. ‘Recently, the Swedish Environment Protection Agency, in a report to government, has proposed a ban on the manufacture or import of leaded gasoline. The proposal has not been considered by government yet Sweden wishes to eliminate imported lead soldered cans ...’.


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20. ‘Sweden is also assisting with development of semi lead free crystal, and eventually wholly lead free crystal.’ Subsequently the Toronto workshop disclosed the competing interests of Irish and French crystal producers. 21. The US entry in the monograph notes that ‘Several additional regulations are under consideration by the USEPA to reduce exposure to lead in drinking water ... The US canning industry has taken the initiative to phase out the use of lead in cans since affordable processes for sealing the seams of tin cans are available ... The USFDA has published non-binding guidelines for acceptable levels of lead in ceramic ware which significantly reduce previous levels.’ At the Toronto workshop it became clear that US manufacturers wanted to ‘level the playing field’ through adoption of US standards by their EU counterparts and that US companies were dominant players in the world market for substitutes for tetraethyl lead in gasoline (alternative additives and reconfiguration of refineries). 22. ‘Ideally technical issues such as procedures, tests, the types of data needed, and the manner of their collection could be harmonized by international agreement, while leaving the level of acceptable risk to be set by sovereign states’ (Stonehouse, J.M. and J.D. Mumford, 1994, Science, Risk Analysis and Environmental Policy Decisions, UNEP, Geneva, 68). 23. ‘While countries may understandably and legitimately adopt standards implying different levels of control over environmental risks, there are economic and environmental gains to be obtained if procedures for risk assessment are harmonized internationally. Procedures can be agreed upon internationally without impinging on each country’s authority to decide for itself the level of acceptable risk’ (UNEP, 1994, Trade and Sustainable Development, p. 40). 24. Brown, Stephen L. (1992), ‘Harmonizing chemical and radiation risk assessment’, Environmental Science and Technology, 26(12), 2336–9. 25. The following US example is drawn from a workshop presentation by Gray, George M. (1996), Harvard Centre for Risk Analysis, Harvard School of Public Health on Risk Assessment: The Key to Risk Management, Angers, France – according to theoretical riskassessment models employed, pesticide exposure from celery had a numerical value of 15 units, compared with actual residue measurement at the farm gate of 4.07 units, and actual residue monitoring of food from the supermarket of 0.12 units (the latter difference due to washing processes in the distribution chain). 26. Thorpe, S., N. Klijn and A. Cox (1995), Lead: Economic Effects on the Lead–Zinc Industry of Possible OECD Risk Reduction Measures for Lead, Canberra: ABARE. 27. Yandle, B. (1989), The Political Limits of Environmental Regulation, New York: Quorum Books. 28. Utility rules involve trade-offs and attempt to maximize net benefits based on analysis of the costs and benefits of a proposed action including non-quantifiable benefits; rights-based rules replace the notion of utility with one of justice and specify that there are some things one party cannot do to another without consent, regardless of costs and benefits; technology-based rules are not concerned with costs, benefits and rights, but rather with the level of technology available to control certain risks (Morgan, Granger M., 1993, ‘Risk analysis and management’, Scientific American, July). 29. COM/ENV/TD(95)48/Final: ‘Report on Trade and Environment to the OECD Council at Ministerial Level’ (developed jointly by the Environment Policy Committee and the Trade Committee). 30. A recent and well publicized example is the ‘Guidance on Benefit–Cost Analysis’ promulgated by the US Office of Management and Budget following lengthy negotiations with the US Congress.

PART IV

National Risks and Quarantine Standards

11. National risk management and the SPS agreement David Wilson and Digby Gascoine THE SPS AGREEMENT Since GATT came into effect in 1948, national regulations on animal and plant health, and food safety measures which affect trade have been subject to international rules. GATT article I, the most-favoured nation clause, has required non-discriminatory treatment of imported products from different foreign suppliers, and article III has required that such products be treated no less favourably than similar domestically produced goods, with respect to any regulations. After the Uruguay Round negotiations, the WTO superseded the GATT, although the rules of GATT (1994) continue to apply when not superseded by a more specific WTO agreement. The Uruguay Round developed new agreements on technical barriers to trade. Sanitary and phytosanitary (quarantine) measures introduced specific concerns for trade, so the separate SPS agreement was ‘carved out’ of the TBT agreement. The SPS agreement, is concerned with the application of food safety and animal and plant health regulations to international trade in animals, plants and their products. The TBT agreement replaced a ‘voluntary’ code negotiated in the Tokyo Round negotiations. The negotiation of the SPS agreement was motivated by concerns that, unless clear rules existed on the use of sanitary and phytosanitary measures, the gains achieved in the negotiations on agricultural trade, in particular, would be eroded by the imposition of new or additional quarantine restrictions and standards. The TBT and SPS agreements differ in scope. The TBT agreement covers all technical regulations and voluntary standards, and the procedures to ensure that these are met, while the SPS agreement applies to measures to protect human, animal and plant life and health. It is therefore the type of measure which determines whether it is covered by the TBT agreement, but the purpose of the measure which is relevant in determining whether a measure is subject to the SPS agreement. The two agreements have common elements, including basic obligations for non-discrimination and similar requirements for the advance notification of 155

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proposed measures and the creation of information offices (called enquiry points). Prior to the Uruguay Round outcomes, SPS outcomes were covered by GATT article XX (b) which permitted countries to take measures ‘necessary to protect human, animal or plant life or health’, as long as these were not applied in an arbitrary or unjustified manner; that is, neither discriminated between countries where the same conditions prevailed, nor acted as a disguised restriction on trade. The SPS agreement established the SPS committee to monitor and review quarantine measures. It provides a forum for information exchange and discussion on issues affecting trade, it examines compliance issues and it ensures orderly implementation of the agreement. The SPS committee, open to all WTO members, normally meets three times a year, with informal or special meetings when necessary. Representatives of relevant intergovernmental organizations are invited to attend meetings as observers, including Codex Alimentarius, Office International des Epizootics (OIE), International Plant Protection Convention (IPPC), Food and Agricultural Organization (FAO), World Health Organization (WHO) and the International Standards Organization (ISO). The SPS agreement provided for a review of its operation and implementation after three years, and thereafter as necessary. In conducting the review in 1998, the SPS committee has emphasized the provisions relating to transparency, notification procedures, the special needs of developing countries, and technical assistance and cooperation.

KEY FEATURES OF THE SPS AGREEMENT The SPS agreement applies to all measures put in place to protect human, animal and plant life or health which, directly or indirectly, affect international trade. Sanitary (human and animal health) and phytosanitary (plant health) measures apply to products produced within a country (national treatment), as well as products imported from or exported to other countries. The agreement does not cover international movements unrelated to trade (for example, the movement of animal pets from country to country). SPS measures are defined as: • measures to protect human or animal life or health from risks arising from additives, contaminants, toxins or disease-causing organisms in their foods, beverages or foodstuffs; • measures to protect human life or health from risks arising from diseases carried by animals, plants and their products, or from the entry, establishment or spread of pests;

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• measures to protect animal or plant life from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms; • measures to prevent or limit other damage to a country from the entry, establishment or spread of pests. These include measures to protect the health of fish and wild fauna, as well as forests and wild flora. Measures for environmental protection (other than as defined above), to protect consumer interests or for the welfare of animals are not covered by the SPS agreement, but are addressed in other WTO agreements (including the TBT agreement and GATT article XX). The key provisions of the SPS agreement are: • SPS measures be applied only to the extent necessary to protect human, animal or plant, life or health; • SPS measures be based on scientific principles and not maintained without sufficient evidence; • SPS measures not be applied in a way which arbitrarily or unjustifiably discriminates between countries where identical or similar conditions prevail, including between conditions within a country and other countries; • SPS measures not be applied in a manner which would constitute a disguised restriction on international trade; • SPS measures be based on international standards, guidelines or recommendations, where these exist, except to the extent that there is scientific justification for a more stringent measure, or where a member determines in a non-discriminatory way that a higher level of protection is appropriate to its circumstances; • SPS measures conforming to international standards, guidelines or recommendations are presumed to be consistent with the agreement; other measures must be based on a risk assessment taking into account available scientific evidence and relevant economic factors; • the use of risk analysis in determining measures to provide the appropriate level of protection (acceptable level of risk) in the least trade-disruptive manner; • an importing country may adopt provisional measures when there is insufficient scientific evidence, but additional information must be sought to allow a decision within a reasonable period of time; • the concept of regionalization of pests or diseases; • the concept of equivalence of measures between members.

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These provisions do not sanction the adoption or maintenance of measures by one country against another on the grounds that the second country is maintaining objectionable SPS restrictions. Scientific Basis for Decisions Importing countries may impose measures necessary to protect life or health, provided they are not inconsistent with the SPS agreement, and they are justified to provide the level of SPS protection necessary. It requires that such measures be applied for no other purpose than to ensure human, animal and plant life and health. The SPS agreement also establishes the conditions to be taken into account in the assessment of risks. It builds on previous GATT rules to restrict the use of unjustified quarantine measures for disguised trade protection, while acknowledging a member country’s sovereign right to provide the health protection it deemed appropriate. WTO members have an obligation (SPS article 5.5) to avoid arbitrary or unjustifiable distinctions in the levels of protection applied in different situations, if such distinctions result in discrimination or disguised trade restrictions. This is necessary to maintain consistency in applying the concept of the appropriate level of protection (ALOP). It is not open to a member government to vary approaches to the acceptance of risk. An authority cannot take a very conservative approach to risk for entry of one commodity while accepting a much higher level of risk for another commodity. This differentiation could be based on domestic industry needs. Guidelines are being developed by the SPS committee to achieve consistency in risk management. Applying the concept of equivalence minimizes the costs associated with international trade and facilitates the use of systems which apply objective riskbased SPS measures. Before trade in animals and their products may occur, an importing country must be satisfied that its animal health status will be appropriately protected. In most cases, the animal health import requirements drawn up will rely on judgements about animal health systems in the exporting country and the effectiveness of sanitary measures undertaken there. Systems operating in the exporting country may differ from those in the importing country with respect to both infrastructure and procedures. Differences may result from different definitions of pests and diseases or different approaches to the hazards presented. International recognition of the legitimacy of different approaches to achieving the same animal and plant health objectives has led to the principle of equivalence being included in trade agreements, including the SPS agreement. Equivalence may be defined as the demonstration by an exporting


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country that its quarantine standards addressing a specified hazard meet the importing country’s ALOP. Transparency is also important in the development and application of SPS measures. SPS article 7 requires government members to notify any changes; annex B details members’ responsibilities. In an emergency, member governments may act to introduce new, or to revise existing, measures without delay but must immediately notify other signatories. Member countries must notify any intention to introduce a new SPS measure not consistent with a relevant international standard, or the intention to change an existing measure. The member developing the measure should allow a reasonable time for other members to comment on the proposal (normally 60 days) and should take into account comments received. All WTO governments must maintain an office or enquiry point, designated to receive and respond to any requests for information about quarantine measures, such as control, inspection and approval procedures which operate within their territory, and information on risk analysis procedures and international agreements adopted. Member governments are obliged to recognize when establishing SPS measures that imported products may originate from pest or disease-free areas. International standard-setting organizations have developed guidelines on surveillance and monitoring standards necessary for pest or disease-free status. National Treatment Conflicts can arise over the relationship between national measures and those imposed on imports. SPS article 3 allows national measures to differ from international standards, but under article 2 requires no discrimination between national measures and the measures applied to similar commodities produced in another member country, nor between countries whose products present equivalent risks with regard to imports. Animal and plant health and food safety regulations may be set by other than the highest governmental authority in a member’s territory but the national governments remain responsible for implementation of the SPS agreement. Risk Analysis SPS article 3 requires that quarantine measures are harmonized, that is, based on international standards, guidelines and recommendations unless there is scientific justification for measures giving a higher level of health protection, or where a member determines in a non-discriminatory way that a higher level of protection is appropriate to its circumstances.

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Quarantine measures not conforming to international standards, guidelines or recommendations should be based on a risk analysis (article 5) taking account of available scientific information and relevant economic factors. In developing such measures, member governments are required to ensure that an appropriate level of protection is provided in the least trade-disruptive manner. In determining the measures to be applied to protect animal and plant health, an importing country may take economic factors into account. These include potential damage to production or sales in the event of the entry, establishment or spread of a pest or disease, the costs of control or eradication of an outbreak and the cost of programmes to manage such responses, the costs associated with the loss of markets either nationally or internationally, and the relative cost-effectiveness of alternative approaches to limiting risks. Import risk analysis is a science-based process involving: • identification of the hazards (pests and disease agents) which might be associated with the commodity under examination; • assessment of the probability of the hazards establishing themselves in the importing country’s animal or plant populations through the commodity; • assessment of the impact of such establishment; • development of risk management options – these might range from no restriction on trade, through various testing/treatment regimes to a prohibition on trade; • selection of the option which best meets the importing country’s ALOP; • development of quarantine procedures which put that option into place. Import risk analysis must take an objective approach to the risks presented and the risk management options, and should follow internationally agreed methods where they exist. The choice of a quarantine measure must have a clear and direct relationship to the risk assessment. To this end the importing country must, if requested, make known what factors it took into consideration, the assessment procedures used and the level of risk it determined to be acceptable. Dispute Settlement While a government’s ability to establish requirements to protect human, animal and plant life and health is not restricted, a specific requirement can be challenged by another member country. Typically, a dispute arises if action has been taken that violates WTO trade rules or does not meet WTO obligations (GATT articles XXII and XXIII). Other member countries can participate as third parties. Only governments, not private entities or non-governmental organizations, can initiate dispute procedures in the WTO.


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The WTO’s dispute settlement procedures encourage the parties to find mutually acceptable solutions by consultation. If a compromise cannot be reached, the WTO may help the parties through good offices, conciliation, mediation and arbitration, with an emphasis on the settlement of disputes by consultation. The WTO dispute settlement process is discussed more fully in Chapters 2–5 (this volume). SPS disputes have been important to establish the role of quarantine regulations in the trade system, and the role of scientific experts in determining risk.

RELATIONS WITH INTERNATIONAL STANDARDS The SPS agreement encourages the adoption of international standards, guidelines and recommendations. The international organizations recognized as responsible for establishing these international standards, guidelines and recommendations include the joint FAO/WHO Codex Alimentarius Commission, (the international animal health organization, OIE) and the relevant international and regional organizations operating within the framework of the FAO, such as IPPC. • The joint FAO/WHO Codex Alimentarius Commission develops international standards for food safety, covering food additives, drug and pesticide residues, and microbiological contaminants. • The OIE is recognized as the international organization responsible for establishing and maintaining animal health standards and guidelines for international trade in animals and animal products. • The contracting parties to the IPPC cooperate in the development of international standards in accordance with agreed procedures, and these are applied to plant health. These international standards are not binding except under the provisions of the SPS agreement. Some differences over definitions and consistency among the various standards are reviewed to ensure maximum adoption. The SPS agreement influences the work of these international standard organizations. • The OIE has accepted the need to review its International Animal Health Code to ensure it supports SPS obligations. It is also reviewing the way standards are developed and amended to ensure that transparency and risk analysis are addressed.

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• The recent revision of the International Plant Protection Convention (IPPC) explicitly introduced the concept of pest risk analysis and mandated such analysis as one of the responsibilities of official national plant protection organizations (IPPC, 1996). • The FAO/WHO Codex Alimentarius Commission and its subsidiary bodies have extensively examined the application of risk analysis to the formulation of food standards and are committed to use risk analysis in a transparent and consistent way. One consequence of the increased importance of these international standards is that international agreement to new standards has become more difficult to achieve and therefore controversial. The danger exists that meetings of these organizations will become another arena for trade disputes.

QUARANTINE RISK MANAGEMENT PRACTICES The SPS agreement has already had a beneficial impact on the design and implementation of animal and plant health and food safety measures affecting international trade. The principles and procedures developed in the SPS agreement provided a more transparent and disciplined framework for bilateral and multilateral discussions on quarantine SPS issues. Countries anticipated the new trading environment and revised their regulatory regimes to conform with the draft rules. By requiring quarantine regulations to be published, countries become committed to science-based decision making. Other countries which had previously asserted their sovereign right to impose trade restrictions on grounds of quarantine were exposed to legal disciplines.

QUARANTINE RISK ANALYSIS IN AUSTRALIA In August 1997 the Australian government released its response to the major review of Australian quarantine (Nairn et al., 1996). It identified seven key themes: • • • • • • •

managed risk, based on science, a continuum of quarantine (pre-border, border, post-border), community responsibility, consultative decision making, external input to quarantine policy, enhanced capacity in plant and fish quarantine, delivering quarantine objectives.


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The government increases resources for quarantine policy and operations to give effect to specific recommendations of the Nairn report. The management of risk became central to both the development of quarantine requirements and to their application. Handbook on risk analysis Quarantine policy has received wide public attention since 1996 and risk analyses on import of traded commodities have become the focus of political decisions. The Handbook on the AQIS Risk Analysis Process (AQIS, 1998) sets out for stakeholders and other interested parties the process followed in developing and reviewing quarantine policies for plants, animals and their products imported into Australia. The process is designed to ensure that risks of entry, establishment and spread of pests and diseases, and their potential impacts are evaluated fully; that importation is only permitted when such risks can be managed in a manner consistent with Australia’s very conservative approach to pest and disease risk; and that stakeholders are fully informed and satisfied with the process followed. Australian quarantine legislation has been amended recently to reflect current policies and practices, and to ensure consistency with international obligations. The concept of ‘quarantine risk’ and its management at an acceptably low level has been formally introduced. The procedure followed by AQIS in analysing sanitary or phytosanitary risk is based on international standards established under the auspices of the OIE and the IPPC (annexed to the AQIS handbook). In broad terms, the elements of the risk analysis process are: • hazard (pest or disease) identification and characterization, • risk assessment, evaluating the potential for a pest or disease to enter Australia and cause damage, and the likely scale of that damage, • risk management involving the choice of control measures necessary to limit risk to an acceptably low level, • risk communication, involving the exchange of information with stakeholders. Operational procedures Optimal risk management is a key consideration in the administration of quarantine requirements on Australia’s borders. Systems are designed and resources are assigned to minimize overall risk. Examples include focusing on particular commodities known to be associated with higher risks, methods of transport known to be associated with the intentional or inadvertent breach of

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quarantine requirement, passengers (and their baggage) originating from countries where significant pest and disease problems exist and so on. Stakeholders in the quarantine risk management processes cover a wide range of interests. Those who elect to engage most actively in public consultation are typically participants in domestic industries (and their representative organizations) which are at risk from the entry of exotic pests and diseases, and/or from import competition. Their views tend to contrast with the opinions of those who stand to benefit from liberal trade policies, the importers, consumers, user industries and so on. Apart from these sectional interests, there is a broad community interest in the maintenance of an appropriate level of sanitary and phytosanitary protection of the natural and built environment against pests and diseases. It also relates to the balance of community benefits which derive from maintaining balance between liberal trade and the costs associated with greater exposure to pest and disease risks.

RISK MANAGEMENT ISSUES IN THE WTO Since 1 January 1995, WTO members are under obligation to conform to the provisions of the SPS agreement. Nevertheless, many terms in the SPS agreement are ambiguous. What is sufficient scientific evidence for an SPS measure? What constitutes an assessment appropriate to the circumstances of the risks to human, animal or plant life or health? How will the objective of achieving consistency in the application of the concept of the appropriate level of sanitary or phytosanitary protection be implemented or verified? Some of these issues have been addressed in formal dispute settlement proceedings which are providing a body of case law. Others need to be examined by the SPS committee. According to SPS article 2.2, members have an obligation not to maintain an SPS measure without sufficient scientific evidence. Members may provisionally adopt SPS measures (under Article 5.7) if the measure is imposed with respect to a situation where ‘relevant scientific evidence is insufficient’ and the measure is adopted on the basis of ‘available pertinent information’, provided additional information is sought for an objective assessment of risk within a reasonable period of time. This provision follows a ‘permitted list’ approach, common in quarantine control regimes. This allows entry of all items or commodities of particular classes to be prohibited without specific evidence of risk until a risk assessment has been carried out. Conservative quarantine policies are commonly adopted because there is a lack of sufficient evidence on which to base an import risk analysis; many pests and disease agents do not have high international interest and have not been the subject of research relevant to quarantine decision making. This requires new research to develop evidence.


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For example, AQIS commissioned laboratory research into the effect of heat on several viruses which cause major diseases in poultry. This work provided the basis of conditions subsequently specified for the importation of cooked chicken meat to Australia. What constitutes sufficient scientific evidence was a central consideration in the recent WTO dispute settlement proceedings between the United States and Japan (agricultural products). The United States challenged Japan’s requirement for testing to establish the efficacy of disinfestation treatment on each variety of apple that the United States exported to Japan. The finding of the dispute settlement panel was that the Japanese measure was not based on sufficient scientific evidence in that the Japanese authorities were unable to adduce evidence that the efficacy of treatments differed between apple varieties. The United States presented evidence that varietal differences do not matter for quarantine effectiveness. Measures not based on scientific evidence can only be maintained temporarily under the protection of SPS article 5.7. However, in many cases there is at least some evidence on each side, and it becomes a matter of opinion whether that evidence is ‘sufficient’. Judgement of the evidence must address its relevance to the issue under consideration and its reliability (for example, was empirical work carried out in a reputable laboratory, and so on, according to well-accepted experimental protocols). WTO dispute settlement panels can call on expert scientific opinion to guide their deliberations on such matters. It would be sensible for WTO members similarly to address their problem by seeking consensus amongst relevant experts. Appropriate Risk Assessment The SPS agreement requires that an animal or plant quarantine measure not meeting an international standard, guideline or recommendation, must be based on an evaluation of the likelihood of entry, establishment or spread of a pest or disease within the territory of an importing country according to the sanitary or phytosanitary measures which might be applied, and of the associated potential biological and economic consequences. On the basis of this definition, the Appellate Body examining Australia’s appeal against the dispute settlement panel’s finding on Australia’s prohibition of imports of Canadian salmon considered that a risk assessment within the meaning of SPS article 5.1 must: • identify the hazards whose entry, establishment or spread within its territory a member wants to prevent, as well as the associated potential biological and economic consequences;

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• evaluate the likelihood of entry, establishment or spread of these hazards, as well as the associated potential biological and economic consequences; • evaluate the likelihood of entry, establishment or spread of these hazards according to the SPS measures which might be applied; measures which might be applied are those which reduce the risks to the appropriate level, with the aim of being least trade restrictive. The Appellate Body believed that, for a risk assessment to fall within the meaning of SPS article 5.1 and the first definition in paragraph 4 of SPS annex A, it was not sufficient that it conclude that there is a possibility as well as the ‘likelihood’ (that is, the ‘probability’) of entry, establishment or spread of diseases according to the SPS measures which might be applied. The experts advising the panel on this issue came to the conclusion that the Australian 1996 final report on Canadian salmon did not appropriately assess probability. The Appellate Body also considered that the risk must be an ascertainable risk – theoretical uncertainty is insufficient. Provided that they are science-based, use accepted procedures and reach conclusions supported by the evidence, qualitative and quantitative risk analyses are equally valid. In practice, in animal and plant quarantine, almost all risk analyses will be qualitative because data on relevant hazards and on exposure pathways are incomplete. In many cases, expert judgement is used to bridge gaps in knowledge. It is not clear from the SPS agreement where the obligation rests to obtain or generate the information necessary to allow a risk assessment to be carried out. Superficially, this burden appears to rest with the importing country (that is, the country applying a restriction on trade), but international practice acknowledges that some of the information required has to be provided by the exporting country’s authorities. For example, the exporting country is normally expected to be aware of its own pest/disease status and to be able to nominate which pest or diseases may potentially be carried by its exports. It is also common practice that exporting countries are expected to demonstrate the efficacy of disinfestation treatments. This is not a small issue, because of the costs of conducting surveys, or scientific trials to establish or verify relevant parameters. Appropriate Level of Protection The SPS agreement defines ‘appropriate level of sanitary or phytosanitary protection’ as the level of protection deemed appropriate by a member government establishing such measures. This is the concept of ‘acceptable level of risk’.


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The SPS article 3.3 allows that: Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations, if there is a scientific justification, or as a consequence of the level of sanitary or phytosanitary protection a member determines to be appropriate in accordance with [other provisions of the agreement].

The Appellate Body examining Australia’s appeal against the decision on Canadian salmon considered that this article did not contain an explicit provision that obliges members to determine the appropriate level of protection (ALOP), but that such an obligation is implicit in several provisions of the SPS agreement. A country has the sovereign right to determine its ALOP. This is not an unfettered right but must take into account the objective of minimizing damage to trade. Determination of ALOP depends on social judgement and the SPS agreement does not offer a scientific basis for that determination. This does not mean, however, that a level of protection should not be subject to relevant provisions of the SPS agreement such as article 5.6. A guide to the ALOP is community and industry acceptance of quarantine decisions taken. A balance must be struck between the risk of pest or disease incursion, and the potential for damage, and the benefits of trade which include access to products of other countries for both consumption and investment. Consistency To be found to have acted inconsistently with SPS article 5.5, the Appellate Body on Canadian salmon considered that a country must not have met all of the conditions: • the same ALOPs should apply to all situations; • levels of protection should not exhibit differences which are ‘arbitrary or unjustifiable’; • the measure should not result in ‘discrimination or disguised restrictions on international trade’. Situations cannot be compared under SPS article 5.5 unless they contain some common elements. They can be compared, however, if these situations involve either a risk of entry, establishment or spread of the same or a similar hazard, or a risk of the same or similar ‘associated potential biological and economic consequences’. There is no need for all hazards to be in common.

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Guidelines are being developed by the SPS committee to assist members in the implementation of their obligations with regard to consistency.

STRENGTHENING THE SPS The benefits of the SPS agreement far outweigh the costs. The gains have been real and further benefits will accrue if members allow it to work. Increasingly quarantine decisions come under close scrutiny, as the salmon decision has shown. While most developed countries and a number of developing countries have embraced the SPS principles, the message has not been heard in all developing countries or the emerging Asian economics. The obligations of the SPS agreement and the links with the relevant international standards are not understood, and many do not have the scientific capacity to meet their obligations. The disciplines of the SPS agreement can also be deflected by ‘trade clout’. Countries’ rights can be qualified in a very direct way by wider trade considerations or associated perspectives on the loss of international ‘goodwill’ should SPS rights be vigorously asserted. Many ambiguities in the drafting of the SPS agreement remain. The process of resolving these matters is proving slow and new concerns about food labelling and GH crops add another dimension. While there are processes identified to resolve these and other questions, new compromises will be difficult. Some governments have become disgruntled by early ‘case law’ decisions that emerge from the dispute settlement process. In the absence of negotiated agreement on many of these questions, the answers are provided not by relevant authorities of trading countries but by independent, non-technical members of dispute settlement panels and the Appellate Body. But there has not been an SPS case that has demonstrated the SPS agreement is failing. It does not therefore need fundamental review. Most countries are headed in the right direction in terms of their reactions and the amendments to their systems.

REFERENCES AQIS (1998), Handbook on the AQIS Risk Analysis Process, Canberra: Department of Primary Industries and Energy. Nairn, M.E., P.G. Allen, A.R. Inglis and C. Tanner (1996), Australian Quarantine: A Shares Responsibility, Canberra: Department of Primary Industries and Energy.

12. Risk and protection for grains: analysis and quarantine Donald MacLaren 12.1 INTRODUCTION The agenda for agricultural trade negotiations in the WTO has expanded during the 1990s and the relative importance of items on that agenda has altered. It has grown to include not only the traditional areas of variable import levies, import quotas, domestic assistance and export subsidies, but greater weight has now been placed on the newer issues of the technical barriers to trade which stem from the public’s increasing concerns about food safety and environmental protection. For example, in the European Union during 1997, concerns about BSE, about pesticide and antibiotic residues in foods, about contamination of foods by bacteria, and about genetically modified organisms in food products, led two-thirds of respondents in a survey on food safety to express concerns about food safety (EU, 1998). In the same year, fire blight disease again became a source of tension between Australia and New Zealand because of the former’s continued refusal to lift a quarantine ban on imports of apples from the latter; China banned imports of all wheat from the United States because of an outbreak of karnal bunt in some regions of the US; and the long-running dispute between the US and the European Union about the latter’s ban on imports of beef produced using synthetic growth hormones (beef-hormones) was eventually settled by a WTO dispute panel and then by an Appellate panel in favour of the former.1 In Australia during 1994, there was considerable debate about the wisdom of considering the importation of bulk grains in order to alleviate the shortage of food for the feedlot beef industry. Until that time Australia had banned all such imports, although permitting supervised imports of small quantities of grains for plant breeding programmes. The Australian Quarantine and Inspection Service (AQIS) is responsible, inter alia, for administering the conditions under which imports of plant material enter the country. These conditions are determined by the Quarantine Act 1908 and the framework provided by the International Plant Protection Convention (IPPC, hereafter, the convention) (Phillips et al., 1994). AQIS classifies imported seeds into those 169

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which are prohibited under the Quarantine Act 1908, those which are restricted under conditions defined by AQIS, and those which are unrestricted, although remaining subject to accepted health standards. The convention defines a quarantinable pest to be: ‘[a] pest of potential national economic importance to the country endangered thereby and not yet present there, or present but not yet widely distributed and being actively controlled’. On the other hand a pest is defined as: ‘any form of plant or animal life, or any pathogenic agents, injurious or potentially injurious to plants or plant products’ (Phillips et al., 1994, p. 7). With the introduction of the SPS agreement following the conclusion of the Uruguay Round, the international framework has been made more comprehensive and members of the WTO are required to abide by the SPS agreement in setting their quarantine standards. Such measures are defined as: ‘[a]ny measure applied: to protect animal or plant life or health within the territory of the Member from risks arising from entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms’ (GATT 1994, annex A, 1a). Under the SPS agreement, WTO members have the right to use these measures (article 2, para. 1) but only to the extent shown necessary by scientific evidence (article 2, para. 2). Members are encouraged to base their measures on international standards (article 3, para. 1), although they may set their own, higher, standards if there is scientific justification based on an assessment of risk (article 3, para. 3). Risk assessment is defined as: [t]he evaluation of the likelihood of entry, establishment or spread of a pest or disease within the territory of an importing member according to the sanitary or phytosanitary measures which might be applied, and of the associated potential biological and economic consequences; or the evaluation of the potential for adverse effects on human or animal health arising from additives, contaminants, toxins or diseasecausing organisms in food, beverages and feedstuffs. (annex A, para. 4)

The appropriate or acceptable level of risk is defined as: ‘[t]he level of protection deemed appropriate by the member establishing a sanitary or phytosanitary measure to protect human, animal or plant life or health within the territory’ (annex A, para. 5). In essence, WTO members are obliged to undertake a formal risk assessment, paying particular attention to scientific evidence, environmental conditions, quarantine treatment, economic factors, including losses from production and costs of eradication, and negative trade effects (article 5, paras 2–5). It is recognized in the agreement that relevant scientific evidence may not always be available and provisional measures may be adopted. However, there is an obligation on governments to obtain the necessary data in order to complete an objective risk assessment (article 5, para. 7).

Risk and protection for grains

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There are a number of difficulties, from a decision-theoretic viewpoint, with accepting some aspects of the SPS agreement. First, there appears to be an implicit assumption that scientific evidence, once obtained, can be interpreted without ambiguity.2 Second, it is not necessarily the case that probabilities can be estimated, either objectively or subjectively, in order to complete the assessment of risk, nor is it even certain that probabilities are the correct measure of risk, let alone uncertainty, if the Knightian distinction between them is made. There exists a substantial literature, beginning with Ellsberg (1961), the substance of which indicates that decision makers who are faced with making decisions based upon vague or ambiguous probabilities do not behave in a way which is consistent with the subjective expected utility model, a model that is consistent with the wording in that part of the SPS agreement which deals with risk analysis. (This comment is explored below.) Third, there are philosophical difficulties in making public policy in a situation in which there are very small probabilities of disaster but very high consequences should one occur.3 Fourth, there is no recognition that governments may be concerned about the costs of making a mistake, for example, using lower international standards, and causing a costly environmental change which is irreversible. Moreover, governments may be sensitive to, and may be influenced by, the public’s perception of the risks, even though it is known that such perceptions are biased and perhaps unstable.4 Fifth, there appears to be no recognition of the potential for unforeseen contingencies, that is, it is assumed that the payoff-relevant space is known and complete and that no possible outcome has been omitted from the analysis. Introducing exotic pests and diseases may easily violate this assumption as, indeed, may some of the eradication measures attempted. The remainder of this chapter is structured as follows. Section 12.2 presents an outline of the Australian government’s approach in 1994 to the issue of the bulk importation of grains. Section 12.3 discusses some of the economic principles which are pertinent to the analysis of risk and quarantine. Section 12.4 works through an example of the type of information required if risk assessment is to be conducted according to these economic principles. The trade policy implications stemming from this analysis are highlighted in Section 12.5.

12.2 PEST RISK ANALYSIS In order to undertake a formal risk assessment analysis of a potential quarantinable pest or disease in a particular grain crop, certain information is required. This information includes: first, whether or not the particular exotic pest is present in the imported grain; second, whether or not the pest will survive quarantine inspection; third, whether or not the pest will become established and spread; fourth, whether or not it will cause a loss of production in that crop, if

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it spreads; fifth, the costs of eradication, if it becomes established and spreads; and sixth, the size of the negative production externalities created for other crops, some of which may be exported, and the size of any resulting losses in export markets. The objective of the pest risk analysis undertaken for AQIS in late 1994 was to estimate the risks involved in the bulk importation of specific grains from Canada and the United States. The approach taken was: first, to identify the exotic pest groups which could be a source of risk in the Australian environment; second, to evaluate three management protocols for handling each type of grain once imported; and third, to estimate various conditional probabilities. The exotic pest groups were identified as seed-borne diseases and storage pests, weed species which could be imported with the grain, and foot and mouth disease from untreated feed-grain. For the first group, an inventory was compiled of diseases endemic to Australia and of diseases which are exotic to Australia but endemic in the countries which were potential sources of imports. For feed-grains it was found that in the exotic category there were two bacteria, fungi, four viruses and two storage pests (Phillips, 1994). For weed seeds, of which around 30 exotics were identified, there were two potential sources of risk; namely, seeds carrying diseases harmful to cultivated crops, and weeds which could displace native vegetation. It was concluded that the risks were lowest for Canadian barley and highest for US maize, the actual values of the probabilities depending upon the management protocol used (Phillips et al., 1994). No attempt was made to undertake an economic cost–benefit analysis. The reasons for the lack of economic analysis are not obvious. They may have included the need for a speedy resolution of the quarantine issue, or they may have included a deliberate decision by the government to use a lexicographic approach to making a decision, or they may have included a recognition that the use of a formal, decision-theoretic model would have imposed a very substantial burden on the data requirements and on computation, and that it would be rational to use a simpler heuristic approach.5 In any event, the government chose to allow imports of grains under the weakest of the three management protocols.

12.3 SOME ECONOMIC CONCEPTS If the decision-theoretic model which apparently underlies the SPS agreement is flawed, then what alternatives might improve the quality of the decisions to be made about quarantine? One place to begin is to attempt to define technical barriers to trade (TBTs), of which SPS barriers are a subset. Thornsbury et al. (1997) have proposed the following:


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[W]e define technical barriers as legally binding regulations and standards governing the sale of products in national markets which have as their prima facie objective the correction of market inefficiencies stemming from externalities associated with production, distribution and consumption of these products. (p. 2, italics in the original)

Having defined them, it is then possible to classify them in a number of alternative ways. Roberts, cited in Liefert (1998) identifies four: by policy instrument, for example, quantitative restrictions, technical specifications and information specifications; by scope of barrier, that is, the effects of the barrier on domestic production and imports; by regulatory goal, for example, safeguarding consumers through food safety regulations, and safeguarding producers through reducing risks of importing plant and animal diseases; and by legal discipline, for example, invoking specific GATT articles and specific WTO agreements, such as SPS and TBT. Once technical barriers have been classified, then the economic tools of analysis necessary to model each of them can be identified. There are three characteristics of technical barriers to trade which make them more difficult to analyse in the context of the economics of public policy than the traditional barriers of tariffs and quotas. First, their use may lead to more, rather than to less, efficient market outcomes, the latter being the standard result for a small country in the absence of market failure. Second, whereas most trade policy analysis is conducted using comparative statics, the time dimension necessitated by the possible spread and behaviour of imported pests and diseases cannot be ignored for TBTs. The removal or weakening of SPS barriers needs to be viewed in the same way as an investment is analysed because the time profiles of the costs and the benefits are different and uncertain, and the environmental costs may be irreversible. Third, in some instances, it is necessary to recognize the importance of unforeseen contingencies, that is, the possibilities which the decision maker does not think about or recognize as possibilities when making a decision – they are not events to which the decision maker gives a probability of zero (Dekel et al., 1997). For a government (as decision maker) which is contemplating the removal of an import ban, recognizing in principle the existence of unforeseen contingencies may be crucial for a rational choice. However, in practice it may not be possible, given the complexity of the consequences stemming from the removal of a quarantine ban, to define the set of all possible consequences. In what follows, the first of these characteristics will be ignored, the second will now be outlined and the third will be illustrated in the following section. A decision by government to relax or to remove a quarantine ban may be thought of in the same way as an investment decision. There is a future stream of benefits to consumers, assuming that the imported product carries no health risk for humans, and a future but uncertain stream of private costs to domestic

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producers and, potentially, an uncertain future stream of net social costs. The uncertainty arises because of the possibility of importing a disease, the possible non-zero probability of the disease becoming established, thereby reducing technical efficiency, raising the costs of production and making domestic production less competitive with imports. There is also the negative externality, ignored hereafter, which is associated with the disease raising the costs of production and/or decreasing the quality of the products of other industries, some of which may be export industries. Consider the standard small country importer with an embargo on the import of a good which is assumed to be a perfect substitute in consumption for the domestically produced product. The usual analysis (Figure 12.1) proceeds by measuring, from autarky, the changes in producer surplus (above S0) and in consumer surplus (under D) from removing the embargo, and concluding that, at the deterministic free-trade world price (pw), there is a gain to consumers (area paadpw), a loss to producers (area paabpw) and an overall net gain (area adb). Contrast this standard analysis with the case in which the imported product is a perfect substitute in consumption but in the next period of this (assumed)

Price

S1

pa pw

S0

a f g

b

d

θ' θ∗ θ D

c Quantity Figure 12.1 Market effects of quarantine restriction


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two-period analysis, the import carries the risk of spreading disease or introducing a noxious pest. If the pest or disease is imported and becomes established, its effects may not be reversible and so re-imposition of the import embargo cannot reverse the effects of the pest or disease on production and cost functions. Assume that the disease is imported when the embargo is removed and in the second period, the domestic supply function shifts upwards to S1 by an amount given by (θ – c) which is thought to occur with probability (1 – π). The conclusion reached above in the standard analysis now needs to be modified to incorporate the discounted additional loss of producer surplus (area fbcθ). But the above conclusion must also reflect the loss of the option to delay the trade policy reform while waiting for new information on, say, ways to eradicate or control the disease. Of course, there is always the possibility of learning about the behaviour of the disease if trade reform is implemented. The opportunity cost of the decision to delay reform is the foregone benefit to consumers should the disease prove to be benign, that is, θ = c (Figure 12.1) with probability π. On the other hand, the disease may prove to be a virulent one, eradication of which is either impossible technically or financially not justified and, as a consequence, the supply function shifts upwards to θ > pw. The domestic industry would then cease to exist and the entire area of producer surplus (pwbc) would be permanently lost, thereby more than wiping out the net social gains from removing the SPS barrier, if area pwbc > adb. In between the benign and virulent cases, there is some incidence of the disease which shifts the supply function upwards by just enough so that there are zero discounted net social gains from removing the trade barrier. Let this value of the intercept be θ*. In a more general analysis conducted in continuous time, the evaluation of an SPS barrier could be modelled as a continuous time stochastic process with Brownian motion together with a Poisson jump process, the latter to account for possible substantial and sudden outbreaks of the disease.6 In this simple, two-period model, the government, as decision maker, needs to calculate the Expected Net Present Value (E[NPV]) of the decision to remove the import embargo. Removal of the embargo at time zero will generate an increase in consumer surplus from time zero into the future as the price falls from pa to pw. The loss of producer surplus is immediate following the fall in price but there is the additional possible loss depending upon whether the disease is imported and upon the size of the increase in the costs of production. Let there be three possible outcomes, namely, c θ, c < θ* and θ > θ*. Assume that the government’s subjective probabilities of these possible outcomes are 0.3, 0.5 and 0.2, respectively. Then the expected NPV of the decision to remove the embargo is:

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∞ E[ NPV] = area( pa adpw ) − area( pa abpw ) + ∑ area( pa adpw ) / (1 + r )' t =1 ∞

∞

t =1

t =1

[

]

− 0.3∑ area( pa abpw ) / (1 + r )' − 0.5∑ area( pa abpw ) + area( fbcθ) / (1 + r )' ∞  − 0.2 ∑ area( pa abpw ) + area( gbcθ) / (1 + r )' .  t =1

[

]

The first two terms are the standard comparative statics result, the terms in braces account for the uncertain outcomes in the second period, and r is the social discount rate. Let the discounted net payoffs from each of the three possible outcomes be 20, 10 and –5, respectively. Then E[NPV] = 10. This result is sensitive to the discount rate used and to the magnitudes of the price elasticities of demand and supply. It might be inferred from standard investment theory that because the E[NPV] is positive, trade reform should be undertaken However, the way in which the calculation was constructed ignored the possibility of delay; in other words, it represents the outcome of a ‘now or never’ decision. Unless the government was required to remove its quarantine ban immediately, for example by a ruling by the WTO, it would have the option to delay the decision by one period in this two-period analysis. If the government knew that research was being conducted in the exporting countries into ways of eradicating or at least controlling the effects of the disease, then it could evaluate the option to delay until the outcome of the research and the costs of the treatment were known. Delaying the decision by one period, to period two, would entail an opportunity cost to consumers from the benefits foregone but a gain to producers from not facing the lower price. The calculation set out above would then need to be modified by deleting the first two terms, and adding an additional term which reflected the size of the downward shift in the supply function (induced by the treatment of the disease) and the costs of the treatment. Then the two calculations could be compared and the one with the higher value chosen.

12.4 A DECISION-THEORETIC EXAMPLE The analysis conducted in the previous section assumed implicitly that the subjective probabilities used obey the usual rules of probability. However, if there has been an embargo on imports, then it may not be realistic to assume that government can acquire subjective probabilities in order to calculate the expected NPV or to satisfy the SPS agreement. The standard way to approach


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the evaluation of risk and uncertainty is to assume that the decision maker can indeed define a subjective probability distribution over all possible states of the world, and that the probabilities are additive and represent a measure of the decision maker’s beliefs. This is a subjective expected utility model (SEU) in which the decision maker chooses that act which maximizes the SEU function, where the utility function is a von Neumann–Morgenstern utility function which can reflect aversion to risk, risk neutrality or love of risk. However, it has been known since Ellsberg (1961) that the experimental evidence does not support the SEU model because in practice individuals display an aversion to ambiguous or imprecise probabilities, something which is assumed away in the SEU model through the definition of subjective probability. The ambiguity can arise because the decision maker finds that there is information missing which is relevant to the decision to be made (Camerer and Weber, 1992, p. 330). In the context of removing a quarantine barrier, the ambiguity arises because the government may find that the scientific evidence is incomplete or that it is complete but the experts may differ in their interpretation of it. Such lack of unanimity, as already mentioned above, highlights the limited role of scientific evidence in public policymaking. Therefore, the government may conclude that the political and economic costs of departing from the status quo are too great in the face of ambiguity about the size of the potential, permanent economic losses.7 There are a number of alternative approaches to modelling decision making when probabilities are vague and the decision maker is averse to such uncertainty or ambiguity.8 One alternative to the SEU model is the Choquet expected utility model (CEU), the expectation being taken with respect to nonadditive probabilities or capacities (see Schmeidler, 1989; Mukerji, 1997 and Sarin and Wakker, 1998).9 The CEU of a particular act, f, depends upon calculating the payoffs for all of the n payoff-relevant states (s1, . . . , sn) which need to be ranked from the most favourable to the least favourable, for example, U[f(s1)] ≥ U[f(s2)] ≥ ... ≥ U[f(sn)] and the capacities υ obtained. There remains, of course, the difficulty in practice of determining what the values of these capacities are. Then n   i   i −1   CEU ≡ U f (s1 ) υ(s1 ) + ∑ U f (si ) υ U s j  − υ U s j  .   j =1   j =1   i=2

[

]

[

]

Continuing the example begun above, assume that the importing country faces the following three possible payoff-relevant states if it removes its import embargo:

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θ1, no outbreak of the disease, c = θ (Figure 12.1) θ2, an outbreak such that c < θ < θ* θ3, an outbreak such that θ > θ*. Note that all foreseen contingencies are captured in these three outcomes. An unforeseen contingency in this example would be the case where θ < c, that is, where imports somehow reduced the costs of producing the domestic product. Let the utilities of the three payoffs be as before, namely, U[f(θ1)] = 20, U[f(θ2)] = 10 and U[f(θ3)] = – 5.10 Assume that the government has formed the belief from scientific evidence that the capacity associated with importing the product without the disease is, as before, 0.3. But now, assume that there is not enough evidence to know whether, if the product is imported with the disease, that the outcome will be θ2 or θ3, that is, whether the supply function will shift upwards by an amount less than or greater than (c – θ*) (Figure 12.1). Recall that θ* is of significance because it was that value of the intercept for which the E[NPV] = 0. So that if the supply function shifts by less than (c – θ*), then there are still net social gains despite the disease; whereas if the function shifts by more than (c – θ*), then there is a net social loss from the new trade policy. Earlier, it was assumed that a subjective probability could be assigned to each of these outcomes separately. Here it is argued that the government knows that it just does not have enough information to make that assignment and so it has to assign a capacity to the event (θ1 ∪ θ2) rather than to each of θ1 and θ2. Let that capacity be 0.3, noting that it is not equal to the sum of the subjective probabilities (0.3 and 0.5) used in the E[NPV] calculation. The value of 0.3 was calculated using the method presented in Mukerji (1997). Then the CEU calculation for this example is given by: CEU = U[f(θ1][υ(θ1)] + U[f(θ2)][υ(θ1 ∪ θ2) – ν(θ1)] + U[f(θ3)][υ(θ1 ∪ θ2 ∪ θ3) – υ(θ1 ∪ θ2)]. Notice that the final term, which has the worst payoff (–5), contains all of the residual probability. Using the payoffs and the capacities, the value of the CEU is 2.5. This is the value of the ‘now or never’ decision to remove the quarantine embargo. Since it is positive, the government would choose to remove the ban, if it were required by the terms of the SPS agreement to do so. However, to complete the analysis, the government might choose to wait for further evidence about the effects of the imported diseases and the costs of eradication. Note that this result (2.5) is substantially smaller than that obtained using the E[NPV] method (10) and reflects the cost of having to make a decision based upon ambiguous probabilities and the government’s aversion to that ambiguity.


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12.5 TRADE POLICY IMPLICATIONS Trade and environmental issues are closely linked in the context of SPS barriers to trade. For island countries such as Australia, the risks from lower quarantine standards are real, not only for the natural environment but also for the image of exporting ‘clean’ agricultural products. The SPS agreement does provide countries with the opportunity to set their own quarantine standards, provided that the rules are followed with respect to risk assessment. It has been argued that the decision-theoretic model underlying the procedures for risk assessment which are set out in the SPS agreement is flawed. These procedures place too much emphasis on the weight of scientific evidence and upon the use of probabilities in an SEU framework. It has been shown in this chapter that if government is to make a rational decision about altering its quarantine policy with respect to grains (or other products), then the decision should be derived within a framework which at least accounts for uncertainty aversion, for dynamics, for unforeseen contingencies and for irreversibility of environmental change. These components of the analysis seem the minimum required to convince the public that the status quo may not be the optimal policy. Moreover, for trade policy and international relations, the framework allows other countries to assess the merits of whatever decision is made about SPS barriers in a manner which is as objective and realistic as possible.

NOTES 1. For a history and analysis of this landmark case, see Carter (1997). 2. For a critical appraisal of the role of science in the scientific approach to public policy, see Formaini (1990, chapter 5) and for a discussion of this role in the specific context of the US–EU dispute on beef-hormones, see Carter (1997). 3. For a discussion of this point, see Camerer and Kunreuther (1989). 4. Camerer and Kunreuther (1989) discuss a number of sources of bias in judging probabilities while Viscusi (1997) concludes that the public behaves in an alarmist or exaggerated manner. 5. Tversky et al. (1988) have shown that in experiments in psychology, subjects often use a lexicographic approach in choosing between acts for which there are a number of attributes. For example, the preference relation of the complex, subjective expected utility model would be replaced with a lexicographic preference relation. In this case, the government may have considered a lexicographic preference relation with two attributes, namely, the probability of an outbreak of disease if the quarantine ban were relaxed (attribute 1) and the economic payoff from the removal of the ban (attribute 2). Then, if the probability is less than some acceptable subjectively determined threshold, the ban is removed (that is, attribute 1 is satisfied). If the probability exceeds this threshold, only then are the economic consequences determined (that is, the second level of attributes is investigated). This approach is consistent with that used by the Australian government in 1994. 6. For a discussion of the way in which such a stochastic process can be used to model an investment decision, see Dixit and Pindyck (1994, chapter 3).

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7. A substantial discussion of status quo bias in decision making is given in Samuelson and Zeckhauser (1988). 8. There are several alternatives from which to choose, for example, rank-dependent expected utility, prospect theory, regret theory and theories based upon a lexicographic ordering. See Camerer (1995) for a survey. 9. One approach is to alter the rules of probability such that the probabilities are not additive and to interpret them as not only conveying the implications of the evidence but also the weight of that evidence. Consider an ambiguous event A. Then one way to represent the ambiguity is to use the residual [1 – π(A) – π(Ac)] as a measure of ambiguity, where π(A) is the probability of event A and π(Ac) is the probability of the complement of A. Hence, if A and B are two events, then non-additivity means that π(A ∪ B) ≠ π(A) + π(B) – π(A ∩ B). Here, π(A) and π(B) measure the likelihood of events (implications of evidence) while [1 – π(Ac) – π(Bc)] measures belief in these likelihoods (weight of evidence). 10. Previously, these payoffs were discounted monetary values. Now they are being re-interpreted as the discounted utilities of the three outcomes.

REFERENCES Camerer, C.F. (1995), ‘Individual Decision Making’, in J.H. Kagel and A.E. Roth (eds), The Handbook of Experimental Economics, Princeton: Princeton University Press, Chapter 8. Camerer, C.F. and H. Kunreuther (1989), ‘Decision processes for low probability events: policy implications’, Journal of Policy Analysis and Management, 8, 325–70. Camerer, C.F. and M. Weber (1992), ‘Recent developments in modeling preferences’, Journal of Risk and Uncertainty, 5, 325–70. Carter, M.D. (1997), ‘Selling science under the SPS agreement: accommodating consumer preference in the growth hormones controversy’, Minnesota Journal of Global Trade, 6, 526–656. Dekel, E., B.L. Lipman and A. Rustichini (1997), ‘Recent Developments in Modeling Unforeseen Contingencies’, mimeo, Economics Department, Northwestern University. Dixit, A.K. and R.S. Pindyck (1994), Investment under Uncertainty, Princeton: Princeton University Press. Ellsberg, D. (1961), ‘Risk, ambiguity, and the savage axioms’, The Quarterly Journal of Economics, LXXV, 643–69. EU (1998), ‘Food safety in the EU – A Commission commitment’, EU News, 17(7), 7. Formaini, R. (1990), The Myth of Scientific Public Policy, New Brunswick: Social Philosophy and Policy Center and Transaction Publishers. GATT (1994), The Result of the Uruguay Round of Multilateral Trade Negotiations: The Legal Text, Geneva: GATT Secretariat. Liefert, W.M. (1998), Technical Barriers to Trade, ERS Staff paper No. 9803, Washington, DC: USDA, July. Mukerji, S. (1997), ‘Understanding the nonadditive probability decision model’, Economic Theory, 9, 23–46. Phillips, D. (1994), Pest Risk Analysis of Seedborne Pests of Barley, Maize and Sorghum from the USA, and Barley from Canada, Canberra: Bureau of Resource Sciences. Phillips, D., W. Roberts and M. Chandrashekar (1994), Pest Risk Analysis of Seedborne Pests of Barley, Wheat, Maize and Sorghum from the USA and Canada: Part 2, Canberra: Bureau of Resource Sciences.


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Samuelson, W. and R. Zeckhauser (1988), ‘Status Quo Bias in Decision Making’, Journal of Risk and Uncertainty, 1, 7–59. Sarin, R. and P.P. Wakker (1998), ‘Revealed likelihood and Knightian uncertainty’, Journal of Risk and Uncertainty, 16, 223–50. Schmeidler, D. (1989), ‘Subjective utility and expected utility without additivity’, Econometrica, 57, 571–87. Thornsbury, S., D. Roberts, K. DeRemer and D. Orden (1997), ‘A First Step in Understanding Technical Barriers to Trade’, a paper presented at the XXIII Conference of the International Association of Agricultural Economics, Sacramento, California, August. Tversky, A., S. Sattath and P. Slovic (1988), ‘Contingent weighting in judgment and choice’, Psychological Review, 95, 371–84. Viscusi, W.K. (1997), ‘Alarmist decisions with divergent risk information’, Economic Journal, 107, 1657–70.

13. A business view of quarantine Lyall Howard It is my task to review the two chapters on quarantine, by Wilson and Gascoine (Chapter 11), and MacLaren (Chapter 12). The first is a survey of the SPS agreement and its implications for Australia’s quarantine regulations, which reveals some continuing obscurities about avoiding SPS measures being used as non-tariff barriers to trade. MacLaren’s paper is an economic analysis of risk in specific circumstances. The Wilson–Gascoine chapter notes that food safety and animal and plant health measures that affect trade have been subject to GATT rules since 1948. The GATT article XX (b) exception permitted countries to introduce new measures to protect public health and welfare provided they did not unjustifiably discriminate between countries, nor were disguised restrictions on trade. However, the prevailing GATT rules were inadequate to sustain the more comprehensive WTO agreements. The GATT exception made it difficult to challenge national measures because of differing interpretations of what constitutes ‘necessary’ to an importing country (Rajasekar, 1999). This, together with the absence of an effective dispute settlement mechanism, explained why there were no SPS disputes during the 47 years of GATT. Within the first 18 months of the SPS agreement, however, seven formal complaints were lodged under the dispute settlement process (Stanton, 1997). There have been many more since. These disputes have been highly controversial (for example, EU–US beef-hormones, Canada–Australia salmon, and so on). An important forerunner of the Uruguay Round agreement on SPS was the Code on Technical Barriers to Trade negotiated in the 1973–79 Tokyo Round. Although the TBT agreement was not developed for regulating sanitary and phytosanitary measures, it did cover technical requirements resulting from food safety and animal and plant health measures, including pesticide residues, inspection requirements and labelling. In order to understand what has changed with the SPS agreement and what it means for trade, it is useful to review some of the concerns that member countries had in mind during the negotiations. First, the United States had tried unsuccessfully to use the TBT code to challenge the European Community’s ban on imports of beef from cattle treated with hormonal growth promotants (Stanton, 1997). On the other hand, for the Europeans, growth hormones were 182

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also a touchstone issue and, apparently, they gave themselves the overriding objective in negotiating the SPS agreement of ensuring their capacity to maintain their hormone ban (Hickey, 1997). At the same time, a number of Latin American countries saw the SPS negotiations as an opportunity to change long-standing restrictions relating to foot-and-mouth disease which effectively barred their meat from lucrative markets in North America and Japan. Shortly after the negotiations started, the US banned imports of certain European wines because of residues of a particular fungicide, which although widely used, had never been registered and approved for use in the US. This incident heightened European interest in the negotiations and encouraged countries with strong agricultural exporting interests, like Australia, Canada and New Zealand, to take the opportunity to make clear what trade restrictions could or could not be imposed in the name of food safety, and animal and plant health protection (Stanton, 1997).

COVERAGE OF THE SPS AGREEMENT Wilson and Gascoine describe key features of the SPS agreement, including scope and coverage. During the negotiations the European Community argued strongly, but ultimately unsuccessfully, for the inclusion of animal welfare, environmental concerns and consumer concerns in the SPS text. Although not explicit, consumer concerns were underlying fears supporting the European case for imposing the import ban on hormone-treated beef from North America. For Australia and like-minded countries it was important to contain the agreement within scientific boundaries. The scope of SPS is confined to the ‘objective’ of a measure, in contrast to the ‘type’ of measure used in the TBT agreement (Stanton, 1997). The SPS agreement recognizes the sovereign right of countries to set their own standards, but it also imposes obligations on countries. Health and safety standards should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail. Governments must also provide advance notice of new or changed quarantine measures and establish a national enquiry point to provide information. The SPS agreement complements the TBT agreement (WTO, 1998).

KEY FEATURES OF THE SPS AGREEMENT ‘Harmonization’ of SPS standards (SPS article 3) is promoted by requiring governments to establish measures that are consistent with international

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standards, although the WTO itself does not develop these standards. This ‘harmonization’ process refers specifically to the relevant international standards-setting bodies – the Codex Alimentarius Commission for standards dealing with food additives, contaminants and pesticide residues; the OIE for animal health issues; and the IPPC for plant diseases and plant health. The harmonization provisions of the agreement represent a significant advance on the pre-Uruguay situation. For example, the domestic use of codex food standards was entirely up to member countries, but the enhanced status conferred on codex standards has resulted in a big step towards their general acceptance. The SPS text also stipulates a proactive agenda for members’ participation in international bodies. It states that countries shall play a full part ‘to promote within these organizations the development of standards’ with respect to all aspects of sanitary and phytosanitary measures (Dawson, 1997). However, there is a view that meetings of these international standards’ bodies are remote, expensive and complicated by technical agendas. In reality, international standards are therefore determined by member countries with the most resources and are driven by domestic concerns (Johnson, 1999). There is scope for conflict in these bodies if it is suspected that particular countries can manipulate the committees and the decision-making processes to promote measures which are instrumental in settling SPS disputes in the WTO (Swinbank, 1998). Efforts will be required to prevent meetings of these organizations becoming the arena for playing out trade disputes. SPS article 5.5 obliges countries to avoid arbitrary or unjustifiable distinctions in the levels of protection applied in different situations. In the WTO dispute settlement panel on Canadian salmon, Australia was found to have acted inconsistently in its treatment of salmon and certain other fish imports, principally herring bait and live ornamental finfish. The different levels of quarantine protection between these products was considered to be arbitrary and unjustifiable, and would result in a disguised restriction on trade. The issue of consistency is also relevant to the discussion of the appropriate level of protection (ALOP). The definition of ALOP in SPS annex A (para. 5), defines it as that ‘deemed appropriate’ by the member establishing the measure. Wilson and Gascoine point out that the Appellate Body examining the appeal against the decision on Canadian salmon considered that the SPS agreement did not contain an explicit provision which obliged members to determine ALOP, but such an obligation is implicit in several provisions of the SPS agreement. The authors note that a government has the sovereign right to determine its ALOP and that such a determination is a value judgement because the SPS agreement does not require its ALOP to be based on science. This does not mean, however, that an ALOP can be determined in isolation from other SPS provisions.


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A useful guide to ALOP is community and industry acceptance of quarantine decisions. When setting a measure to achieve ALOP, a balance between the risk of an incursion, the associated potential for damage and the benefits of trade must be struck.

RISK ASSESSMENT SPS article 5.1 requires countries to base their quarantine measures on risk assessment, that is, ‘taking into account risk assessment techniques developed by relevant international organizations’. Risk assessment techniques, of course, have come a long way and although nothing can eliminate uncertainty, a rigorous application of risk assessment can lead to the most appropriate measure. MacLaren’s chapter fits into the discussion at this point. In his introduction, MacLaren refers to the definition of ALOP. He raises five difficulties with the definition: (i)

the implicit assumption that scientific evidence, once obtained, can be interpreted without ambiguity; (ii) probabilities cannot necessarily be estimated, either objectively or subjectively, in order to complete a risk assessment; (iii) philosophical difficulties occur in public policymaking when there are small probabilities of disaster but very high consequences stemming from them; (iv) governments may be concerned about the costs of making a mistake; (v) no recognition of the potential for unforseen events. Scientists are always reluctant to be pinned down to precise ‘black and white’ recommendations about risk. But, at the end of the day, managers have to make decisions. Managers therefore need to understand that science involves a high degree of judgement on the part of its practitioners. MacLaren is not alone in his concern about estimating probabilities in the risk analysis. The Nairn review, in its examination of the import risk analysis process used by AQIS, recognized that quarantine risk assessments involve the complex problem of estimating probabilities. Nairn observed that there is an increasing trend to objective approaches, but this is often impractical because of resource and data limitations. Nairn also observed that the perception that objective approaches are inherently ‘better’ or ‘more scientific’ than subjective approaches is misguided (Nunn, 1997). As Wilson and Gascoine noted, the WTO Appellate Body examining Australia’s appeal against the panel’s finding on Canadian salmon argued that, for a risk assessment to meet the requirements of the SPS agreement, it is not

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sufficient to conclude that there is a ‘possibility’ of entry of a disease, but there must also be an evaluation of the ‘probability’ of entry. The experts advising the panel on this issue concluded that Australia did not appropriately assess probability. At the end of the day probabilities can always be estimated, but with different levels of confidence – hence the need to utilize expert opinion. The Nairn process in Australia achieves this through its technical working groups. MacLaren’s observation about small probabilities and large consequences is also a familiar problem. The debate about the importation of live animal viruses into the Australian Animal Health Laboratory at Geelong is a case in point. The capripox virus, for example, is exotic to Australia and the likelihood of its introduction is low. The socio-economic and trade implications of an outbreak of sheep pox, however, are severe because of the high mortality rates and serious production losses in affected flocks. If live viruses were imported for research, the probability of an escape from the Geelong laboratory would be extremely low, but not zero. The extent of the trade loss resulting from an outbreak following an escape is unknown because it depends on whether our trading partners accept zoning. Whether or not to permit the importation of live capripox virus into Australia for research purposes has been a challenging issue for industry. The concern about costly mistakes that are irreversible is similarly difficult. When dealing with risk assessments affecting natural resources, a mistake which causes environmental change could be irreversible. MacLaren’s analysis uses a firm facing an investment decision where the orthodox methodology is to calculate the net present value. However, the NPV rule assumes that an investment is reversible and that it can be undone and the investment recovered. The reality, however, is that when investments are firm- or industry-specific they are sunk costs and any recovery would be small, so the ability to delay irreversible investment expenditure can profoundly affect the decision to invest (Dixit and Pindyck, 1994). This insight illustrates why some stakeholders encourage governments to be conservative in quarantine decision making. MacLaren’s final point concerns risks that have not been thought of. Some submissions to the Nairn review argued that where there is significant uncertainty or gaps in the knowledge needed to conduct a risk assessment, AQIS should take a ‘conservative’ approach. A recent discussion paper on quarantine risk analysis argued that quarantine provides a good example of the valid application of the precautionary principle (Nunn, 1997). According to SPS article 5.7 member countries can provisionally adopt SPS measures in cases where supporting scientific information is inadequate. However, in these circumstances, members are obliged to seek the additional information and not use the precautionary principle as grounds for continuing protection (Nunn, 1997). Wilson and Gascoine also raise this issue of sufficient scientific evidence. They point out that under SPS article 2.2, countries are obliged not to maintain


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a measure without sufficient scientific evidence. But in some circumstances it will be a matter of opinion whether the available science is ‘sufficient’. Judgement on this issue must be based on the relevance of the existing science, its reliability and so on, which created uncertainties.

RISK AND PROTECTION IN GRAINS Returning to MacLaren’s paper and his analysis of risk for imported grains, he examines the 1994 bulk grain risk assessment in the context of the government’s failure to undertake a cost–benefit analysis. MacLaren suggests an economic analysis that includes the gains and losses to producers and consumers for calculating the net value of a decision to permit imports. The need for more analysis of quarantine policy decisions, that includes the gains to consumers, has also been suggested by the Centre for International Economic Studies at the University of Adelaide, based on empirical analysis of Australia’s ban on imports of bananas (Anderson and James, 1998). The 1994 bulk grain risk assessment was largely an ad hoc response to a large number of requests to import cereal grains by the intensive livestock industries under the pressure of drought. A 1996 retrospective analysis states, ‘approaches from industry to transport imported grain into rural areas for processing into stockfeed posed a new suite of procedural issues that strained the resources of AQIS’. A report by the Bureau of Resource Sciences found that, ‘Much of the grain imported in 1994/95 was approved under evolving protocols, explaining some apparent inconsistencies in AQIS’s approach to managing quarantine risk’ (Evans et al., 1996). An import risk analysis for bulk maize grain from the United States has been conducted under the new Nairn risk assessment procedures that are more transparent and more consultative than in the past. Further, a public file containing non-confidential stakeholder comments and technical documentation on the risk assessment is available for perusal and copying. This clear paper trail is a big step forward as industry continues to believe that AQIS carries out these risk assessments and arrives at a determination using non-transparent processes. Analysis for bulk maize, released in March 1999, contained an analysis of the quarantine risks and proposed risk management strategies. A consultation period of 60 days was allowed. The draft analysis did not address economic issues. The Ministry of Agriculture, Fisheries and Forestry – Australia (AFFA) will supply an economic analysis to the Minister. The Nairn process is certainly an improvement on the 1994 process. However, with clear producer interests on both sides of the fence the debate about the trade-offs involved in different levels of protection will continue when the economic costs and benefits of alternative quarantine measures are

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calculated. As exporters, farmers understand the need for a rules-based approach to import access requests. Equally, Australia has a history of costly invasions of exotic pests and diseases. The recent incursion of papaya fruit fly disrupted trade and cost $50 million to eradicate. With governments asking industry to pay a greater share of future clean-up costs there will be increased scrutiny by industry of quarantine processes and decisions. The SPS agreement contains components for a harmonized approach to quarantine regulation, but as Wilson and Gascoine, and MacLaren show, there remains much work to be done in the SPS committee before a balance between trade and SPS interests can be achieved.

REFERENCES Anderson, K. and S. James (1998), On the Need for More Economic Assessment of Quarantine/SPS Policies, Centre for International Economic Studies, Seminar Paper, 98–02, Adelaide: University of Adelaide. Dawson, R. (1997), ‘Impact of WTO on CODEX Alimentarius and its Implications for World Trade’, Proceedings of a Conference of the International Agricultural Trade Research Consortium, ‘Understanding Technical Barriers to Agricultural Trade’, January, pp. 69–74. Dixit, A. and R. Pindyck (1994), Investment Under Uncertainty, Princeton: Princeton University Press. Evans, G. et al. (1996), Quarantine Risk Associated with the Importation of Bulk Grain: A Retrospective Analysis, Bureau of Resource Sciences, November. Hickey, P. (1997), ‘Sanitary and Phytosanitary (SPS) Issues’, paper presented to a Symposium on Agricultural Trade Strategies, Australian National University, September; subsequently published in A. Stoeckel (1998), World Agricultural Products Trade – Towards a Strategy for Australia, Rural Industries Research and Development Corporation, November, pp. 83–90. Johnson, R. (1999), ‘Political Economy, Equity and Technical Barriers to Trade’, paper presented to a workshop on Border Security and Risk Analysis – Dealing with SPS after the Uruguay Round, January, Lincoln University, New Zealand. Nunn, M. (1997) ‘Quarantine Risk Analysis’, Australian Journal of Agricultural and Resource Economics, 1(4), 559–78. Rajasekar, S. (1999), ‘The SPS Agreement: A Historical Perspective’, paper presented to a workshop on Border Security and Risk Analysis – Dealing with SPS after the Uruguay Round, January, Lincoln University, New Zealand. Stanton, G. (1997), ‘Implications of the WTO Agreement on Sanitary and Phytosanitary Measures’, Proceedings of a Conference of the International Agricultural Trade Research Consortium, ‘Understanding Technical Barriers to Agricultural Trade’, January, pp. 75–8. Swinbank, A. (1998), ‘Role of the WTO and the International Agencies in SPS Standard Setting: Prospects for the Millennium Round’, paper presented to a Conference on Food Quality and Safety Standards in Trade in Agricultural and Food Products, London, December. WTO (1998), Trading Into the Future: Introduction to the WTO (2nd edn), Geneva: WTO Publications.

PART V

Managing Biotechnology

14. Government regulations and genetically-modified organisms Nancy F. Millis* The development of genetically-modified organisms (GMOs) has raised new issues for trade and the consideration and management of risk. Any WTO panel rulings on risk associated with GMOs will depend on risk assessments. This raises many complex questions including social and political prejudices, as is evident in consideration of GMOs at the national level. This chapter outlines the processes being established in one country, Australia, for managing the risks associated with this new technology. Australia has had formal surveillance of genetic engineering since 1975; at first through the Australian Academy of Science. In 1981 the task was assumed by a committee established by the Commonwealth Government’s Department of Science, and in 1987 the Genetic Manipulation Advisory Committee (GMAC) was established. This is a non-statutory agency, but sanctions for noncompliance apply through withdrawal of government funds and agreed obligations by employers. In January 2000, the Commonwealth Government established the Interim Office of the Gene Technology Regulator (IOGTR) in preparation for legislation which will establish a Gene Technology Regulator within the Department of Health. GMAC will be replaced by the Gene Technology, Technical Advisory Committee (GTTAC) when the legislation is passed but GMAC will continue to operate until that time and will collaborate with the IOGTR. The GMAC operates with 19 members who are recruited from the scientific community and the general public. Members are not representative of special interest groups, but persons were selected for their expertise or knowledge. This ensures that GMAC has access to the most up to date knowledge of a wide range of organisms from persons who are active in research with studies at the molecular level and, in the broader aspects of ecology, the environment and legal issues. *

Professor Emeritus, Department of Microbiology and Immunology, University of Melbourne; Chair of Australia’s Genetic Manipulation Advisory Committee (GMAC).

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Managing biotechnology

GMAC STRUCTURE AND OPERATION GMAC operates through four sub-committees: • A scientific sub-committee considers molecular and genetic aspects of both contained and deliberate release work. • A large-scale sub-committee considers proposals to grow large culture volumes (greater than 10 litres), or large numbers of animals, plants, insects and so on, and certifies the containment facilities for large numbers of organisms. • A deliberate release sub-committee considers proposals to release live modified organisms into the open environment. It also considers work where release may occur inadvertently (for example, when a GMO is in transit for processing). • A public liaison sub-committee provides information about GMAC activities, decisions on deliberate releases of live GMOs and informs the public of changes in regulations and guidelines. Four sets of guidelines are published which define the scope and types of construct covered by GMAC. They set out work practices and the physical containment (PC) required for work with different GMOs, depending on the hazard perceived to be associated with them (PC2 is the least stringent containment and PC4 the most stringent). GMOs of negligible risk may be granted exemption from the guidelines. The guidelines for deliberate release require detailed information on the issues related to the genetics of the GMO and its interaction with the environment and its biota. GMAC’s committees systematically analyse the potential hazards associated with each GMO, and assess the probability of harm coming to the workers, the general public, agriculture, livestock or the environment. An example of the rationale GMAC applies is set out in an annex, where the hazards associated with the consumption of the novel DNA and novel protein in a food GMO are considered. GMOs constructed overseas and imported into Australia have often been extensively investigated in both contained conditions and in open field trials overseas for their efficacy and safety for humans, agriculture, the environment and the general public. Data from other countries published in reputable refereed journals and reports from relevant agencies overseas submitted by proponents are considered by GMAC. GMAC may decide it is not necessary to repeat studies which apply directly to Australia, but may require further experimentation where different conditions exist. For example, it was accepted that the Bacillus thuringensis Bt toxin in Bt cotton was not toxic to humans or livestock, the lint from Bt cotton posed no

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hazard and that Bt cotton plants degraded in soil in the same way as conventional cotton. However the types of insect and their response to Bt in cotton was considered to be sufficiently different to require extensive study in field trials in Australia.

INSTITUTIONAL BIOSAFETY COMMITTEES All organizations undertaking genetic engineering must establish an institutional biosafety committee. Each such committee has the responsibility (on behalf of the organization) of ensuring that work with GMOs is conducted according to GMAC guidelines, and that all work is submitted to them. Contained work of lowest risk can be approved by that committee. After approval, work can begin and the proposal is then sent to GMAC for information. Proposals for work of higher risk must be sent to GMAC. GMAC’s advice on the work is sent to an institutional biosafety committee, which must ensure that the advice is implemented by the proposer.

1. Contained work Low risk or exempt small-scale work Worker ➜ Biosafety committee ➜ GMAC GMAC is informed and work goes ahead as soon as the institutional biosafety committee (IBC) approves. Higher risk small-scale work, and large-scale work Worker Biosafety committee GMAC ➜

➜

Work cannot begin until GMAC gives advice to the IBC and the IBC ensures the worker abides by the advice. 2. Live release Field trials Worker ➜ Biosafety committee ➜ GMAC ➜

➜

Public informed Agencies Figure 14.1 Surveillance system operating in Australia through IOGTR and GMAC

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All live release proposals must be sent by a biosafety committee to GMAC for advice. GMAC publishes a short description of the project and invites comment from the general public. It also informs other agencies if there are related responsibilities (for example, food, environment, agriculture, therapeutic goods). GMAC considers the information provided by the proposer, along with all comments received, and is free to seek further expert advice if necessary. Its advice is sent to the IBC and to other agencies. This sets out the conditions for growing the GMO, monitoring, supervision and any other requirements. The IBC must ensure that the proposers adopt the advice. The obligation to ensure that staff and facilities are of the appropriate standard and that the inspections are conducted throughout the project lies with the user and is implemented through the biosafety committee. The surveillance system is set out in Figure 14.1. GMAC issues a ‘Public information sheet’ about all open field trials which provides details of the organism, the release and GMAC’s risk assessment of the proposal. The proponent must place an advertisement in the local press at the time of a deliberate release. The agency gives legal approval, if appropriate, and the public can receive a copy of GMAC’s risk assessment and public information sheet on the proposal.

GMAC’S LIAISON WITH OTHER AGENCIES ANZFA The Australian and New Zealand Food Authority (ANZFA) has statutory responsibility for setting standards for the safety, nutritional quality and public health aspects of all food sold in Australia. It sets limits on pesticides, heavy metals, organic contaminants and so on permitted in food and controls labelling. Although ANZFA provides the regulation for all Australia, the States and Territories must be consulted, as they are responsible for their enforcement; this work is undertaken by State departments which deal with issues related to health, through local government authorities. GMAC’s assessment and advice relate to the genetic aspects of the GMO, its stability and the possibility that the genetic change could alter a property which is relevant to ANZFA’s considerations. This advice is added to whatever else ANZFA may require in its assessment of a food GMO before permitting its sale for human consumption. In 1999, ANZFA prepared a draft standard (A18) relating to food GMOs. It prohibits the sale of food containing GMOs unless ANZFA has considered each food on a case-by-case basis and judged the GMO food to be safe and


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wholesome. It would require GMO foods which are ‘substantially different’ to carry a label indicating this. Late in 1999, the Ministers of Health of the States, Territories, the Commonwealth and New Zealand Governments drafted a revised standard that all GMO foods and food products containing GMOs, including those substantially equivalent to their conventional counterparts, must be labelled when this fact is known. ANZFA is currently revising its earlier draft (A18) standard which proposed not to label foods which were ‘substantially equivalent’ to their conventional counterparts. Public comment on the draft is currently being compiled and considered by ANZFA and the health ministers. (Public outcries against ‘Frankenstein foods’ and hysteria about the dangers from GM foods is influencing attitudes to biotechnology, much of which has been around for many decades. See the annex to this chapter for a scientific assessment of risks to consumers.) National Registration Authority The National Registration Authority is responsible for registering the use of herbicides and pesticides, and the crops to which they may be applied. A GMO containing a herbicide-tolerant gene is not registered as such, but the Authority must give approval to use the herbicide with the particular crop and will specify the maximum rate of application. Assessment of herbicide-tolerant GMOs, therefore, lies primarily with GMAC. In the case of insect-resistant plants, such as those which carry the Bt gene, the GMO is regarded as a pesticide and comes under both the Authority’s and GMAC’s responsibility. All GMO crop plants are reviewed by GMAC and copies of its advice are sent to the Authority as well as to ANZFA. AQIS The Australian Quarantine Inspection Service (AQIS) is a statutory Commonwealth agency which controls the import of all biological material into Australia. Its prime responsibilities are to safeguard the health of plant, animal and human life from infectious agents which may be imported into Australia in or on biological material, and to prevent the import of biological material likely to become a pest or cause damage to agriculture or the environment. AQIS may issue a permit after its own assessment of the safety of the material. As part of its assessment of the risks associated with genetically modified plants, AQIS uses questions from GMAC’s guidelines. AQIS may require the importer to contain the organism under specified conditions for a particular period. If the GMO is to be grown for research, or in an open field trial, the work will then be subject to GMAC guidelines and surveillance.

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Therapeutic Goods Agency The Therapeutic Goods Agency is a Commonwealth statutory authority within the Health Department which controls the efficacy, quality, safety, manufacture and use of all therapeutic goods for human medicine. Veterinary goods are given similar surveillance by an expert committee within the National Registration Authority. In both cases, preparations involving GMOs are given the same scrutiny as applies to their conventional counterparts. Preliminary research and development of the therapeutic GMO material would come under GMAC surveillance, and the Agency would have received a copy of GMAC advice. GTRAP In Australia, human gene therapy affecting the cells of the germ line is not permitted. However, subject to review and risk assessment by the Gene Therapy Research Advisory Panel (GTRAP) of the National Health and Medical Research Council, gene technology is permitted to treat genetic defects in persons after birth (so called somatic gene therapy). Such procedures require extensive counselling and the informed consent of the patient, as well as approval of the Hospital Ethics Committee. GMAC may be involved at an early stage when the DNA is being purified, characterized and tested in animal models. (The modification of the germ line of animals and agricultural livestock is permitted.) Environmental Agencies The Commonwealth statutory authority in this area is Environment Australia. The States and Territories have other bodies which have responsibilities for environmental issues in their respective localities. Environment Australia has a member on GMAC. The respective agencies are informed by GMAC of the intention of proponents to conduct open field trials of GMOs in their areas. They can then interact with the proposers, should they wish to do so.

INTERNATIONAL HARMONIZATION Australian GMO guidelines are in harmony with recommendations from the OECD. Australia has signed the UN Convention on Biological Diversity and took part in the first, second, third and fourth meetings of the open-ended Ad Hoc Working Group on Biosafety. Australia has responded to requests for information and copies of its guidelines and procedures from a number of countries in the south-east Asia region. GMAC’s guidelines require that


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researchers wishing to export a live GMO to another country provide the importing country with GMAC’s assessment of the risks associated with use of the GMO in Australia.

STATISTICS Table 14.1 sets out the numbers of institutional biosafety committee proposals and the different types of proposal considered by GMAC for the year 1998 to 1999 and the total from 1981 to 1999 (mid-years). Table 14.1 GMAC activities in Australia Cases*

Activity 1998–99 IBCs Small-scale (contained) Large-scale (contained) Deliberate release General release

89 299 1 19 1

1981–99 (mid-year) 4543 35 99 4

Note: * In addition, there are large numbers of contained projects involving GMOs that are of such low risk that they are exempt from GMAC’s Guidelines.

The deliberately released GMOs in Australia are largely agricultural crops but include ornamental plants, pasture species and micro-organisms of agricultural significance (see Table 14.2). Table 14.2 GMOs deliberately released in Australia to 1999 Crops Apple Barley B.juncea Canola Cotton* Field pea Grapevine Indian mustard Lentil

Ornamentals Carnation* Chrysanthemum Rose

continued

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Table 14.2

continued

Crops Lupin Poppy Potato Sugarcane Tobacco Tomato Wheat

Ornamentals Microorganisms Agrobacterium* Baker’s yeast Bovine herpes virus I (animal vaccines) Fowl pox virus (animal vaccines) Pseudomonas Rhizobium Salmonella (animal vaccines)

Pasture species Subterranean clover White clover Note:

*

General release

Table 14.3 lists the host plants and the major genes released as GMOs in Australia from 1981–97. In the last two years, cotton and canola with resistance to insects and/or herbicides have been the most numerous. Table 14.3 Some transgenes and host plants released in Australia from 1981–97 Transgene

Host plant

Insect resistance (17)* Herbicide resistance (19)*

Cotton, pea, tomato Canola, cotton, carnation†, lupin, rose†, subterranean clover, wheat Lupin, potato, sugarcane, white clover.

Virus resistance (10)* Notes: * Number of proposals † Marker used in construction

LIVESTOCK As far as livestock are concerned GMAC has considered only one proposal for deliberate release. This concerned pigs carrying extra copies of porcine growth hormone controlled by a zinc-sensitive metallothionein promoter. GMAC regularly receives research proposals involving ‘knock-out’ and ‘knock-in’ mice.


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POST RELEASE As more transgenic crops are granted general release status and become freely traded, new challenges arise for their management by individual farmers. This applies particularly to insect and herbicide resistant crops. The development of resistance that has already occurred in insects and weeds to applied chemicals, and in pathogenic bacteria to therapeutic antibiotics, gives ample cause for concern that transgenic crops will rapidly lose their efficacy, if not appropriately managed. The challenge is to ensure that this new and powerful technology is used in a truly responsible way. Up to the time of a general release, a good deal of effort has been put into identifying potential hazards and devising practices to eliminate or contain hazards. When GMOs enter the commercial sphere, the GMO must be managed by individual farmers. It is clearly not feasible to suggest a universal way in which GMOs can be incorporated into any farming system, given the great range of soils, rainfall, cropping rotations, capital equipment and farm management prevailing across Australia. Nonetheless, some guidance on best management strategies can be set out which will assist farmers to extend the life of GMO crop plants. An attempt to tackle this problem is being made through the Commonwealth’s Ministry of Agriculture, Fisheries and Forestry’s Standing Committee on Agriculture and Resource Management. A working group of that standing committee has prepared a document identifying points to be considered to manage GMO crops on the farm. This has been accepted and it is proposed that two workshops be held to provide a forum to consider points of concern, one at the time of the first field trial, and the other at the time of the general release (when data from earlier field trials are available and GMAC’s surveillance stops). At the second workshop, an information package would be developed in which the seller of the GMO seed sets out important points for farmers to implement in their use of it; these measures should be seen as an essential part of their integrated weed or pest management strategy. The management plan must also include monitoring and reporting arrangements for any adverse effects. It may be appropriate for these measures to constitute part of a contract or licence accompanying the sale of the seed. The classification of herbicides on the basis of their mode of action and the labelling of all containers with the appropriate symbol is an excellent example of cooperation between scientists, consultants, industry and farm managers. It is hoped that a similar cooperation will be achieved in Australia for the management of transgenic crop plants on the farm.

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GENE TECHNOLOGY REGULATOR: POSSIBLE MODE OF OPERATION When legislation is in place, it is probable that the GTR will receive advice on policy from the Minister of Health, a ministerial council, a public consultative committee and the Australian Health Ethics Committee. Proposals for general release will be sent by the GTR to GTTAC for advice on the molecular, environmental and genetic aspects (as GMAC does at present), and to Environment Australia for their risk assessment. The views of the public and the states and territories will also be sought. From this advice, the GTR will develop a risk assessment which is circulated for public comment. Following response to this, the GTR will make a decision.

ANNEX How Much Health Risk from GM Food? Scientific risk management and GM risk To manage risk, you must • • • •

identify potential hazards quantify the probability of the hazards occurring estimate the damage should the hazards occur identify measures to minimize or eliminate the hazards.

In connection with GMOs, GMAC’s guidelines are directed at obtaining very detailed responses to questions seeking information on each of the above points from parties who wish to work with, or release live GMOs into the environment. The potential hazards can be systematically identified by asking questions about: • • • • • •

the host organism the donor of the DNA the inserted DNA the resulting GMO the environment in which the GMO is to be grown the interaction between the GMO and its environment.

From this information, GMAC makes a value judgement about the seriousness of any novel features of the GMO. GMAC advises the proponent


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on safe working practices, and may impose conditions upon the work to minimize any potential damage. GMAC may recommend against the work proceeding at all, if it judges the hazards to be serious and likely to occur. The process of assessing and managing the risks from ingesting GMO foods is set out in the next section. Human risk and GMO foods (Figure 14.2) Some concerns of the general public about GMOs as food, or as an ingredient in food, relate either to the novel DNA, the novel protein or both. It is helpful to set out putative hazards, to estimate the probability with which those hazards may eventuate, and consider how dangerous it would be, should they occur. Some sectors of the community have concerns based on lifestyle, religion or socio-economic preference, such as a preference for cottage agriculture. These issues, however significant for some groups, are not approachable by the process of hazard analysis and risk management which will now be considered. Digestion First, consider what happens in the alimentary canal when food is ingested. (i)

In the mouth, food is chewed into smaller pieces and mixed with saliva containing the enzyme, amylase; starch digestion begins. (ii) In the stomach, the pH is rapidly lowered to between pH1 and 2 and the slurry of food is digested by peptic enzymes which attack proteins. The acidity hydrolyses many bonds in large molecules, such as protein and nucleic acids. Foods remains there for some six hours. Little adsorption into the bloodstream occurs from here. (iii) In the duodenum (small intestine), the pH is raised to about eight and a battery of enzymes and bile salts is released to continue degrading proteins, fats, carbohydrates and nucleic acids. The small molecular weight sub-units of those large molecules (amino acids, fatty acids, sugars, nucleotides and their bases, respectively) are adsorbed into the bloodstream. The body reassembles the sub-units into its own proteins, fats, carbohydrates and nucleic acids. (iv) The contents of the duodenum pass to the large bowel where they meet a very large population of bacteria. These secrete a wide spectrum of degradative enzymes, many of the bacteria lyse, and intra-cellular enzymes are released. This dense population of bacteria scavenges avidly for nutrients in the bowel. (v) The bowel contents are finally somewhat de-watered and excreted as faeces.

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Saliva

Stomach pH 1–2; peptic digestion pH 8, tryptic, bile, nuclease, digestion, bile salts.

Large bowel

➜

Selection if antibiotic prescribed

R-gene with plant promoter

E coli + R-gene with bacterial powder ➜ Pathogen + E coli with R-gene ➜ Pathogen now with R-gene

Note:

For the pathogen to become dominant, the antibiotic must be prescribed.

Figure 14.2 Steps required for an antibiotic resistance gene (R-gene) in food to be transferred to a pathogen


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Putative hazards from GMO foods With this background on the digestive process, what hazards might arise from GMO foods? • From inserted DNA Some people are concerned that the DNA inserted into GMOs could pass intact into the host (human or animal) and have some deleterious effect. There is no reason to believe that the inserted DNA of the GMOs, because it is derived from another organism, will behave in some way that is different from the rest of the DNA in the food. From birth, we have been ingesting DNA in all the biological material we eat. The same is true for other animals. Further, animals eat all their food raw; we cook much of ours and thus partially or fully destroy many large molecules such as proteins and nucleic acids. If adsorption and expression in the consumer of DNA from food were common, or even possible, it could be expected that it would have been observed as a natural event, given the eons of time and the multitude of species with similar digestive processes to humans. This has never been reported. • DNA coding for antibiotic resistance Some fear that a marker gene for antibiotic resistance present in some GMO foods might survive to reach the large bowel. There, the gene might pass to a pathogen, rendering it resistant to that particular antibiotic. Let us consider the steps the DNA must take. The gene must (a) (b) (c) (d)

escape low pH and peptic digestion in the stomach; escape high pH, tryptic and nuclease digestion in the small intestine; escape enzymic hydrolysis in the large bowel; enter into a plasmid or the chromosome of a common gut organism like E. coli and replicate. The receiving bacteria would have to excise the plant promoter (genetic switch) from the resistance gene and acquire a bacterial promoter before it could be expressed in any bacterium; (e) pass from E. coli to a pre-existing pathogen in the gut (incidentally, the person must be a carrier case or incubating the disease for the pathogen to be present); (f) be expressed in the pathogen; (g) finally, the antibiotic must be administered to the person to select the resistant pathogen. A probability can be assigned to each of these steps and the overall probability computed by multiplying these probabilities together. If each step had a chance of 1 in 100 of occurring, it is clear that the probability of a resistant pathogen is negligible, but in fact, the 1 in 100 chance is an unrealistically high probability. Further, the most common antibiotic markers in plants (kanamycin and hygromycin) are not used as therapeutic agents to control enteric disease.

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In any case resistance in pathogenic bacteria to these antibiotics is widespread in nature already. A far more potent cause of serious antibiotic resistance comes from the hospital environment, and from the feeding of therapeutic antibiotics in the diet of livestock. • Adverse effects from the novel protein In addition to concerns about the effects of the DNA itself, some fear that the protein coded by the introduced gene could be harmful. The novel protein could be an allergen, toxin, teragen or carcinogen; it could have an unwanted nutritional effect; it might change flavour, texture or some property affecting food processing or storage; it could affect fertility. In order to elicit an allergic response, the protein or a peptide derived from it must retain the essential allergenic sequence of amino acids against digestion in the stomach to reach the small intestine intact. There, the allergenic peptide must escape digestion and react with cells of the mucous membrane, and this may lead to a hypersensitive response in a susceptible person. Similarly, toxins, carcinogens, teragens and fertility factors must escape digestion and be adsorbed intact from the small intestine and be transported to their respective sites of action. Conventional foods and proteins secreted by bacteria and other organisms are known to have some of these undesirable outcomes, so it is possible for the novel protein in the GMO to reach the small intestine intact. GMAC will have scrutinized the genetic background of the GMO. They will have information on the base sequence of the novel gene, its product, its controls and stability. They will also investigate whether any other inserted DNA is present, and they will know the properties of the organism from which the gene was excised, and the properties of the vector, if one was used. They will also investigate the phenotype of the resulting GMO. Advice from GMAC is sent to ANZFA and is used by them as part of their assessment of the safety of the GMO as a food. ANZFA will require detailed data on the chemical composition of the food GMO and the results of feeding trials in experimental animals such as mice, rats, rabbits, chickens, to ensure that there is no evidence of any of the unwanted outcomes mentioned above. The amino acid sequence of the protein will be scrutinized for the presence of any known allergenic peptides. If the donor and host organisms have a long history of safe use as food, or if the donor organism is known to be commonly ingested with food, or is present as part of normal flora, then it is highly improbable that a protein from such a benign source will cause problems when it is expressed in an otherwise conventional food organism. On the other hand, if the donor organism is known to cause allergies in some people, then the GMO should be so labelled. Similarly, if the GMO is safe but is substantially different from its conventional counterpart, the food authority may pass it for sale, but require it to be labelled to indicate that difference. As


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stated previously, the whole matter of labelling of food GMOs is pending on the finalization of the ANZFA Food Standard A18. Finally, it should be remembered that proteins in food that has been heated before consumption will be largely denatured and less liable to have unwanted effects. However, it is also true that some proteins are relatively heat stable, and that many foods are consumed raw. Regulations and careful overview must reflect these realities.

15. GM foods and global trade David Robertson In the case of genetically modified crops, opponents will not accept any level of risk. This controversy is really an ideological and political battle in a wider war against unfettered free trade, globalisation and multinationals. You do not win such battles with science. You win them with propaganda. (New Scientist editorial, 22 May 1999)

Public campaigns opposing genetically modified crops and foods, promoted uncritically – and almost universally – by the media, are already affecting international trade flows and threatening the future of the World Trade Organization (WTO), which means the rules-based multilateral trading system. Some European governments have introduced bans on imports of agricultural commodities that may contain GM varieties, while EU environment ministers have introduced a de facto moratorium on new trial plantings of GM crops until new rules authorizing them have been approved. These could be delayed until 2002. In Japan new food labelling laws have been introduced for 30 foods, while in Australia new labelling regulations are being considered for foods that may contain GM constituents. The outcry by non-government organizations (NGOs) against GM foods has caused food retail chains in many European countries to remove popular brands of widely used processed foods from their shelves (for example, tomato paste, soya breads and so on). These decisions will affect trade in due course. The storm over GM crops and foods has blown up suddenly in the past year. North American farmers and consumers had accepted their introduction with equanimity since early in the 1990s. Substantial proportions of American staple crops (maize, soya, cotton, canola) now come from GM stock. (According to the OECD Secretariat, 35 such crops had been approved in the US by mid-1999, and many other GM substances were used in food processing.) Until the recent outcry these were treated as equivalent to traditional crops and mixed in storage. Now some US commodity companies are seeking to segregate GM production, in order to retain access to some overseas markets. (The Wall Street Journal, 2 September 1999 reported that US corn sales to Spain and Portugal had been blocked for many months and that US grain exporting companies were asking farmers to segregate GM varieties in an attempt to recover these markets.)1 206

GM foods and global trade

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The capitulation by major retail chains and multinational food companies in Europe to lobbying pressures and media campaigns has encouraged anti-GM groups. Consumer groups stimulated by international environmental organizations – such as Greenpeace and the Worldwide Fund for Nature – have pursued national governments, seeking regulations and laws to prohibit testing of GM crops and sale of GM foods. Most of the demands find public sympathy because of the failure of food safety standards (dioxins in Belgian pork and chicken, the BSE outbreak in Britain, swine fever outbreaks in the Netherlands, hysteria in France) rather than to any scientific evidence about GM crops. The demands build on concerns among Europeans that their regulatory authorities cannot be trusted. American consumers, however, have longstanding confidence in the US Food and Drug Authority (FDA). Ironically, Europeans also accept FDA approval of pharmaceuticals, but not apparently food. Encouraged by the success of the anti-GM campaign in Europe, which is spilling over into North America, militant NGOs have added biotechnology to their established anti-trade agenda of environmental protection, human rights, labour standards, cultural protection and rhetoric against multinational enterprises (MNEs). Having tasted institutional blood by demonstrating against OECD negotiations on the multilateral agreement on investment (MAI) in October 1998 (Henderson, 1999), and claiming success from the suspension of negotiations, these groups relish the new battle. Such publicity swells the NGOs’ financial coffers! The media reporting of protests and demonstrations in Seattle, and NGOs’ claims to have stopped the new WTO round of trade negotiations have doubtless found new converts among the Luddites and antiestablishment groups. Already import restrictions on GM foods and proposals to introduce new national labelling regulations are restricting trade in ways that contradict existing WTO rules and will cause disputes. Notwithstanding the failure of the WTO ministerial meeting in Seattle, the WTO Council will have to find ways to deal with biotechnology disputes. None of the Uruguay Round agreements deal specifically with biotechnology, which makes the WTO vulnerable to attack over GM foods. The relevant provisions are in the WTO agreements on technical barriers to trade (TBT), sanitary and phyto-sanitary standards (quarantine) (SPS), trade-related aspects of intellectual property rights (TRIPs), and GATT (1994) article XX: General Exceptions. (The relevance of these provisions is examined below.)

WHY HAS GM FOOD SAFETY BECOME PROMINENT? Biotechnology is not new. Plants and animals have been selectively bred for centuries. Without such efforts the traditional foods we eat would not be

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harvested in sufficient quantities to support the world’s six billion population. The Green Revolution of the 1970s which gave many developing countries economic take-off depended on new grain varieties. Feeding 10 billion by 2050 will depend on new high-yielding crops from even less hospitable soils and climates. Asian governments have acknowledged that sustainable food supplies will depend on GM (ADB, 1999). Micro-organisms have been used to produce bread and wine, beer and cheese for centuries, before scientists began to understand microbiology. Since the 1970s biotechnology has progressed into commercial industry with contributions to medicine and medical treatments, fuel processes and environmental uses, as well as agriculture and food processing. Ironically, environmental groups and other GM food sceptics have readily accepted the contributions of biotechnology to the creation of new materials such as biodegradable plastics, polymers and pesticides, and in domestic uses in fabric softeners, corrosion inhibitors, solvents, hair conditioners and perfumes. Many of these biotechnologies are also used in the chemicals, pulp and paper, textiles, leather, metals and minerals industries. These applications of biotechnology are regarded as beneficial to the environment, yet are viewed differently in the case of GM crops and foods. Similarly, biotechnology is making major contributions to medical treatment; OECD claims 80 biotechnology drugs are on the market in the United States (OECD, 1999a). Insulin is now manufactured from bacteria modified with human insulin-producing genes. Any risks associated with these treatments appear to be acceptable in the presence of life-threatening situations. Yet GM crops and foods are declared unacceptable until they are shown to pose no risk to consumers. Since most traditional foods have never been tested for toxicity, this GM scrutiny is far more stringent than is applied to conventionally bred food organisms. Opponents of genetic manipulation tend to classify all GM crops together. Yet GM refers to modern techniques of genetic enhancement which allow improvements in desirable properties beyond those which can be readily achieved by natural selection and breeding within a species. This genetic engineering is more certain and quicker than traditional breeding methods, but is not fundamentally different at the molecular level. Transgenics may be treated as a separate issue. The term refers to genes transferred between species that could not be achieved using traditional breeding methods; for example, by inserting genes from bacteria into plants to make them resistant to insect attack, herbicides, or to change the colour of flowers by exchanging genes between plants, or to prevent browning in potatoes. The infinite variety of gene transfers that this method makes possible could bring risks to food safety, that proper testing would expose.


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However, the accelerated development that genetic engineering ‘within species’ occasions should not cause concerns. Unfortunately, the evangelistic zeal of consumer and environmental groups opposing GM foods does not recognize the similarities with traditional breeding methods, preferring to label all GM foods as unacceptable (even where the outcome is identical to new types of apple, potato and cabbage bred using traditional methods). On the other hand, they accept somaclonal variation, protoplast or mutagenesis. An analytical approach to GM foods would classify risks from transgenic products into: (i) (ii)

risk to consumers from eating GM food; secondary damage, such as eating meat from animals fed on GM clover or similar fodder, which could lead to new allergies; (iii) third party risk that GM properties of modified crops might be transferred to neighbouring crops, natural vegetation or insects (a biodiversity issue); (iv) risks that modified genes might pass through the consumer and into the environment, where they could contaminate other organisms; (v) risks that pesticide residues might remain in foods as a contaminant, which of course occurs in conventional foods; (vi) risks that transferred genes might create new toxins in foods. Toxicologists point out that there are no effective methods for testing conventional foods, which could provide the starting point for GM testing. An OECD experts’ group decided in December 1998 that a new approach was needed (MacKenzie, 1999). At present it can be argued that GM foods have been tested more thoroughly than conventional foods, some of which are known to be poisonous if not properly prepared (kidney beans, almonds, manioc). Many plants’ natural protections against pests are toxic (potatoes, fruits). Microbiologists argue that secondary effects after digestion are extremely unlikely. The Royal Society’s expert group concluded that, ‘the risk of transfer of genes from GM crops plants to wild species and non-GM crops, or the uptake of genes from GM foods by the digestive system ... are slight provided the regulatory processes are followed’ (The Royal Society, 1998). Hence, it seems unlikely that GM foods will be any more toxic to consumers than traditional foods if subject to normal food safety standards. Genetic modification can be designed to enhance nutritional value, for example adding iron and vitamin A to rice (Holmes, 1999); or to increase yields by raising fertilizer absorption from poor soils (Addiscott, 1999). Third-party damage has been the principal concern of environmental lobbies; pesticide-resistant pollen escaping to cross-breed with weeds (for example, canola and wild rape) to create varieties resistant to normal weed-killers; insectresistant pollen falling on neighbouring plants on which insects feed (the

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notorious monarch butterfly case; Losey et al., 1999). There are many similar disasters being popularized without proper understanding. Little evidence has been found to support such claims. The amazing neglect in these ‘cases’ is the opportunity cost of not adopting these sophisticated genetic answers to serious environmental problems. Incorporating pesticide and insecticide resistant genes into plant species reduces the quantities of chemicals applied to crops, and hence decreases the amount and range of chemicals used, most of which finishes up in waterways. Even if the monarch butterfly story were true (see Box 15.1), the larvae killed by GM maize pollen on milkweed would be many fewer than if insecticide had been sprayed on the fields! Box 15.1 Monarchs, milkweed and GM maize

America’s famous monarch butterflies breed in the Mid-West corn belt, where caterpillars feed on milkweed. John Losey (Cornell University) noticed that milkweed near maize fields became sprinkled with maize pollen which was engineered to carry a bacterial gene for a natural insecticide (Bt toxin). In the laboratory, he discovered that milkweed leaves dusted in this way killed half the caterpillars, whereas dusting with non-GM maize pollen did not cause any deaths in a control group. This laboratory experiment evoked the expected over-reaction from ‘green’ NGOs, led by Greenpeace. The results were presented in Nature, with suitable warnings about their general relevance and the need for field trials. For example, it is claimed that monarch caterpillars do not eat dusty leaves when clean leaves are available nearby. Maize plants pollinate for only a few days that may not coincide with the equally short period that caterpillars feed on milkweed. On the other hand, Bt maize reduces the use of insecticide which would also be fatal to the caterpillars. Milkweed is regarded as a pest and is being widely cleared; probably a bigger threat to the monarch butterfly.

Source: Kleiner (1999); Losey et al. (1999).

Politicians are easily misled by such appealing propaganda. On French television in September, President Chirac said: Some in Seattle at the WTO are going to support the possibility of selling freely on the market food products for livestock and for people that are genetically modified or have undergone treatment with hormones. Our conviction is that we have no assurance that these practices meet standards for the health of mankind ... We know very well that GMOs can destroy certain parts of the environment, remember the case of the butterfly. (Reported by Reuters, Paris, 4 September 1999)


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Two other objections to GM crops concern the use of an antibiotic marker in GM seeds and the introduction of ‘terminator’ genes to create sterile seeds. The discovery that some bacteria are resistant to certain antibiotics has raised European sensitivities about antibiotics in animal feed (Mitchener, 1999). Fears have been expressed that over-exposure to antibiotics will reduce their effectiveness against diseases. The use of antibiotic-resistant market genes was also regarded as dangerous. Fortunately, research has established a new type of marker gene that does not use an antibiotic-resistance characteristic. This new procedure will remove the need to use antibiotics to select wanted transformants during strain construction (Coghlan, 1999b). The search for ‘terminator’ genes provided fertile ground for anti-GM propagandists too. Some hybrid seeds are naturally sterile and require fresh seed to be purchased each season. Some GM plants are sterile too, but others can retain their special characteristics. Introduction of ‘turn-off’ genes means fresh seed must be bought for each season. Good farmers wanting high yields will buy fresh seeds each season, as long as the higher yields warrant the investment. This is an economic matter. Monsanto and other agri-businesses sought to use a terminator gene, owned by the US Department of Agriculture, to guarantee income to offset the research costs. Some regard this search for ‘turn-off’ genes as creating a monopoly position and unacceptable (Editorial, Financial Times, 13 September 1999, ‘Seeds of a monopoly’). An anti-trust case is threatened in the US into the life-science industry because of increasing concentration of control and ownership by companies like Monsanto (Eaglesham, 1999). In October, Monsanto resiled from its earlier position on the ‘terminator’ gene (Financial Times, 7 October 1999). The scientific evidence supporting the case against GM foods is weak and dubious. But NGOs are adept at propaganda and fleet-footed in dropping confuted arguments in favour of others yet to be tested. Most NGO evidence against GM refers to the third-party effects on biodiversity, already discussed above. Actual evidence against GM foods for human consumption rests on discredited laboratory experiments like Pusztai’s force-feeding raw GM potatoes to rats (Concar et al., 1999, Pusztai, 1999). Even The Guardian’s efforts to undermine peer review of scientific research has only revealed how much the media wishes to control the release of information to the public (Wakeford, 1999). Asked to justify the expression ‘Frankenstein foods’ the media would be hard pressed to provide evidence beyond some vague ethical concerns about the way GM crops and foods are produced. It is extraordinary that GM crops and foods have become the centre of international disputes that threaten the world trading system. There is scarcely any scientific evidence of dangers to consumers or the environment (The Royal Society, 1998). Yet the anti-GM lobbies are demanding scientific proof that no

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GM product will ever affect human, plant or animal health. Apart from setting a standard that traditional foods could not meet, it calls for riskless foods in a world where food safety standards are frequently not achieved. Consumer groups in many OECD countries have taken the lead role by arguing for mandatory food labelling. Even this discriminates against GM food and ignores other aspects of food safety. Environmental NGOs declare that genetic engineering is dangerous for biodiversity. This is not supported by scientific evidence either. The real reason for their anti-GM propaganda may be more Machiavellian; part of a much broader programme to promote their role as leaders of ‘civil society’ in the WTO, to match their growing influence in most UN agencies (Scholte et al., 1999).

GM AND WTO AGREEMENTS The nature of national commitments to WTO agreements and how they restrain policies to regulate GM foods and plants needs to be explained. In spite of the NGOs’ desire to rewrite the rules, they cannot start with a clean sheet. There are existing rules and procedures to consider. Present demands to ban or regulate GM foods contradict WTO rules developed over 50 years. Already environmentalists have run foul of WTO rules in trying to establish new UN treaties – for example the Biosafety Protocol, Basel Convention – largely because they want to use trade sanctions as instruments to enforce environmental standards, refusing to admit any trade-off against competing policy objectives or the dangers in extra-territorial application of a nation’s laws. These are familiar issues in the WTO and have been discussed extensively in its Committee on Trade and Environment (CTE). National commitments to the liberal, multilateral trading system embodied in GATT/WTO agreements have contributed to 50 years of unprecedented global economic growth and prosperity. Rejection or modification of the GATT principles of non-discrimination, reciprocity and transparency require overwhelming evidence that these valuable principles would not be sacrificed, or that equivalent gains and stability would be provided by a new arrangement. Employing trade barriers for environmental or health reasons without acceptable scientific evidence about these matters will not ensure this. Public opinion based on fear of the unknown, ethical concerns and personal judgements may justify food labelling, but not trade bans that jeopardize the WTO system and remove freedom of choice from consumers. Demands for trade bans against GM foods and plants go right to the heart of the WTO system. Any attempt to restrict invention or marketing of new crops and foods threatens the fabric of international agencies, like the WTO.


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Quarantine and Food Labelling (SPS–TBT) The SPS agreement came into effect with the WTO on 1 January 1995. It covers the application of food safety and animal and plant health regulations to international trade. This represents a ‘carve-out’ from the broader, but less specific, ‘Standards Code’ contained in the TBT agreement. These agreements are implemented together to prevent industrial standards being used as barriers to trade. The TBT covers technical regulation and standards (including labelling requirements), while the purpose of a measure determines whether it is subject to SPS rules (quarantine). Implementation of the SPS agreement is supervised by the SPS committee of the WTO, which is currently reviewing its processes. The SPS agreement applies to: • measures to protect human or animal life or health from risks arising from additives, contaminants, toxins and diseases in foods and beverages; • risks from diseases carried by animals, plants or pests. Measures to protect the environment, consumer interests and animal welfare are not mentioned in the SPS agreement, although they may be addressed under the TBT agreement or GATT article XX: General Exceptions. Key provisions of the SPS agreement are: • measures must be applied to the extent necessary to achieve their purpose and be based on scientific principles; • measures must be non-discriminatory among countries where similar conditions apply, and be transparent and not constitute a disguised restriction on trade; • measures should be based on international standards,2 where they exist, except where otherwise justified by scientific judgement; • risk analysis should be used to establish appropriate protection. While a member country’s ability to establish requirements to protect human, animal and plant life and health is not restricted, a measure may be challenged by another member. Only governments can initiate a dispute according to the Understanding on Dispute Settlement (DSU). If a dispute cannot be resolved by consultation, it proceeds to the Dispute Settlement Body (DSB), which is responsible for settling disputes. The recent complaint by Canada about Australia’s quarantine regulations against imports of fresh salmon (salmon) was brought under the SPS agreement. The DSB panel decided that Australian quarantine measures were inconsistent with provisions in the SPS agreement, and nullified and impaired benefits that should accrue to Canada. On appeal

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this judgement was modified in some details but the Appellate Body still found that Australia’s action was inconsistent with SPS provisions. This decision was adopted by the DSB on 6 November 1998 and implemented by Australia in July 1999. GM products would not generally be covered by the SPS agreement. GM modifications are not normally regarded as additives, contaminants, toxic, disease carrying or pests. Evidently, the SPS agreement is intended to prevent the misuse of sanitary or phyto-sanitary regulations as barriers to normal international commerce, and are based on scientific evidence. However, the SPS agreement is relevant to trade in GM products in three senses. (i) The basis for SPS measures is scientific evidence. (ii) SPS measures depend on risk assessment. (iii) WTO members are committed to cooperate in the design of international standards for food safety and quarantine regulations by the TBT. (The WTO is not a ‘standards’ organization; it depends on established standards from ISO, Codex Alimentarius, OIE, IPPC.) The SPS agreement, however, does allow ‘precautionary measures when a government considers the scientific evidence is insufficient to permit a final decision on safety’ (see Pauwelyn, Chapter 5, this volume). All these components of the SPS could provide the basis for negotiations on GM foods. Moreover, the standards-setting organizations need to be sound and have a representative and comprehensive membership. Some developing countries argue that they are inadequately represented on the major international standards organizations. The TBT agreement covers many quality requirements for foods, including labelling. Standards for food labelling must not impose onerous costs of compliance. This could be a critical issue for food testing because monitoring for GM material is very expensive (Coghlan, 1999a). Already the Australian proposal for mandatory labelling of GM foods has been delayed on grounds of cost (Australian Financial Review, 22 October 1999). Japan and the EU are considering similar schemes, but costs do not seem to have been mentioned. For labelling to gain the confidence of consumers proper standardized testing will be necessary. This will also be a requirement for international disputes. The SPS–TBT rules as they stand will not provide a solution to the GM foods controversy. Reference must be made to the international standards agencies already mentioned. If it is necessary to establish that GM products are not harmful in the long term, rather than the more conventional safety tests, uncertainties could continue for many years. Given the investments in GM production in many countries, domestic as well as international conflicts will occur between


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consumers and producers. At the international level, the subsidiary role of the TBT agreement in applying international standards means that acrimonious negotiations are likely over what new kinds of agencies should be established. Differences over the draft Biosafety Protocol will resurface. Eco-labelling and waste-handling requirements have been extensively discussed in the CTE and they have remained contentious because they are potentially trade distorting, and their role in protecting the environment is unclear. Eco-labelling is supposed to assist consumers to make informed purchases. The labelling schemes may be administered by central and local governments, and by NGOs, so they all carry the risk that local producers will be favoured over foreign suppliers. For example, foreign producers may not be aware of the procedures for labelling before they enter a market, most labelling authorities are unlikely to facilitate foreign competition, and the labelling standards may not recognize constituents or processes that are not used locally. There is great scope for the introduction of non-tariff barriers to trade. Even ‘voluntary’ schemes for labelling prejudice buyers against nonapproved alternatives. Business has expressed concern about transparency and consultation processes in establishing eco-labelling, and has similar opinions about GM food labelling. Developing countries in the WTO are particularly concerned about access to technologies that may be necessary to meet labelling standards and about their ability to achieve required environmental or health standards, which are inevitably based on domestic criteria. Since environmental conditions vary among countries, some flexibility in labelling is necessary if arbitrary barriers to trade are to be avoided. The TBT provisions will allow member countries to introduce mandatory food labelling, on condition it is the ‘least trade restrictive’ measure available. However, self-appointed consumer groups have been identifying GM foods and crops for special treatment while ignoring other aspects of food safety. The consumers’ ‘right to know’ cannot be denied. At the same time, increasing knowledge of genetic engineering is likely to reduce some of the present hysterical opposition – that is, labels could be educational. Allowing mandatory labelling, subject to TBT provisions, would be preferable to trade bans or discrimination. Ultimately, though, the effectiveness of labelling requirements still depends on the food-testing authorities and the official regulators, which appear to be a weak link in European countries. Risk Assessment It is the SPS agreement that provides for effective food safety procedures based on scientific methods and proper risk assessment. Unfortunately, recent WTO trade disputes based on the SPS agreement (for example, salmon, beef-

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hormones) and environmental protection (shrimp-turtle) have not helped to establish confidence in scientific risk assessments. Risk comprises the likelihood of something happening and the consequences of that. It extends, therefore, beyond science alone and it depends on different perceptions. Some groups are risk averse, especially if it costs nothing. Officials/regulators seek to minimize possible damage to their reputations by avoiding risk. Consumers and environmental NGOs are similarly risk averse if that position is perceived to have no direct cost to them (for example, an imported good). They ignore long-term consequences. On the other hand, businesses rely on risk-taking to make profits, although even they tend to favour rent-seeking activities if opportunities are offered. In these cases, ‘risk’ is in the ‘eye of the beholder’ and an objective definition is difficult to achieve. ‘Risk analysis’ has taken on new significance because environmental and health and safety issues have risen to prominence in the public debate. NGOs pressing for protection of ‘public interests’ present their arguments in black and white, without accepting any trade-offs. This begs the question, what is the ‘risk’ of an event occurring? Analysis contains several elements: • risk identification • assessment of the options • evaluation of the consequences of taking specific risks. The outcome of this analysis is decisions about risk management (reducing consequences of choices) and risk communication to stakeholders (Nunn, 1997). These processes are not one-way communications but depend on exchanges between the assessors, the stakeholders and the risk takers (for example, consumers and food producers with respect to GM foods). Risk assessment is also multidisciplinary. Assessing quarantine standards, for example, is not only about scientific evidence but about economic, commercial, environmental and social considerations as well. Risk analysis is undertaken using a precautionary approach. Once the risk has been assessed and its probability established, it becomes a management matter. The options followed must depend on the seriousness of the risk. If it is not serious, draconian measures are not necessary. With respect to GM foods it does not require zero risk. The option taken will depend on cost–benefit analysis, identification of responsibility for risk assessments and continuing review of new evidence. Achieving agreement on risk management brings its own problems, within national governments as well as at the international level. Departments of health and consumer affairs tend to seek low risk outcomes, whereas trade and agricultural ministries would accept scientific evidence. NGO influences on these positions will also differ. In all, governments have difficulties establishing coherent positions to take to international meetings.


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This modern multidisciplinary approach to risk assessment exposes one of the weaknesses in the SPS agreement. Scientific evidence alone is not enough. Recently public respect for scientists in many OECD countries has collapsed under a battering from self-appointed NGO critics and ill-informed media. The anti-GM lobbies do not want to give prominence to scientific evidence of risk because their support relies on public outrage, moral indignation and personal values – none definable! Belief outweighs evidence – or bad news sells newspapers. Since medical science is accepted so readily (new pharmaceuticals and gene treatments are welcomed even before testing is completed), it is anomalous that other biotechnology is rejected so completely, especially GM plants. This distrust seems to be media generated, with assistance from commercial naivety (short-term rent seeking) among some major seed companies. The SPS agreement will be a major target for governments and NGOs seeking to establish new trade rules to cover biotechnology in the upcoming WTO round. The SPS contains a precautionary approach to quarantine matters (see article 5 on introducing provisional measures while a full assessment is being undertaken). The EU Commission wants this precautionary approach extended to cover biotechnology in general (see below). GATT Article XX This article allows for members not to apply aspects of the GATT rules in specific circumstances. The ‘general exceptions’, however, may not be used to discriminate between countries or as disguised restrictions on international trade. Two provisions of article XX are relevant to GM foods as a public concern and as an environmental matter: • XX(b) allows exceptions ‘necessary to protect human, animal or plant life or health’; • XX(g) allows exceptions ‘relating to the conservation of exhaustible natural resources’. (The SPS agreement was introduced during the Uruguay Round negotiations as an elaboration of article XX(b).) It is the question of discrimination between countries that confuses environmental NGOs, as was shown in US reactions to DSB decisions in the tuna-dolphin and the shrimp-turtle disputes. In both cases the US authorities applied trade embargoes based on domestic legislation against foreign exporters without consultations. (‘No country has employed [trade] sanctions as often as the United States’ (Hufbauer, 1998).) That extra-territorial application of US laws might be unacceptable under GATT rules seems to be

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beyond the comprehension of NGOs. Hufbauer shows that sanctions seldom achieve their objectives, inflict pain on the innocent and damage the interests of the perpetrators. Not surprisingly the United States would like to widen article XX to allow unilateral measures and extra-jurisdictional applications of national environmental laws. But this would undermine the open, non-discriminatory, rules-based system of the WTO. The EU Commission favours global environmental agreements having priority over WTO rules, including article XX. This is another attempt to bypass non-discrimination, because article XX allows trade measures on environmental grounds, as long as they are non-discriminatory. Developing countries oppose any amendments to article XX on the grounds that any relaxation of its conditions would open new opportunities for OECD protectionism. Intellectual Property (TRIPs) The basic objective of the TRIPs agreement is to provide effective protection for intellectual property rights to promote and encourage creativity and inventiveness. This is relevant to the GM debate. The TRIPs establishes a minimum standard for protection of intellectual property to apply in all WTO member countries. Some developing countries have baulked at introducing TRIPs standards next year. Least-developed countries have until 2006 to comply with TRIPs. Intellectual property rights have become increasingly important in international trade which makes differences in patent protection significant. Harmonizing protection in the TRIPs system, including administration and enforcement of intellectual property law, is important for the trading system. The TRIPs agreement has been monitored over the past five years, and is currently being reviewed informally. The TRIPs council is concerned not to reopen the whole text for review because it might jeopardize the delicate consensus established in the Uruguay Round drafting. During 1999, the TRIPs council has been reviewing article 27.3(b) of the TRIPs agreement, on the protection by patents of plant and animal inventions. At present that article allows an exemption of plants and animals from patent requirements under TRIPs. However, microorganisms and microbiological processes for the protection of plants or animals are not exempted. Nor are plant varieties although these may be protected by an effective sui generis system instead of through patents. Here is some uncertainty for GM inventors. Some fundamental philosophical problems arise about intellectual property rights and the monopoly powers they endow. Evidently, R&D investment requires an appropriate return to encourage technological advances, but social returns are optimized if knowledge is available at low costs. Achieving balance


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between these goals requires a balance between patent (copyright) protection and competition policy (allowing new entrants into production). This raises questions about TRIPs that will not be easy to answer. Significant differences have been revealed between developed and developing countries over article 27.3(b). India and several other major developing countries have proposed changes that would ensure that benefits based on biological material drawn from another country would receive patent benefits. India has also proposed that a system of prior informed consent should apply to material transfer agreements, consistent with provisions in the UN Biosafety Protocol (February 2000). Other developing countries have proposed an alternative way to protect indigenous knowledge and biological material by guaranteeing existing exceptions from patents that allow ‘farmers’ privileges’ and ‘plant breeders’ rights’. If patent rights were granted on plants and animals according to article 27.3(b), they might be used to bypass exceptions for traditional or cultural stock. These countries are concerned that their lack of expertise in GM technology might prevent them from appreciating the potential residing in their own natural resources, and losses might occur through patenting. Since the TRIPs agreement came into effect, some developing countries have expressed doubts about its consequences for their trade potential and economic development, and their capacities to safeguard their interests under the present rules. Some evidence exists already that opposition to GM plants in non-OECD countries arises from concern that their indigenous crops might be out-competed by super-crops planted in other countries, if they were unable to afford to buy new GM plant stock. Many developing countries believe that they have suffered from their traditional markets being captured by new producers with more efficient systems (for example, coffee, cocoa and palm oil). This opposition is evident in the positions that many developing countries have adopted in the UN negotiations on biosafety. Now some OECD governments and NGOs are criticizing the TRIPs on ethical and economic grounds. These different perspectives could be a key element in any confrontation over biotechnology in the WTO. Committee on Trade and Environment (CTE) The WTO has already reviewed several topics relevant to GM foods and plants in the CTE. It is doubtful whether many anti-GM NGOs are aware of this. CTE discussions on eco-labelling and packaging requirements have direct relevance to new national food labelling proposals. The aim of discussions in the CTE was to establish procedures for labelling and packaging that were consistent with WTO principles of non-discrimination and transparency (that is, to prevent the use of labelling for trade protectionism).

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Production and processing methods (PPMs) are not reasons for trade restraints in the WTO because its principle of non-discrimination requires equal treatment for ‘like products’ (GATT article III). This has been a controversial issue in the CTE discussions. Using PPMs as an excuse to restrict trade is excluded by the agreement on Technical Barriers to Trade (TBT). The DSB decision against the US import embargo on shrimp from countries that did not use turtle-excluder devices, however, has suggested that PPMs might be used for environmental reasons. Outlawing GM foods that are substantially the same as traditionally produced foods would not be consistent with article III, but the OECD principle of ‘substantial equivalence’ in the assessment of novel foods has been brought into question, which may again throw doubts on the conventional interpretation of article III. The conditions for pre-market testing of foods are set out in the SPS, while TBT establishes conditions for mandatory labelling regulations. The CTE is used for pre-negotiation discussions on trade and environment issues. These discussions are directly relevant to differences over interpretaBox 15.2 The precautionary principle This is a risk management approach to be exercised in circumstances of scientific uncertainty, requiring action to avoid damage without awaiting the results of scientific research. This approach is based on six guidelines: (1) Implementation of an approach based on the precautionary principle should start with an objective risk assessment, identifying at each stage the degree of scientific uncertainty. (2) All the stakeholders should be involved in the decision to study the various management options that may be envisaged once the results of the risk assessment are available and the procedure should be as transparent as possible. (3) Measures based on the precautionary principle must be proportionate to the risk which is to be limited or eliminated. (4) Measures based on the precautionary principle must include a cost/benefit assessment (advantages/disadvantages) with an eye to reducing the risk to a level that is acceptable to all the stakeholders. (5) Measures based on the precautionary principle must be able to establish responsibility as to who must furnish the scientific proof needed for a full risk assessment. (6) Measures based on the precautionary principle must always be of a provisional nature, pending the results of scientific research performed to furnish the missing data and perform a more objective risk assessment.

Source: European Commission D-G XXIV (Consumer Policy and Consumer Health Protection); 17 October 1998.


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tions of WTO agreements in the context of environmental policies, but they also provide opportunities for policy coordination among member countries. This facility could be relevant to the GM debate, especially in preparing for amendments to existing WTO agreements to cover GM crops and food, particularly SPS and TRIPs, or if support builds for a comprehensive agreement on biotechnology. A new debate on the precautionary principle, which some are trying to establish as part of customary international law, would certainly need to be referred to the CTE for discussion (Box 15.2). Several EU countries want WTO rules to put greater emphasis on the precautionary principle where trade and environmental issues are involved.

HOW MUCH TRADE? The focus on WTO trade rules may appear dry and legalistic, but this is where the NGOs’ attention is directed. The volume of trade that might be directly affected by bans or other restrictions on trade in GM plants and foods is quite small. Few crops yet have significant production of GM varieties. However, if major exceptions are made in WTO rules to accommodate special treatment for GM, it will undermine the rules-based multilateral trading system. Opposition to the WTO, globalization and MNEs is manifest in the outpourings of NGOs. Any weakening of the WTO rules will be used to prise open the way for new exceptions and escape clauses. Once again, agriculture promises to offer the most difficult issues in biotechnology. Differences between the protectionist countries (EU, Japan and Korea) and the leading exporters (United States and the Cairns Group) were exposed in the preparatory meetings before the WTO ministerial meeting in Seattle. The former group wants acceptance of ‘multifunctionality’ before new trade negotiations can begin. This requires that agricultural policies should be accepted as having a multiple role in protecting the environment, sustaining rural economies and ‘cultural’ pursuits, and maintaining the amenity of the countryside. In other words, agriculture should not be subject to normal liberal trade rules (see Box 15.3). The subject of GM plants has become caught in the EU commitment to ‘multifunctionality’, as catered for in the draft UN Biosafety Protocol. This provides protection against GM organisms that might compromise ‘traditional’ socioeconomic activities (that is, farming).3 This provision is one reason why the Miami Group (United States, Canada, Argentina, Chile, Australia) opposed the Biosafety Protocol. Multifunctionality is also being used in the GM debate in Europe. Dr Fischler (EU Agricultural Commissioner) has indicated that he would like to renegotiate the SPS agreement to permit trade restrictions to be used to accommodate consumer preferences (Kerr, 1999). Leaving consumers

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Box 15.3 European multifunctionality

According to the Commission, the main lines of this model are: • • •

• •

a competitive agricultural sector which can gradually face up to the world market without being over-subsidized, since this is becoming less and less acceptable internationally; production methods which are sound and environmentally friendly, able to supply quality products of the kind the public wants; diverse forms of agriculture, rich in tradition, which are not just outputoriented but seek to maintain the visual amenity of our countrysides as well as vibrant and active rural communities, generating and maintaining employment; an agricultural policy which establishes a clear dividing line between the decisions that have to be taken jointly and those which should stay in the hands of the member states; an agricultural policy where the expenditure is justified by the services which society at large expects farmers to provide.

The Agriculture Council at its meeting of November 1998, broadly endorsed the Agenda 2000 proposals and affirmed its belief in this Model of European Agriculture (Council, 1998).

Source: Swinbank (1999).

free to choose what they purchase does not seem to suit European farmers – or Dr Fischler! Without an effective food safety system, foreign exporters are the natural targets for the European anti-GM campaign. The heavy protection given to traditional agriculture by the Common Agricultural Policy means that EU farmers have little interest in raising their productivity, and no incentive to try new GM crop varieties. GM is both directly and indirectly relevant to production costs. Adoption of GM crops could reduce prices and improve export competitiveness. On the other hand, more stringent food safety standards, possibly relating to GM foods, could raise production costs at home. Confidence that products are safe and meet international standards should increase export opportunities. National regulations, however, could close trading opportunities. Evidently, food regulations to meet consumer or health standards can be an effective form of trade protection and popular among rent seekers. This makes international rules and food standards necessary (OECD, 1999b). Trade in agricultural products accounted for just over 10 per cent of world merchandise trade in 1998; four-fifths were food exports (WTO, 1998). Much of this trade is intra-regional, including 29 per cent of it within the EU. At


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present, few countries have substantial exports from GM stock, although 55 per cent of US soya bean acreage is genetically modified, around 35 per cent of corn and 50 per cent of cotton. The initial effect on exports from import bans on GM foods by the EU and Japan will not be serious. However, in the longer term GM varieties will offer higher yields and cost advantages.

BIOTECH IN THE WTO It is shown above that failure to deal with biotechnology in the Uruguay Round left references to GM issues dispersed across several WTO agreements. Several major WTO players would like to establish a single set of rules, based on provisions in the UN Biosafety Protocol. In the present anti-GM atmosphere, such a new agreement could undermine the WTO system and create unnecessary constraints on GM foods in the future. Before the Seattle ministerial meeting, Canada and Japan proposed that the WTO should establish a working group on GM crops and foods (excluding GM pharmaceuticals as uncontroversial). One objective of such a group would be to educate officials (and others) about biotechnology issues. This might allay suspicions and move forward discussions on market access for GM products. The working group could review existing WTO provisions affecting GM crops and foods, without a commitment to negotiate. US farmers and food retailers favour the present SPS agreement, citing DSB decisions on Japanese testing of fruits and the EU ban on beef from cows fed growth hormones as positive support for SPS provisions. They are attracted also by the SPS commitment to scientific risk assessments (Inside US Trade, 1999). On the other hand, some EU officials regard GM foods as a labelling issue under the TBT agreement, while wishing to tighten food-testing requirements in the SPS. Negotiations to establish a new regulatory framework for mandatory labelling would delay access for GM foods for several years.

WHERE NEXT? The initial intensity of the GM debate is beginning to give way to more reasoned discussion and government officials are seeking constructive approaches to the biotechnology issue in the WTO. Only extremists believe there is anything to be gained from trade sanctions. Establishing a WTO working group on biotech issues will allow proper assessment of scientific evidence and the economic effects of GM crops and foods. This will facilitate

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discussion on whether WTO agreements need amendments or a new set of provisions to disentangle the contradictions. The GM revolution has important economic dimensions. Feeding the world’s growing population will depend on raising agricultural yields and nutritional contents. The advantages offered by genetic manipulation should not be rejected on emotional or superstitious grounds. GM provides methods for accelerating the processes of selective breeding that have been used for centuries. Transgenics provide means to protect plants from pests and disease by implanting genes from bacteria which alleviate the use of chemicals that endanger the environment, and which improve chemical uptake from soils and reduce fertilizer use. Recognition of these benefits by ‘green’ NGOs will indicate whether their interest is in the environment and poverty, or simply political disruption. The agri-business industry has to polish its image by confronting the media and anti-GM lobbies about the benefits of biotechnology. The profits available from GM products should be an incentive. Similarly, farmers have potential to raise yields and returns. Governments could help by revising food safety regulations; the EU, United States and Canada are reviewing their statutes on food, health and safety. GM testing and labelling will raise the costs of supplying markets. In Australia, the costs of introducing mandatory labelling for GM foods are being investigated before final approval can be given to the labelling proposals by the Australia New Zealand Food Standards Council. The economic costs of GM labelling and withdrawal of GM foods from the market in Europe do not yet seem to have been considered. Correcting recent food-safety scares in European countries by improving food testing must bring a financial cost, and costs of labelling (once approved) will have to be added. There are also social costs from trade embargoes and market disruption. As traditional trade barriers are reduced, national regulations on food safety and quality controls become more important in international trade. TBT and SPS have helped to establish international standards and discouraged resort to differentiated national standards that might distort trade and lead to trade disputes. But the economic stakes are high and trade conflicts over food safety and quality will require international cooperation. Codex Alimentarius and several OECD working groups are already reviewing food safety issues (OECD, 1999b). Over one hundred years ago Francis Edgeworth wrote ‘The first principle of economics is that every agent is actuated only by self-interest, including government’ (Mathematical Psychics, 1881). Cynical perhaps, but confirmed by experience. This principle applies to the motives of the anti-GM lobbies. Some attacks by ‘greens’ on trial plantings of GM crops in the UK have been led by declared organic farmers. Their marketing theme is ‘no chemicals’. Many


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GM varieties also have this goal and are therefore competitive. Expanding foodsafety rules and testing ought to be applied to organic crops. The intense media debate stimulated by demonstrations by extremists has raised the NGO profile in recent years. Above all, the NGOs’ attacks on GM crops and food seem to be about political influence (see the editorial comment from the New Scientist heading this chapter). These self-appointed advocates of ‘civil society’ are not accountable for their actions and do not reveal their sponsors or disclose their full objectives. They argue that they are representative of ‘public opinion’ and should be heard alongside governments in international agencies, such as the WTO and the OECD. Their concerns appear to include a core of reasonable anxieties – although the fact that the concerns so often shift raises questions about their true motives. Their legitimacy and capacity to represent public interest are certainly questionable. If the anti-GM lobbies have a case, it requires an assessment of risks to establish a rational analysis of costs and benefits. Demanding ‘no risk’ food does not make sense unless all foods – GM or non-GM – are subjected to the same scientific tests and risk assessment.

NOTES 1. Egypt and Japan have introduced similar conditions. 2. Standard-setting authorities include: • FAO/WHO Codex Alimentarius • International Office of Epizootics (OIE) • International Plant Protection Convention (IPPC). 3. Biosafety Protocol (draft, August, 1998), article 26.

REFERENCES Asian Development Bank (ADB) (1999), Rural Asia: Beyond the Green Revolution, Manilla: ADB. Addiscott, T. (1999), ‘Home grown’, New Scientist, 12 June, 51. Coghlan, A. (1999a), ‘Freeze! Gene police!’, New Scientist, 27 March, 4. Coghlan, A. (1999b), ‘Playing safe’, New Scientist, 4 September, 20. Concar, D., D. MacKenzie and A. Coghlan (1999), ‘Mashed potatoes’, New Scientist, 6 March, 13. Eaglesham, J. (1999), ‘Anti-trust case sows seeds of debate about farming’s future’, The Financial Times, 13 September 1999. Henderson, D. (1999), The MAI Affair: A Story and its Lessons, Pelham Paper No. 6, Melbourne: Melbourne Business School. Holmes, R. (1999), ‘Grains of gold’, New Scientist, 14 August, 12. Hufbauer, G.C. (1998) ‘Sanctions-happy USA’, The Washington Post, 12 July, IIE International Economies Policy Brief No. 98–4.

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Inside US Trade, Washington, DC, 17(38), 24 September 1999. Kerr, W.A. (1999), ‘International trade in transgenic food products: a new focus for agricultural trade disputes’ The World Economy, 245–59. Kleiner, K. (1999), ‘Monarchs under seige’, New Scientist, 22 May, 3–4. Losey, J.E., L.S. Rayor and M.E. Carter (1999), ‘Transgenic pollen harms monarch butterfly’, Nature, 399, 214. MacKenzie, D. (1999), ‘Unpalatable truths’, New Scientist, 17 April, 18–19. Mitchener, B. (1999), ‘EU to place new curbs on feed activities’, Wall Street Journal, 6 September. Nunn, M. (1997), ‘Quarantine risk analysis’, The Australian Journal of Agricultural and Resource Economics, 41(4), 559–78. Pusztai, A. (1999), The Lancet, October. OECD Observer (1999a), Modern Technology and the OECD, Paris: OECD Secretariat, June. OECD Observer (1999b), Food Safety and Quality: Trade Considerations, Paris: OECD Secretariat, November. Scholte, J.A., R. O’Brien and M. Williams (1999), ‘The WTO and Civil Society’, Journal of World Trade, 33(i), 107–23. Swinbank, A. (1999), ‘EU agriculture, Agenda 2000 and the WTO Commitments’, The World Economy, 22(i), 41–54. The Royal Society (1998), Genetically Modified Plants for Food Use, Group of Experts’ Report, September. http://www.royalsoc.ac.uk/st_htm. Wakeford, T. (1999), ‘Too chummy by half’, The Guardian, 27 April. World Trade Organization (1998), Annual Report 1998: International Trade Statistics, Geneva: WTO.

PART VI

Concluding Summary

16. Trade and risk management: exploring the issues Ian Holland and Aynsley Kellow The conclusion of the Uruguay Round negotiations in 1994 was heralded as a new era in international trade relations which would promote closer economic integration and new levels of prosperity. The strengthening of trade rules and the expansion of coverage to new trade-related areas in WTO agreements, and an expanding membership, were expected to establish a new order in commercial relations. One of the consequences of formalizing trade rules into WTO agreements has been to make arbitration and interpretation necessary to resolve trade disputes – sometimes referred to as the lawyers’ revenge because GATT disputes had previously been resolved by negotiation. Unfortunately, legal processes seem to have increased controversy and uncertainties in the multilateral trading system, because legal judgements require enforcement which was not necessary with negotiated settlements. Tensions over enforcement of decisions and US resort to trade sanctions when the EU refused to implement the dispute settlement decision on beef-hormones, contradicted the fundamental principle of non-discrimination. These set dangerous precedents for trade sanctions to be adopted in other circumstances. Many of the new agreements also introduced the concept of ‘risk’ into the process of trade liberalization. Adoption of international standards (technical and quarantine regulations) requires judgements about the consequences of change, whereas in traditional trade negotiations the participants attempted to balance once-only reductions in protection (sometimes phased over several years). This ‘risk’ element has become important in quarantine (SPS agreement) and adoption of other international standards (TBT agreement), where disputes have arisen over ‘excessive protection’ and the need for scientific justification. Similarly, the TRIPs agreement contains a schedule for countries to establish systems of patenting and copyright. Attention given to risk has increased also because of the growing interest in environmental issues and perceived conflicts between globalization and trade rules, and environmental protection. The emergence of environmental concerns has given rise to new tensions, because among those concerned for the 229

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Concluding summary

environment are some who regard the economic growth arising from globalization as damaging the environment. At the same time they cannot see that using unilateral trade restraints to protect the environment is a ‘second-best’ instrument because they do not consider second- and third-round effects of protection, or the opportunity it provides to protect domestic industries from competition. Likewise many environmental advocates believe in absolute standards, without any allowances for differences in income levels, climate, resource endowments or social preferences. Some tend to regard any environmental risk as above and beyond economic concerns and therefore as a reason to exclude economic activity from risk management decisions. Ironically, both concern for environmental protection and the ability to pay for it have accompanied the increased prosperity to which globalization based on a rulesbased multilateral trading system has contributed. In the 1990s, circumstances surrounding international institutions changed radically. Intergovernmental agencies, like the WTO and OECD, came under challenge from international non-government organizations. These agencies are regarded as supranational, with independent power and able to influence national policies. Environmental and development groups, consumer associations and human rights lobbies have targeted the WTO over conservation issues and claimed abuses, without understanding the WTO as an intergovernmental agency, or the content of its agreements (Robertson, 2000). In many instances the link from trade to policy instruments depends on risk assessments, where social and cultural perceptions of risk are advanced without acknowledging requirements in WTO agreements for scientific assessments of risk. Different perceptions of risk are now a major cause of confusion in trade disputes and their arbitration. Several different perspectives were evident in discussion at the conference at which the papers in this volume were first presented. One difference was between economic and non-economic approaches to risk assessment. Economists argued in terms of costs of an invasion, while the quarantine specialists considered the ‘cost’ of an acceptable level of protection (ALOP). The SPS agreement separated the economic and non-economic factors in risk assessment. Several sessions focused on the SPS agreement because it has been at the centre of key trade disputes (Cottier, Chapter 4; and Pauwelyn, Chapter 5, this volume). Different views were apparent in considering the potential for risk management actions to lead to trade advantage. Some expressed scepticism about the underlying purpose of many quarantine and environmental policy measures which also provided economic protection, whereas others were prepared to accept such policies as being primarily designed to achieve their stated purpose of quarantine or environmental protection. Similarly, trade disputes were seen by some observers as constituting a problem, an indication

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that the SPS regime was not working. Others regarded disputes as a necessary, and possibly desirable way of clarifying the application of trade rules, adding detail which it was not always possible to include in negotiated agreements. The need to reform or improve the SPS and TBT agreements was acknowledged, although some thought it was important to leave them alone and to concentrate on seeking consistent outcomes and developing a set of cases to achieve this result. Some saw the need for an increased emphasis on the importance of international institutions and the need for their reform, although others raised the possibility that expectations of such institutions were already too high. Several saw the need for greater transparency, better science and more objectivity, while others pointed to what they saw as the difficulties of achieving this while taking account of the social and cultural factors which they believed should form part of any risk management process. It became apparent that much of the conflict between the trade regime and environmental and quarantine risk management regimes arose from basic differences over what constituted ‘risk’, and what were the roles of science, economics and different national cultures in the risk management process. It was not just that different assessments of risk lay at the heart of disputes over quarantine standards, hormone-treated beef and GMOs, but that there were disagreements over the process by which such risks should be assessed. Some argued that established procedures amounted to ‘reductionist’ approaches to risk; that is, that risk analysis could be reduced to science (Schrader-Frechette, 1991). Ultimately, this might not deliver satisfactory outcomes and might make disputes even more intractable, since the science could become contaminated with special interests.

APPROACHES TO RISK Contemporary discussion of environmental risk is dominated at a theoretical level by a split between ‘realist’ and culturally-based, ‘constructivist’ stances (Szerszynski et al., 1996). One approach to risk in the WTO is harmonization through the establishment of the pre-eminence of realistic, natural sciencebased risk assessment in the examination of quarantine-related measures and other TBTs. This is because the predominant view of risk analysis is that it is a scientific process, and that rigorous science is a necessary antidote to perceived neo-protectionism. Some of the limitations of this approach emerged in the discussions, not only in criticism of the trade regime, but in the problems revealed in the WTO dispute settlement processes. Difficulties have arisen getting consistent interpretations of the SPS agreement (Cottier, Chapter 4; and Pauwelyn, Chapter 5, this volume). In the beef-hormones case, no evidence of a ‘scientifically-assessed

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risk’ was found to support European perceptions that growth hormones might be carcinogenic. Some saw this as disregarding cultural or social perceptions of risk, but it could also be said that it required that such perceptions needed to be supported by scientific evidence. One possible response to these problems of ‘scientific’ risk assessment would be to shift to ‘constructivist’ approaches. This raises the question, could accommodating criticisms of current risk analysis be achieved without creating obstacles to trade liberalization? Differences in approach have become apparent even where there is a degree of international standardization of approaches to risk management, because risk management must take into account local exposures and economic and social values, which introduce the potential for risk management decisions to be used to justify economic protection. For example, while the Codex Alimentarius attempts to harmonize risk management methodology within a particular policy domain, different national agencies continue to pursue different approaches. This is not inconsistent with SPS because higher standards are allowed if supported by acceptable scientific evidence. Differences between the US and the European Union have been crucial in several trade disputes. The United States pursues a risk management approach which involves balancing environmental or quarantine risks against a range of costs and benefits, often (though not necessarily) measured in monetary terms (Graham and Hartwell, 1997). This approach was developed at the domestic level in response to requirements that regulations be subjected to quantitative risk assessments. The US authorities inevitably tend to carry such a model of risk management to the international arena. The European Union, on the other hand, has adopted a precautionary approach to risk where economics scarcely features. This can be seen as amounting to an internationalization of the German vorsorge prinzip which seeks advantage for German ecological modernization or ‘Green Keynesianism’ (Boehmer-Christiansen, 1994). This attempts to reduce risk management to a balancing of precaution against other costs and benefits. It does not necessarily address the question of how much precaution should be exercised, or even whether the negative risks at stake might be worth the positive gains. As Chase (1997, pp. 4–5) points out, a rule that least harm should be caused is no more ‘correct’ than one that gains should be maximized. Game theory indicates that which of these two strategies is chosen simply reflects ‘how the subject feels about the alternatives’ (Luce and Raiffa, 1958, p. 21). There are numerous versions of the precautionary principle, and it has been subject to abuse. While the European Union has recently enunciated its version in a way which acknowledges the role for both politics and economics in determining acceptable levels of risk (CEC, 2000 – see the Appendix), it has at the same time demonstrated an approach to risk assessment which does not


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include an explicitly subjective evaluative component. However, it incorporates such an evaluative position on Chase’s dilemma by suggesting that, when data are non-conclusive, it is prudent to opt for the worst-case hypothesis. It acknowledges that the accumulation of such hypotheses will lead to an exaggeration of the real risk, but claims that this gives ‘a certain assurance that it will not be underestimated’ (CEC, 2000, p. 29). It represents, however, a considerable bias against taking the risks which accompany any innovation. A call for the WTO to adopt a precautionary approach to risk therefore fails to rise above the very real differences between the EU and the US. It fails to recognize that the very approach ‘constructivists’ advocate is itself a construction rather than a rule which is likely to be accepted universally. This European Commission position is an invitation to use worst-case hypotheses as the basis for trade restrictions. The divergence between European interpretations of the precautionary principle and those of other countries is a source of misunderstanding, and the European approach continues to be rejected in multilateral arenas. For example, the Protocol on Biosafety adopted in January 2000 (Article 10, para. 6) incorporated a precautionary approach that is much narrower than the European interpretation, and one that is more consistent with multilateral agreements (and the Rio Declaration), that is that lack of scientific certainty should not prevent decisions. This is a long way from allowing worstcase scenarios to serve as the basis for action. The tendency for the EU to invoke other interpretations of the principle while arguing for its status in customary international law is a continuing cause of disagreement. All sorts of objections can be raised about the EU approach to risk, not least that the precautionary principle necessarily assigns subjective valuations of risk as an implicit rather than explicit part of risk management (Sampson, Chapter 2; and Byron, Chapter 3, this volume). The important point to make here is that these two major players in several significant trade disputes involving risk judgements argue from different ‘premises’. Attempts to find common ground have relied on scientific evidence but without achieving a solution (Pauwelyn, Chapter 5, this volume).

SCIENCE AND RISK ASSESSMENT Science is an essential foundation for any risk management decision, but social concerns cannot be ignored. Moreover, the science can become contaminated by professional, commercial and political interests. For example, BSE in British cattle herds and its possible link to ‘new variant Creutzfeldt-Jacob disease’ possibly through the mechanism of a prion or rogue protein, provided France with the ideal opportunity to erect trade barriers to the benefit of its beef producers. Yet the prion theory is by no means universally accepted.

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Science can be ‘contaminated’ in many ways, and not just by governments or industry wishing to defend economic interests by demanding science which suits their purposes. Scientific reputations can also be built on ‘discovering’ risks, especially in ‘grant-rich’ settings (for example the notorious McBride case in Australia amplified risks through scientific fraud). To expect science to regulate risk invites the contamination of science with politics. But the best science alone is not sufficient for an assessment of risks. Different nations have developed different approaches which inevitably give rise to different risk assessments, and result in trade conflicts. Agreements such as the SPS have become part of a process of harmonization, bringing common standards into transborder transactions. At the same time it harmonizes approaches to risk based on scientific risk analysis. Several participants argued that this approach took little account of variations in the ‘social dimensions’ of risk exposure (Cottier, Chapter 4, this volume). There is no capacity for countries to vary their SPS measures from those agreed in international standards such as the Codex Alimentarius, unless there is ‘scientific justification’ (WTO, 1998, p. 1). Justifications such as personal or cultural aversions to ‘strange’ rather than ‘familiar’ risks are not valid. Yet these can make a critical difference to risk assessment (Adams, 1995). Risk assessment is affected by numerous social factors, including the openness of decision processes, the sense of powerlessness some people feel when confronted with powerful institutions or corporations, and whether risks are accepted voluntarily or opposed (Slovic, 1992; Fischoff et al., 1981). These are reflected in European risk assessments, but implicitly rather than explicitly in what is essentially a reductionist approach to risk. Viewed from the United States, the European position on GMOs or beefhormones appears to be unnecessarily risk-averse and not based on science (as well as opposed to the trade advantage these technologies provide for the US, while compatible with the CAP). A call to find a basis for arbitration in ‘more science’ or ‘better science’ is not likely to be productive, because both could agree on the science and still reach risk assessments which were opposed. Ironically, the trade regime itself might actually amplify perceptions of risk assessments made in member states. If there is a perception that risks constituted by any traded product must be accepted under the trade rules, this compulsory imposition of risk is likely to amplify perceptions and contribute to disparities between the risk assessments of citizens and increase political pressures on governments to take trade-restrictive actions. Where these pressures reinforce economic interests threatened by the trade, coalitions supporting trade restrictions will be very powerful. The trade rules themselves therefore form part of the institutional context which affects risk assessments. The more ‘reductionist’ approach to risk management in the EU probably results from being negotiated transnationally. ‘Reductionist’ approaches


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generally represent weakness of intergovernmental institutions, as the temptation is to seek safety in numbers, or science (Waterton and Wynne, 1996). But economic interests appear to be relatively less influential at the intergovernmental level than they are at the level of the nation-state (Kellow, 1999). The development of practical policy at the international level often suffers from marginalization of business which represents economic interests (Hanf and Underdal, 1998), and approaches to risk management which are ‘reductionist’ and exclude economic considerations are more likely to emanate from regional organizations such as the European Union than they are from nation-states such as the US. It might be difficult to agree on the scientific basis for a hazard, but the inclusion of uses and exposures makes the development of internationallyagreed risk assessments highly problematic (Dal Bon, Chapter 10, this volume). Agreement will be more likely if risk assessment is based on agreed science, to the neglect of social dimensions.

REDUCTIONISM AND CONSTRUCTIVISM The ‘reductionist’ approach to the management of risk in international agreements is driven by a number of concerns. These include the use of risk assessments to conceal neo-protectionist policy measures; the opposition of some free-trade critics to economic growth; and the belief held by many that ‘scientific’ risk assessments are superior to the alternatives. There is experience among those forming risk-related national policies that they facilitate trade protection (Elliott, 1998, p. 210). The concern with protectionist agendas being ‘hidden’ in quarantine and other technical trade barriers gave rise to the TBT and SPS agreements. Evidence from a number of international trade–environment conflicts lends weight to this contention. Environmental or quarantine arguments were used to support protectionist measures in the tuna-dolphin case, the beef-hormones case and the salmon case (Pauwelyn, Chapter 5, this volume). The risks of imported uncooked salmon are perceived to be more important to the Australian salmon industry both because it stands to lose from the introduction of disease and because it will be forced to lower prices to compete with imports. Separating these interests in practice is difficult, and a disease outbreak becomes significant not just because of the disease and direct damage it might cause, but because it weakens the rationale for quarantine-based trade protection in future because contamination has occurred. Environmental regulations can play a positive role in stimulating economic development (Vogel, 1995) – as long as the same standards can subsequently be exported or they can serve as an indicator of product quality which consumers prefer. Any trade restriction creates winners and losers, and arguments for

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protection frequently have very little to do with ends-related policy justification. Trade liberalization can increase the incentives to search for non-tariff protection in the form of quarantine or environment measures to restrict trade. Scientific and technical standards tend to embody cultural assumptions which create domestic winners and losers. Attempts to develop habitat classification systems in the European Union came unstuck because of this reality (Waterton and Wynne, 1996). In the OECD test protocols for toxicity, metals were first required to be dissolved to make them bioavailable, so that the subsequent reductionist approach to risk based on the results of such toxicity testing ignored the general protection low levels of bioavailability afforded from many metal products (Dal Bon, Chapter 10, this volume; Kellow, 1999). Reductionist approaches to risk management facilitate international agreement at least partly because they mask interests, but they also can have a differential impact on interests. Which risks are addressed in the risk management concerns of governments is decided by a political process in which the normative ‘feelings’ of NGOs about the risks of GMOs (or the perception of risks of disease for salmon farmers) become inseparable from the trade interests of farmers. It is not that normative arguments are ‘bolted on’ to trade interests; they are, rather, combined like an alloy, often stronger than its constituents. The alloy might even be stronger when the heightened risk assessment is supplied by an actor other than the one who stands to benefit from the restriction. The important point about ‘constructivist’ approaches to risk is that there is a difficulty in maintaining a position that different social constructions of risk are all ‘equally valid’ in domestic policymaking (Scott et al., 1999), even before moving to the international level. Governments in the act of making risk management decisions inevitably must decide that some assessments are more equal than others. The Natural Law Party, for example, might oppose GMOs because they consider they upset the harmony of nature – and this assessment may be valid for yogic flyers! Any decision a government makes on the risks of GMOs, however, is likely to be based on good science and more widely defensible assessments of risks. The metaphysical beliefs of the Natural Law Party, in other words, can be considered ‘equally valid’ as those of Muslims, Jews, Hindus or Methodists, but their empirical claims should be subjected to particular standards of proof, and governments – if they cannot find a policy which appeases all – must choose one particular risk evaluation. The second factor encouraging reductionist approaches to risk management in the international context arises from the experience of environmental advocates being opponents of trade liberalization (Morris, 1990; Tokar, 1997). Such opposition stems not just from concerns that trade necessarily involves the movement of products across ‘bioregions’, but because many environmentalists stand opposed to trade-creating economic growth – and often express


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preferences for organic or traditional farming methods. They find it difficult to gain widespread support for anti-growth sentiments, but the value system they employ in support of concepts such as biodiversity is ecocentric or biocentric, seeking to draw normative power from ecological science, and it deliberately eschews a concern with ‘mere interests’. Third, the scientific approach to risk management is driven by the belief of many people in the field (frequently scientists) that it is superior to the alternatives. This superiority is grounded in the idea that a particular ‘scientific’ understanding of risk is superior to any other. Wooldridge (Chapter 6) argues that ‘an intensive or highly politicized campaign may lead to erroneous perceptions about the magnitude of the risk which is out of all proportion to any known facts’. This approach to science assumes an unproblematic distinction between the ‘perception’ and ‘reality’ of a risk. This is most evident in the nuclear industry, where scientists believed nuclear risks were much lower than did the general public. The implication is that there are perceptions that are accurate and those which are less accurate, but the risk–benefit equations for scientists and the public differ: even if they share the same risks as the public, the scientists benefit from employment by the industry. Indeed, the very theory of risk – objective or subjective – which is adhered to is affected by the professional training of individuals. Dietz and Rycroft (1987, p. 70) found that individuals with graduate degrees in the sciences or engineering, business or economics, medicine or public health, and biology or ecology were more likely to take the position that public misunderstanding of ‘objective’ risk is a major source of controversy than were those with bachelor’s degrees or less, law school graduates, and persons with graduate degrees in the humanities or social sciences. Many risk professionals are trained to believe in their own ability to assess risk objectively. This ‘science advocacy’ arises from the acceptance of a distinction between risk assessment and risk management (Sampson, Chapter 2; Deane, Chapter 8; Nunn, Chapter 7, this volume; and Nairn et al., 1996, p. 85; Graham and Hartwell, 1997). According to this distinction, good science can lead to some form of objective risk assessment, while the social dimension of the issue can be left to the process of risk management, in which management can be aimed at achieving an outcome delivering a socially acceptable level of risk. Deane (Chapter 8, this volume) extols the benefits of risk communication in this context, on the grounds that ‘a better understanding of science can shift opinion in its favour’. Dal Bon (Chapter 10, this volume) is less convinced of science’s superiority. She acknowledges that science is not free of values. She recognizes that scientific research is used (and may be abused) selectively, that some projects get funded while others do not, and so forth. This position sees scientific results embedded in a world of interests:

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Science is not value free and selective use of hazard data sets as a means of achieving a political agenda for concerted risk reduction is not acceptable. For this reason, OECD has applied considerable effort to harmonize methodologies and standards for hazard assessment to ensure scientific rigour, independence, transparency and peer review.

While this position acknowledges the social context of science, it still adopts a realist’s position. Dal Bon, for example, suggests that the abuse of science can be overcome with more rigorous scientific processes. Kellow’s distinction (Chapter 9, this volume) is more complex, paying more respect to the fragile nature of knowledge that social science produces (Weiss, 1977). He recognizes two aspects of risk analysis that are social in nature and precede risk management: namely, risk estimation and risk evaluation. While this approach emphasizes the social construction of risk, and might be seen as a positivist position in suggesting that hazard identification and risk estimation are scientific and probabilistic exercises, it also allows that risk management occurs, where risk perceptions can alter behaviour in ways which affect probabilities (Formaini, 1990). Risk perception can also be biased by a failure to understand probabilities in a technical context, and a further problem lies with the expectation that social assessments of risk need to be quantified in some sense to be combined with scientific measures in risk assessment, before they are included in risk management. A dilemma for policymakers and judicial and quasi-judicial interpretation lies in how to regard scientific information in arbitrating between conflicting claims. There has been a tendency in such disputes for each side to hire its own experts, each willing to testify under oath, if need be, that the science supports their client. The likely result, when ‘objective’ science is used to mask evaluative questions, is that the different sides to any dispute will simply engage their own experts, and science will be debased (Douglas, 1992, p. 33). But while acknowledging that pure, objective science is problematical, this does not justify the relativist conclusion that any piece of scientific information is as good as any other, nor that he who pays the piper calls the tune. The last point is particularly important with chemicals, GMOs and other sources of hazard subject to intellectual property constraints, since most of the research available to regulators is either provided by or funded by the proponents of the technology. Regulation of laboratory practice (including laboratory auditing) and peer reviewed publication are relied upon to prevent abuse. This risk assessment includes an assessment of the risks of the costs of their science being wrong (both political and commercial costs and the risk of any legal damages which might be awarded), so it does include some consideration of the concerns of the wider society. But it is never alone likely to be an acceptable substitute for a social assessment, and society will be suspicious of any attempt


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to foreclose the option of a separate risk assessment (Millis, Chapter 14, this volume). Risk assessments performed by large powerful corporations are not likely to be trusted by NGOs which have a strong influence on public opinion. The US Supreme Court has had to decide what counts as scientific evidence in legal proceedings, and came down on the side of a process-related standard. It decided that evidence based on research which was able to be reproduced and had been published in established journals after anonymous peer review satisfied the canons of science, and was to be preferred to evidence that had not been produced by this process. (The judgement was given in Daubert v Merrel Dow Pharmaceuticals Inc. 113 S Ct 2786 (1993)). This process is not flawless, but it appears preferable to the ‘rent-an-expert’ approach to scientific evidence followed in many US state jurisdictions not bound by the Supreme Court ruling, where juries have been willing to compensate victims on much more flimsy scientific evidence when plaintiffs are the same large (insured) faceless corporations whose power gives rise to concerns known to amplify risk perceptions (Rosenbaum, 1997; Fumento, 1993). This should also be the standard insisted upon in trade disputes: the best science should be seen as necessary, but not sufficient for transparent risk assessment. The criticism that science carries too many hostages (vested interests in outcomes) depends on establishing effective measures to assess ‘social risks’, and this (as Cottier notes in Chapter 4, this volume) is an important challenge for the WTO. The political interests which might divert scientific risk assessment must also be tested if they are to replace, or be incorporated into, risk analysis using scientific evidence. Adding social factors explicitly to risk assessment provides an excuse to reject measurement in favour of ‘feelings’ and ill-defined public opinion, and the challenge is to develop criteria and methodologies which will minimize this possibility.

FROM SCIENCE TO RISK One explanation of the prevalence of the positivist approach to risk analysis is the alignment of interests with scientific positions. Scientific information can be used to further particular views. Nuclear scientists have personal commitments to the industry. They are likely to have trained for ten years to hold their current positions. They are also likely to depend for employment on the continuance of that industry. At the same time they are more qualified to hold an opinion than the general public, yet their expertise sets them apart from the public and serves as the basis for distrust! This is identified as the need for education to understand risk (Deane, Chapter 8, this volume).

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In discussing the role of interests in risk management, the whole range of possible interests must be considered. The analysis must include not just corporate interests which stand to benefit from the commercial activities, but less obvious interests, such as those that will benefit from any regulatory action or trade restriction, or simply from ‘winning’ a political contest. At the same time, there is a ‘danger establishment’ with interest in talking up the dangers of toxic chemicals or GMOs and food safety. Consumers (and politicians) have limited expertise and limited time to study and understand the issues. They rely on the risk interpretations of intermediaries such as scientists, government officials, journalists, policy advocates, environmental lobbies and other interest groups. Such actors promulgate disinformation and selective evidence shaped by professional and organizational interests that benefit from exaggerating dangers, and these activists pursue their interests as earnestly as do other economic interests. ‘Their presentation of risks makes small risks become big and big risks bigger, but not proportionally. Consumers are easily confused, thinking health risks are bigger and more alike than they actually are’ (Sapolsky, 1993, p. 90). Much of the distortion is simply the result of professions and organizations competing with one another for scarce resources, particularly the patronage of a population frightened by its own mortality. Scientists (as much as Greenpeace and WWF) must secure funding, and they face incentives not just to talk up dangers, but to define them in ways which they can solve in intense competition for recognition and reward. Both sides of the argument are aided in this task by journalists who must seek out audiences and readers, public interest advocates needing patronage, and government officials who seek to maximize budgets for their agencies. Most of the organizations and individuals offering advice on risks are driven to exaggeration. ‘The competition for the attention of peers, donors, editors, public officials, and customers is so intense that the irresistible temptation is to shout in order to be heard’ (Sapolsky, 1993, p. 94). The influence of interests was noted by Wilson and Gascoine in the case of the SPS agreement (Chapter 11, this volume). The SPS agreement does not contain scientific risk assessments: it is an agreement about objectives and processes, not outcomes. Nor does the administering body, the WTO, see itself as a risk-assessing organization (Sampson, Chapter 2, this volume). It defers to ‘expert’ organizations such as the Codex Alimentarius Commission in the setting of these standards. In these organizations, standards ‘are developed by leading scientists in the field and government experts on health protection’ (WTO, 1998, p. 3). But as Wilson and Gascoine point out, ‘the SPS agreement influences the work of these international organizations’. In other words, the work of dispute panels and the Appellate Body feeds back to the standards organizations. It is possible, however, to argue a different case that explains the problem of trans-science (Sampson, Chapter 2; and Byron, Chapter 3, this volume); that is,


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the idea that the WTO is seeking to use science to answer questions which it cannot answer. This case does not rest on conspiracy theorizing that Sampson clearly finds unconvincing, and which is probably wide of the mark. Rather, it suggests that everyone believes they are experts at risk analysis (Adams, 1995). This implies there is no distinction to be drawn between experts and the general public, but rather between cultural constructions of what constitutes a risk, and what is an acceptable level of risk (Wynne, 1996). The problem is that the distinction between scientific assessment of hazard and political judgement of ‘acceptable levels of risk’ understates ‘the importance of the cultural nature of science’ (Wynne, 1996, p. 45). This position, however, does little to provide a foundation on which to base the practical analysis or management of risk.

RISK AND TRADE To admit the possibility of merits in ‘constructivism’ is not to defend the employment of risk assessment as a means of resisting trade liberalization. By drawing attention to the possibilities for science to become contaminated by interests, a ‘constructivist approach’ should promote scepticism about any one piece of scientific information and cause us to attach even more importance to the processes that constitute ‘good science’ (reproducibility, publication after peer review and so on) and reliance upon internationally agreed science (such as developed by codex, OIE, IPPC and similar bodies) as the foundation for any decision making. Science is essential in developing hazard assessments, but a full risk assessment inevitably involves assessing factors such as uses of products that give rise to exposures and evaluations which vary between countries (and, indeed, within countries). The SPS agreement, for example, might well place too much reliance on process-setting technical standards such as the codex, as the reference points for arbitrating trade disputes. The SPS agreement requires measures to be based on international standards, where they exist, except where otherwise justified by scientific judgement, and risk analysis should be used to establish appropriate levels of protection (ALOP). But how would new SPS standards be set? Not by intergovernmental wrangling in WTO committees. SPS article 5.3 states: In assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection [ALOP] from such risk, Members shall take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or disease; the costs of control or eradication in the territory of the importing Member; and the relative cost-effectiveness of alternative approaches to limiting risks.

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In addition to risk assessment being scientific therefore, risk management – through the determination and implementation of an ALOP – is essentially construed in economic terms. This is contentious in two senses. First, there is a debate whether SPS article 5.3 confines the factors to be considered to economic ones. Some take the view that the intention of the clause was to make this an explicitly economic calculation. Others see the wording as inclusive rather than exclusive: it sets out some relevant factors, but not all of them. Second, this clause is complex because analysing the economics of quarantine incursions is difficult. It deals not with definite transactions but possible ones (MacLaren, Chapter 12, this volume). The uncertain time lines are sensitive to discount rates, and spillover effects to outside industries make this an openended analysis (James and Anderson, 1998). Allowing for these difficulties, early analysis might deliver some surprising results. James and Anderson (1998, p. 427) have suggested that ‘even if disease importation were to be so severe as to destroy the profitability of a local industry, it is conceivable such importation, through lowering prices, might benefit consumers more than it would harm import-competing producers and environmental groups’. SPS article 5.3 allows economic factors to be considered in setting the ALOP, but recognition of the cultural dimensions to risk suggests that social factors might also be important. There are some indications that the Appellate Body might be leaning this way (for example, the reversal of the panel report on shrimp-turtle). This presents a problem, particularly in the light of the EU concept of ‘multifunctionality’, whereby agricultural policies are seen to have a multiple role in protecting the environment, sustaining rural economies and ‘cultural’ pursuits, and maintaining the amenity of the countryside, ahead of trade policy obligations (Robertson, Chapter 15, this volume). The CAP trade distortions have long been justified as maintaining the visual amenity of the countryside, ‘vibrant and active’ rural communities and maintaining rural employment. Almost any trade-restrictive measure could be justified on similar grounds (at high economic costs), and the cultural dimension to risk assessment could be used to justify any restrictive actions. Scepticism over the ability of technical standards to arbitrate risk disputes must extend to attempts to embody cultural assessments of risk within technical decision rules, such as the precautionary principle (Sampson, Chapter 2; and Byron, Chapter 3, this volume). These cultural dispositions to risk are not uniform within nations, just as they are not uniform across nations. For a national government to base its policy decisions on the BSE interests of French farmers or the GMO prejudices of Greenpeace is to impose narrow appreciations of risk (and usually higher prices) on all citizens, and to deny choice to those who are willing to accept a different risk–benefit trade-off. Indeed, the risk


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assessments promoted by environmental groups implicitly attempt to impose their cultural preferences on the community at large. This applies to both production risks and consumption risks. It is debatable whether citizens of one country have the moral right to impose decisions about environmental (or any other) policy on the citizens of another. Even if accepted, it is doubtful whether such interventions would produce good risk management decisions, because different environmental and social conditions would render such general applications inappropriate. Consumption-related risks require regulation by national governments, and environment groups will seek to influence such decisions (Millis, Chapter 14, this volume). The trade rules do no more than require like treatment of like products, so such decisions can accommodate differing cultural appreciations of risk. Quarantine poses particular problems because it deals with risks associated with imports, and therefore provides discriminatory protection. Difficulties arise where there is scope for argument over quarantine risks or whether products are really alike because they have been produced differently (like hormone-treated beef). Such risk management decisions, which coincidentally provide protection to domestic producers, will always find more supporters than those that do not. If risks are production-related, the issue becomes one of production and process methods. If the risks are to the natural environment, this would appear to be a matter for relevant national authorities, but it would be reasonable to expect that they have some demonstrable scientific basis for action. But in the salmon case, it is reasonable to require governments to pass a test of consistency in how they manage risks. If risks are consumption-related, there is a need for governments to justify risk–benefit trade-offs which deviate widely from internationally-agreed standards and to be consistent in such measures.

RISK AND TRADE: RESPONSE STRATEGIES Where consumption risks are concerned, a case exists for enhancing consumer choice by facilitating more conservative risk–benefit trade-offs by consumers on cultural (or any other) grounds. Those producers who claim their products afford a greater standard of safety than those internationally agreed to be of low hazard (under codex or some similar set of standards) can establish labelling and verification schemes which allow more choice without running into the problems mandatory labelling might pose by constituting technical barriers to trade or adding substantially to consumers’ costs. Claims made that foods are ‘organic’ or ‘GM-free’, for example, appeal to those consumers with a culturally-amplified perception of the risks of pesticide residues or GM foods, without being different to labelling those made for eggs as ‘free-range’, or other

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foods as ‘halal’ or ‘kosher’. Positive labelling indicating that a product has characteristics which might command a price premium or offer a lower level of perceived risk is likely to involve lower social costs than requiring general labelling. There are practical alternatives which permit consumers to make their own assessments of risk on the basis of cultural factors which do not constitute disguised protectionism. However, this would require a review of the TBT agreement (Robertson, Chapter 15, this volume). Subjecting consumption-related risk management decisions to the discipline of trade rules would ensure the gains from trade are secured. There are likely to be advantages in using positive labelling and allowing consumers to make culturally-based decisions to buy produce which is GM-free, free-range, kosher, halal or whatever. Beyond that, provision is made in the WTO agreements for trade-restrictive action to protect public morals (GATT article XX(a)). To grant legitimacy to such subjective factors does not necessarily mean that consistency with trade rules is abandoned in favour of the relativism advocated by some ‘constructivists’. Consistency can be demanded, so that the cultural amplification of risk by activist groups or economic interests can be prevented from being used as a flag of convenience by governments yielding to protectionist urges. For example, it would seem consistent for an Islamic country to ban the import of GM products which involve the insertion of pig genes into other species, as long as that country applied the same restrictions to domestic producers. The moral objection precedes the regulatory decision. Cultural dispositions to risk developed in reaction to products which are not consistent with such an established morality (and which happen to reinforce economic interests) should be treated with suspicion. This still leaves the problem of reaching agreement on assessments of risk in international agreements when risks are transboundary or global. Conflict over the management of environmental risk highlights the limitations of international policy regimes. Several speakers remarked that too much is expected of international agreements. They take time to negotiate, but there seems to be less haste with trade agreements than with MEAs, and greater preparedness to ‘get it right’ rather than ‘get it finished’. The Uruguay Round took a decade from conception to conclusion. Often the language had to be ambiguous to be acceptable to all parties. Then implementations and interpretations have to be accepted. This has been evident in the TBT and SPS agreements and particularly in the evolution of the understanding on dispute settlement. There was widespread agreement among conference participants that too many environmental problems are regarded as ‘global’, even though the capacity of the international system to deal with them and its record of success is unimpressive (Sandbrook, 1997). The local, national or regional nature of many environmental issues is often ignored.


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The scope for divergent risk assessments suggests a need at the international level for something resembling the ‘subsidiarity principle’ which operates in the European Union: namely, that problems be dealt with at the lowest level of government necessary for their solution, preserving scarce capacity for governance in the multilateral arena for those problems which can be resolved only at the international level. The question also arose whether the existence of trade disputes warranted re-opening the texts of some technical agreements such as the SPS agreement to seek clarifications. Disputes over the SPS and TBT agreements are regarded as problematic for several reasons (Cottier, Chapter 4, this volume): • contradictory interpretations of important articles between panels and the Appellate Body; • implementation problems, including lack of guidance under Article XX, and differences over enforcement mechanisms; • inconsistencies in the outcomes from dispute procedures which appear to differ from the intentions of the agreements; • a need to clarify provisions allowing sovereignty over national quarantine policies, as long as they are more strict than international standards, by reviewing of SPS article 2. On the other hand, re-opening the agreements might lead to disputes over wording that would weaken the trade rules. The development of ‘case law’ within the dispute settlement mechanism has changed the character of the multilateral trading system by establishing a legalistic approach. Most disputes are resolved prior to dispute settlement procedures commencing, but the difficult cases (beef-hormones, bananas, shrimp-turtle, agricultural testing) have exposed serious differences between expert panels and the Appellate Body. One proposal is the development by dispute settlement panels of (non-binding) implementation recommendations, but this cuts into the conciliation process that follows the acceptance of the judgement by the WTO Council, sitting as the DSB.

CONCLUSIONS The discussion concluded that good science is necessary, but not always sufficient for risk assessment. Other considerations should include the acceptance of different national social and cultural characteristics. Some speakers regarded ignoring this point as to invite ‘reductionism’ and the contamination of science with norms and special interests. This need not mean

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accepting that any risk assessment is ‘equally valid’, but it raises contentious issues of weighing different risks. The most important concern is to demonstrate a connection between amplified risk assessment and some prior social values that might be invoked. Consistency, rather than convenience, can still be demanded by the application of appropriate rules, even with culturally-constructed risk assessments. The popular presentation of this is compulsory labelling to allow consumers to exercise their concerns by choosing whether or not to consume certain products (GM foods). But such labelling can be approached in a positive, rather than a negative, fashion, where the preference of one group of consumers is for substantially equivalent products to be ‘organic’, ‘GM free’ or meeting some similar demand for a particular method of production. Unfortunately, such opportunities for consumer choice do not arise when NGO lobby groups force retail chains to declare ‘No GM foods sold’ under the threat of concerted media campaigns against non-compliance. All arguments are not treated equally. Subjective elements are likely to be present in risk assessments and risk management decisions in the trade area. This need not mean that these elements should not be treated with rigour and the discipline of consistency. In a rulesbased system, there should be rules for as many of the factors relevant to decisions as possible. The challenge is to produce a set of rules which allow consumers to choose which risks they will accept without allowing these preferences to be imposed by others. Simultaneously these rules should not undermine the benefits of trade liberalization, or undermine the sovereignty of governments seeking to manage domestic, production-related risks. The WTO has become controversial because of vagueness in some of its key agreements, such as TBT and SPS, and because of the new ‘legalism’ introduced into dispute settlement by the DSU. Some revisions to the DSU were on the agenda of the Seattle ministerial meeting. Shortcomings in WTO agreements, however, are only one reason why the WTO has become a focus for risk concerns. Environmental and consumer NGOs regard the WTO as an institution that offers a shortcut to introducing international standards that reduce perceived risks. A successful campaign in a WTO dispute (for example, the shrimp-turtle case) can create a precedent that avoids the need to undertake separate campaigns against national governments. Presentation of risk estimates is an important part of such campaigns, and it can attract new allies from domestic producers seeking protection from trade competition. Such alliances arouse strong sympathies, and weighing the many types of risk that are involved is a complex exercise. This volume enumerates the many types of risk that arise from policy changes, but evaluation is a multidisciplinary exercise that lacks structure and comparability. The evidence presented and discussed at the seminar shows that assessment of risks remains qualitative and controversial.


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REFERENCES Adams, J. (1995), Risk: The Policy Implications of Risk Compensation and Plural Rationalities. London: UCL Press. ANZFA (1996), Framework for the Assessment and Management of Food-related Risks, Canberra: Australia New Zealand Food Authority. Boehmer-Christiansen, Sonja (1994), ‘The Precautionary Principle in Germany – Enabling Government’, in Timothy O’Riordan and James Cameron (eds), Interpreting the Precautionary Principle, London: Earthscan. CEC (2000), Commission of the European Communities, Communication from the Commission on the Precautionary Principle, COM(2000) 1, Brussels, 2 February 2000. Chase, Alston (1997), ‘Some Cautionary Remarks about the Precautionary Principle’, in Managing Climate Change – Key Issues, Papers from the Conference ‘Countdown to Kyoto’, Canberra: Australian APEC Study Centre. Dietz, Thomas M. and Robert W. Rycroft (1987), The Risk Professionals, New York: Russell Sage Foundation. Douglas, M. (1992), Risk and Blame, London: Routledge. Elliott, L. (1998), The Global Politics of the Environment, Houndsmills, UK: Macmillan. Fischoff, Baruch, Sarah Lichtenstein, Paul Slovic, S. Derby and R. Keeney (1981), Acceptable Risk, New York: Cambridge University Press. Formaini, Robert (1990), The Myth of Scientific Public Policy, New Brunswick: Transaction. Fumento, M. (1993), Science under Siege: Balancing Technology and the Environment, New York: Morrow. Graham, J.D. and J.K. Hartwell (1997), ‘The Risk Management Approach’, in J.D. Graham and J.K. Hartwell (eds), The Greening of Industry. A Risk Management Approach, Cambridge, MA: Harvard University Press, pp. 1–16. Hanf, Kenneth and Arild Underdal (1998), ‘Domesticating International Commitments: Linking National and International Decision-Making’, in Arild Underdal (ed.), The Politics of International Environmental Management, Dordrecht: Kluwer. James, S. and K. Anderson (1998), ‘On the need for more economic assessment of quarantine/SPS policies’, Australian Journal of Agricultural and Resource Economics, 42(4), 425–44. Kellow, A. (1999), International Toxic Risk Management: Ideals, Interests and Implementation, Cambridge: Cambridge University Press. Luce, R. Duncan and Howard Raiffa (1958), Games and Decisions, New York: John Wiley. Morris, D. (1990), ‘Free Trade: The Great Destroyer’, The Ecologist, 20, 190–195. Nairn, M.E., P.G. Allen et al. (1996), Australian Quarantine: A Shared Responsibility, Canberra: Department of Primary Industries and Energy. Robertson, D. (2000), ‘Civil society and the WTO’, The World Economy, Global Trade Policy (forthcoming). Rosenbaum, James T. (1997), ‘Lessons from litigation over silicone breast implants: a call for activism by scientists’, Science, 276, 1524–5. Sandbrook, Richard (1997), ‘UNGASS has run out of steam’, International Affairs, 73, 641–54, 661. Sapolsky, Harvey M. (1993), ‘The Politics of Risk’, in Edward J. Burger, Jr (ed.), Risk, Ann Arbor: University of Michigan Press.

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Schrader-Frechette, Kristin (1991), ‘Reductionist Approaches to Risk’, in Deborah G. Mayo and Rachelle D. Hollander (eds), Acceptable Evidence: Science and Values in Risk Management, New York: Oxford University Press. Scott, Alister, Andy Stirling, Nick Mabey, Frans Berkhout, Chris Williams, Chris Rose, Michael Jacobs, Robin Grove-White, Ian Scoones and Melissa Leach (1999), ‘Precautionary approach to risk assessment’, Nature, 402 (25 November), 348. Slovic, Paul (1992), ‘Perception of Risk: Reflections on the Psychometric Paradigm’, in Sheldon Krimsky and Dominic Golding (eds), Social Theories of Risk, Westport, CT: Praeger. Szerszynski, B., S. Lash et al. (1996), ‘Introduction: Ecology, Realism and the Social Sciences’, in S. Lash, B. Szerszynski and B. Wynne (eds), Risk, Environment and Modernity. Towards a New Ecology, London: Sage Publications, pp. 1–26. Tokar, B. (1997), Earth for Sale. Reclaiming Ecology in the Age of the Corporate Greenwash, Boston, MA: South End Press. Vogel, David (1995), Trading Up: Consumer and Environmental Regulation in a Global Economy, Cambridge, MA: Harvard University Press. Waterton, Claire and Brian Wynne (1996), ‘Building the European Union: science and the cultural dimensions of environmental policy’, Journal of European Public Policy, 3, 421–40. Weiss, C. (1977), ‘Introduction’, in C. Weiss (ed.), Using Social Research in Public Policy Making, 3rd edn, Lexington, MA: Lexington Books, pp. 1–22. WTO (1998), Understanding the WTO Agreement on Sanitary and Phytosanitary (SPS) Measures, http://www.wto.org/goods/spsund.htm (8 March 1999). Wynne, B. (1996), ‘May the Sheep Safely Graze? A Reflexive View of the Expert–Lay Knowledge Divide’, in S. Lash, B. Szerszynski and B. Wynne (eds), Risk, Environment and Modernity. Towards a New Ecology, London: Sage Publications, pp. 44–83.

Appendix COMMUNICATION ON THE PRECAUTIONARY PRINCIPLE [Commission of the European Communities, Brussels, 2 February 2000 (COM(2000)] Introduction A number of recent events has shown that public opinion is becoming increasingly aware of the potential risks to which the population or their environment are potentially exposed. Whether or not to invoke the precautionary principle is a decision exercised where scientific information is insufficient, inconclusive or uncertain, and where there are indications that the possible effects on the environment, or human, animal or plant health may be potentially dangerous and inconsistent with the chosen level of protection. Summary of Document 1. The issue of when and how to use the precautionary principle, both within the European Union and internationally, is giving rise to much debate, and to mixed, and sometimes contradictory views. Thus, decision makers are constantly faced with the dilemma of balancing the freedom and rights of individuals, industry and organizations with the need to reduce the risk of adverse effects to the environment, human, animal or plant health. Therefore, finding the correct balance so that the proportionate, non-discriminatory, transparent and coherent actions can be taken, requires a structured decisionmaking process with detailed scientific and other objective information. 2. This communication’s fourfold aim is to: • outline the Commission’s approach to using the precautionary principle, • establish Commission guidelines for applying it, • build a common understanding of how to assess, appraise, manage and communicate risks that science is not yet able to evaluate fully, and 249

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• avoid unwarranted recourse to the precautionary principle, as a disguised form of protectionism. It also seeks to provide an input to the ongoing debate on this issue, both within the Community and internationally. 3. The precautionary principle is not defined in the (EU) Treaty, which prescribes it only once – to protect the environment. But in practice its scope is much wider, specifically where preliminary objective scientific evaluation indicates that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human, animal or plant health may be inconsistent with the high level of protection chosen for the European Community. The Commission considers that the Community, like other WTO members, has the right to establish the level of protection – particularly of the environment, human, animal and plant health – that it deems appropriate. Applying the precautionary principle is a key tenet of its policy, and the choices it makes to this end will continue to affect the views it defends internationally, on how this principle should be applied. 4. The precautionary principle should be considered within a structured approach to the analysis of risk which comprises three elements: risk assessment, risk management, risk communication. The precautionary principle is particularly relevant to the management of risk. The precautionary principle, which is essentially used by decision makers in the management of risk, should not be confused with the element of caution that scientists apply in their assessment of scientific data. Recourse to the precautionary principle presupposes that potentially dangerous effects deriving from a phenomenon, product or process have been identified, and that scientific evaluation does not allow the risk to be determined with sufficient certainty. The implementation of an approach based on the precautionary principle should start with a scientific evaluation as complete as possible and, where possible, identifying at each stage the degree of scientific uncertainty. 5. Decision makers need to be aware of the degree of uncertainty attached to the results of the evaluation of the available scientific information. Judging what is an ‘acceptable’ level of risk for society is an eminently political responsibility. Decision makers faced with an unacceptable risk, scientific uncertainty and public concerns have a duty to find answers. Therefore, all these factors have to be taken into consideration. In some cases, the right answer may be not to act or at least not to introduce a binding legal measure. A wide range of initiatives is available in the case of action, going from a legally binding measure to a research project or a recommendation.

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The decision-making procedure should be transparent and should involve as early as possible and to the extent reasonably possible all interested parties. 6. Where action is deemed necessary, measures based on the precautionary principle should be, inter alia: • • • •

proportional to the chosen level of protection, non-discriminatory in their application, consistent with similar measure already taken, based on an examination of the potential benefits and costs of action or lack of action (including, where appropriate and feasible, an economic cost/benefit analysis), • subject to review, in the light of new scientific data, and • capable of assigning responsibility for producing the scientific evidence necessary for a more comprehensive risk assessment. Proportionality means tailoring measures to the chosen level of protection. Risk can rarely be reduced to zero, but incomplete risk assessments may greatly reduce the range of options open to risk managers. A total ban may not be a proportional response to a potential risk in all cases. However, in certain cases, it is the sole possible response to a given risk. Non-discrimination means that comparable situations should not be treated differently, and that different situations should not be treated in the same way, unless there are objective grounds for doing so. Consistency means that measures should be of comparable scope and nature to those already taken in equivalent areas in which all scientific data are available. Examining costs and benefits entails comparing the overall cost to the Community of action and lack of action, in both the short and long term. This is not simply an economic cost–benefit analysis: its scope is much broader, and includes non-economic considerations, such as the efficacy of possible options and their acceptability to the public. In the conduct of such an examination, account should be taken of the general principle and the case law of the Court that the protection of health takes precedence over economic considerations. Subject to review in the light of new scientific data, means measures based on the precautionary principle should be maintained so long as scientific information is incomplete or inconclusive, and the risk is still considered too high to be imposed on society, in view of the chosen level of protection. Measures should be periodically reviewed in the light of scientific progress, and amended as necessary. Assigning responsibility for producing scientific evidence is already a common consequence of these measures. Countries that impose a prior

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approval (marketing authorization) requirement on products that they deem dangerous a priori reverse the burden of proving injury, by treating them as dangerous unless and until businesses do the scientific work necessary to demonstrate that they are safe. Where there is no prior authorization procedure, it may be up to the user or to public authorities to demonstrate the nature of a danger and the level of risk of a product or process. In such cases, a specific precautionary measure might be taken to place the burden of proof upon the producer, manufacturer or importer, but this cannot be made a general rule.

The full text of this document is available from the European Commission’s website: http://europa.eu.int/.

Index acceptable level of risk (ALR) 48, 166 and SPS measures 71 acceptable risk 91 Adams, J. 234, 241 ADB (Asian Development Bank) 208 Addiscott, T. 209 Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) see SPS agreement Agreement on Technical Barriers to Trade see TBT agreement agricultural products dispute 24, 41, 45, 46, 47, 51, 52, 54, 63, 64, 65, 70, 165 implementation of reports 75 provisional SPS measures 69–70 risk assessment 67 scientific evidence 50, 74 agriculture and biotechnology 221 Europe 221–2 Ahl, A.S. 95 ALOP see appropriate level of protection Anderson, C. 125 Anderson, K. 43, 187, 242 animal health 95, 158–9, 160 antibiotic resistance 203–4 antibiotics 129 and GM crops 211 ANZFA (Australian and New Zealand Food Authority) 95, 97 and GMAC 194–5 Appellate Body 1, 5, 19, 20, 41–2, 49, 51–2, 73–4, 185 and the beef-hormone dispute 43–4 reports in SPS disputes 75–6 appropriate level of protection (ALOP) 15, 48, 158–9, 166–7, 184–5, 230, 241, 242 definition 185

AQIS (Australian Quarantine and Inspection Service) 97, 98, 102, 169, 172, 185, 187 and GMAC 195 Handbook on the AQIS Risk Analysis Process 163 Atik, J. 53 Auer, M.R. 129 Australia 10, 39, 71, 185–6 banana imports 187 biotechnology 107 genetic engineering 109 GMOs 191–205 grain imports 169–72, 187–8 import of viruses 186 labelling of GM foods 214 lead 141, 146–7 McBride case 234 Ministry of Agriculture, Fisheries and Forestry (AFFA) 187 quarantine 97, 102 quarantine risk analysis 162–4 transgenes and host plants 198 wine trade 119 Australia – Measures affecting the importation of salmon see salmon dispute Australian Financial Review 214 Australian Quarantine and Inspection Service see AQIS Australian senate 102 Austria, and biotechnology 111 Bakkes, J.A. 36–7 banana disputes 56 bananas, Australia 187 Banks, D.J.D. 102 ‘Baptists and Bootleggers Coalition’ 37, 121, 126, 146 Barcel, J.J. 41 barriers to trade, and WTO 24–5 Basel Convention 127–8, 132, 212

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Bayertz, K. 109, 114 beef-hormones dispute 20, 24, 35, 41, 42, 45, 46, 47, 49, 50, 52, 54, 55, 56, 63, 64, 70, 71, 73, 74, 97, 182–3, 231–2 and the Appellate Body 43–4 implementation of reports 75 and international standards 72 risk assessment 66–8 scientific evidence 51 settlement 169 beef-hormones panel 6 Beer, T. 97 Belgium, biotechnology 111 benefit, and biotechnology 108–9 Bennett, A.E. 125 Biosafety Protocol 20, 130, 212, 215, 219, 221, 233 biotechnology 106–15, 207–8 and agriculture 221 and benefit 108–9 and communication strategies 111–12 and ethical concerns 110 non-food applications 208 and public opinion 111 Birkwood, P.L. 95, 122, 123 Boehmer-Christiansen, S. 120, 232 Brack, D. 37 Bradbury, J.A. 131 Brenton, T. 127 Breyer, S. 100 Brickman, R. 124 Britain, biotechnology 113 Brown, S.L. 124 BSE 35, 169, 233 Byron, N. 5 Cairncross, F. 39 ‘California effect’ 120 Cambodia 128 Camerer, C.F. 177 Cameron, J. 20 Canada biotechnology 109, 113 lead 141 see also beef-hormones dispute; salmon dispute Canadian Food Inspection Agency 112 CFCs 36–7, 123 Charnovitz, S. 63

Chase, A. 232–3 Chatham House rules 4 chemicals 135–6 regulation 120 risk assessment 144–5 risk management 146, 147–8 risk reduction programme 136 safety 130 toxic 122–5 Chirac, President 210 chlorination 125, 130 Choquet expected utility model (CEU) 177–8 CITES (Convention on International Trade in Endangered Species) 36, 128 Codex see FAO/WHO Codex Alimentarius Commission Coghlan, A. 211, 214 Cohen, J.T. 100 communication strategies and biotechnology 111–12 and credibility 113–14 and education 112–13 and government regulation 114–15 and public consultation 114 compliance, and accountability mechanisms 147–8 Concar, D. 211 constructivist approach to risk management 236 consumer groups 207 and food labelling 212 consumption-related risks 243–4 control, and risk perception 110 Convention on Biological Diversity 30 Convention on Persistent Organic Pollutants 147 Convention on Prior Informed Consent for the Importation of Hazardous Chemicals (PIC) 142 copper 125–6 cork 119 Cottier, T. 5, 6, 49 Couchman, K. 110, 113 Covello, V.T. 95 CRARM (Presidential/Congressional Commission on Risk Assessment and Risk Management) 97

Index credibility, as a communication strategy 113–14 CTE (Committee on Trade and Environment) (WTO) 4, 15–16, 19, 21, 212, 215, 219–21 Dal Bon, K. 9, 236 Daubert v Merrell Dow Pharmaceuticals Inc. 239 Dawson, R. 184 Deane, C.R. 8, 42 Dekel, E. 173 Delaney Amendments to the US Food and Drug Act 124 developing countries 1, 37 discrimination on the basis of process 31–4 exceptions 32 dispute settlement, SPS agreement 160–161 Dispute Settlement Body (DSB) (WTO) see DSB dispute settlement process 2 disputes 245 Dixit, A. 186 DNA, in GM foods 203–4 Doble, J. 1112 Douglas, M. 108, 122, 131, 238 Downie, D.L. 123 DPIE (Department of Primary Industries and Energy), Australia 97, 102 DSB 5, 55, 63, 73, 75, 213 DSU 213 article 11 49, 50, 52 article 13 74 article 19 55 Durant, J. 113 Durso, T.W. 109 Eaglesham, J. 211 EC 5 communication on the precautionary principle 249–52 definition of the precautionary principle 29–30 see also bananas dispute eco-labelling 215 economic interest, and environmental interest 120–121 Edgeworth, F. 224

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education 8–9 as a communication strategy 112–13 Egan, D. 128 Eggers, B. 45, 52 Elliot, L. 235 Ellsberg, D. 171, 177 Environics Research Group 107, 112, 113 environment and the precautionary principle 20–21 and trade 15–16 and WTO 19 and WTO rules 17–20 environmental agencies, and GMAC 196 environmental concerns 229–30 environmental health 38 environmental interest, and economic interest 120–121 environmental policy, and trade policy 17 environmental problems, risk management approach 125 environmental risks 119–20 environmental treaties 2 Espey, J. 106, 109, 110, 112, 113 ethical concerns, and biotechnology 110 EU 20, 169 and GM crops 206 and GM foods 222 lead 141 multifunctionality 221–2, 242 and US, trade disputes 232 EU Directive 220, on GMs 111 Europe, agriculture 221–2 European Communities see EC European Communities – Measures affecting meat and meat products (hormones) see beef-hormones dispute European Communities – Regime for the importation, sale and distribution of bananas see bananas dispute European Union see EU Evans, G. 99, 113, 187 exotic pest groups 172 extra-territoriality 38 FAO (Food and Agriculture Organization) (UN) 41, 156

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FAO International Plant Protection Convention see IPPC FAO/WHO Codex Alimentarius Commission 23, 35, 44, 48, 95, 96, 120, 131, 156, 161, 184, 224, 232, 234, 240 risk analysis and food standards 162 Financial Times 211 Fink-Jensen, K. 110, 113 Fischler, Dr 221 Fischoff, B. 84, 108, 124, 234 food GMOs 194–5 food labelling 54, 109, 204–5, 207, 214, 215, 219, 223, 243–4, 246 eco-labelling 215 and GM foods 24 Japan 206 and quarantine 213–15 food safety 95, 97, 124, 224 GM food safety 207–12 food safety standards, failure 207 Formaini, R. 238 Framework Convention on Climate Change (FCCC) (UN) 17, 18, 31, 127 France British beef ban 120 GM crops 111 French, P. 107 Frewer, L.J. 84, 108, 109, 110, 113, 114 Fumento, M. 239 game theory 232 Gascoine, D. 9, 23, 182 gasoline dispute 34 GATS (multilateral disciplines for services) 41 GATT 1, 2, 5, 16, 17, 18, 21, 44, 170, 229 article I 71, 155 article III 18, 31, 33, 71, 155, 220 article XI 41 article XX 41, 43, 64, 121, 132, 156, 182, 207, 213, 217–18, 244 article XX: General Exceptions 18–19, 23, 32, 34 article XXII 160 article XXIII 160 non-discrimination and national treatment obligations 22–3

gene technology regulation 200 Gene Technology, Technical Advisory Committee (GTTAC) 191 Gene Therapy Research Advisory Panel (GTRAP), and GMAC 196 Genetic Manipulation Advisory Committee (GMAC) (Australia) see GMAC genetically-modified organisms see GMOs Germany and biotechnology 109 precautionary principle 120 Ginsburg, R. 100 ‘global civil society’ 1 global trade, and GM foods 206–26 globalization 2, 11 GM crops, US 206 GM food safety 207–12 GM foods 11, 23, 194–5 economic dimensions 224 and global trade 206–26 health risk 200–205 and risk assessment 215–17 and SPS agreement 214 and WTO agreements 212–21 GM testing 209 GMAC 191 activities in Australia 197 and ANZFA (Australian and New Zealand Food Authority) 194–5 and AQIS 195 and environmental agencies 196 and Gene Therapy Research Advisory Panel (GTRAP) 196 institutional biosafety committees 193–4 and international harmonization 196–7 liaison with other agencies 194–6 and livestock 198 and National Registration Authority 195 structure and operation 192–3 and Therapeutic Goods Agency 196 GMOs 10, 36, 43, 99, 131 deliberately released in Australia 197–8 and government regulations 191–205 post release 199 Goldberg, D.M. 18

Index government regulations and communication strategies 114–15 and GMOs 191–205 Graham, J.D. 125, 232, 237 grain imports, Australia 169–72 risk and protection 187–8 greenhouse gas emissions 17–19 Guardian, the 211 habitat classification systems 236 Hamstra, A. 110 Hance, B.J. 107 Handbook on the AQIS Risk Analysis Process, AQIS 163 Hanf, K. 127, 235 harmonization 231, 234 Hartwell, J.K. 125, 232, 237 Hathaway, S.C. 95 hazard assessment 135, 144 hazard identification 122–3 health protection, and SPS measures 64 health risk burden of proof 73–4 GM food 200–205 Health and Safety Executive, UK 88 Henderson, D. 207 Hickey, P. 183 Hilf, M. 45, 52 Hoban, T.J. 107, 111, 114 Hoffmann, H. 36, 39 Holmes, R. 209 House of Lords 111 Howard, L. 10 Hufbauer, G.C. 217–18 Hunt, S. 84 Hurst, D. 63 import embargoes 173–6 import restrictions, GM foods 207 import risk 159–60 import risk assessment 98 in dubio mitius 45, 74 India see United States – Measures affecting imports of woven wool shirts and blouses from India information, and risk management 85–6 Institute of Food Research, UK 88 intellectual property see TRIPs interest groups 240

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Interim Office of the Gene Technology Regulator (IOGTR) 191 International Animal Health Code, OIE 161 international chemical agreements, accounting for risk 139–48 international environmental agreements, and the precautionary principle 20–21 international harmonization, and GMAC 196–7 international law 2 and the precautionary principle 30 international obligations 96 International Office of Epizootics see OIE International Plant Protection Convention (FAO) see IPPC international policy, and risk assessment 93 International Programme for Chemical Safety see IPCS international risk 89–91 precautionary principle 90–91 risk communication 89–90 international risk assessment 121–2 international risk management 82 requirements of 90 international standards 44–8, 184 and SPS agreement 161–2 and SPS measures 71–2 international trade, and greenhouse gas emissions 17 IPCC 127, 130, 131 IPCS (International Programme on Chemical Safety) 123, 144 IPPC (International Plant Protection Convention) (FAO) 23, 35, 96, 156, 161, 169, 184 and pest risk analysis 162 ISO (International Standards Organization) 156 iura novit curia 46 Jackson, J.H. 43 James, S. 43, 187, 242 Japan 72 biotechnology 107 food labelling 206

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Japan – Measures affecting agricultural products see agricultural products dispute Jasanoff, S. 124 Johnson, J. 112 Johnson, R. 184 Jokinen, P. 127 Kasperson, R.E. 108 Katic, L.D. 107, 114 Kellar, J.A. 95, 98 Kelley, J. 107, 109 Kellow, A. 9, 126, 127, 235, 236 KEMI (Swedish National Chemical Inspectorate) report 139 Keohane, R.O. 129 Kerr, W.A. 221 King, A. 129 Kleiner, K. 210 Koskinen, K. 127 Krewski, D. 95, 122, 123 Kuhn, T.S. 52 Kyoto Protocol 4–5, 17, 31, 127 labelling see food labelling lead 123 negotiations on lead risk reduction 139–48 lead risk reduction 137 key stages 137–9 Lederberg, J. 119 Levy, D.L. 128 Liefert, W.M. 172 life-cycle approach 17 livestock, and GMAC 198 Losey, J.E. 210 Luce, R. 232 McBride case, Australia 234 MacDiarmid, S.C. 95, 98 Macer, D. 107, 113 MacKenzie, D. 209 MacLaren, D. 10, 182 Marrakesh ministerial meeting 15 Mathematical Psychics 224 Mead, G.C. 95 MEAs 9, 16, 19–20, 28, 33, 34, 44, 120, 132 and risk management 128 and trade measures 36–8

Melbourne Business School 3 Melbourne conference 47 Merkhofer, M.W. 95 Mexico, tuna-dolphin dispute 217 Miami group 221 Millennium Round 42 Miller, J.D. 112 Millis, N.F. 10 Ministry of Agriculture, Fisheries and Forestry, Australia (AFFA) 187 Mitchener, B. 211 MNEs (multinational enterprises) 207 Monarch butterfly case 210 Monsanto 211 Monte Carlo simulation 100 Montreal Protocol 36–7 Morris, D. 236 Mukerji, S. 177, 178 multidisciplinary approach to risk assessment 103 multifuctionality, EU 242 multilateral agreement on investment (MAI), OECD 207 Multilateral Environmental Agreements see MEAs multilateral negotiations, in risk 126–30 Nairn, M.E. 97, 100, 102, 162, 185, 237 national measures, and SPS agreement 159 National Registration Authority, and GMAC 195 national risk assessment 144–5 national standards 44–8 Natural Law Party 236 New Scientist 206 New Zealand biotechnology 107 GMOs 113 NGOs (non-government organizations) 1–2, 207, 225, 230 and biotechnology 217 and GM foods 206, 211, 212 non-discrimination 21, 22, 71, 155 North, D.W. 95 Norton, J. 110 Notermans, S. 95 novel protein 204–5 Nunn, M.J. 7, 95, 185, 186, 216

Index OECD 9, 20, 135–6, 144, 146, 148, 208, 222, 224, 236 negotiations on lead risk reductions 139–49 risk reduction programme 136–9 OIE 23, 35, 44, 95, 96, 98, 156, 161, 184 International Animal Health Code 161 O’Riordan, T. 20 Oxley, A. 28, 33, 37 ozone-depleting substances 36–7 Paarlberg, R.L. 120 Pauwelyn, J. 5, 20, 23, 73 pest risk analysis 171–2 and IPPC 162 pesticide residues 120 Phillips, D. 169, 170, 172 Pindyck, R. 186 Pistorius, R. 121 plant health 160 policies, need for 81–2 policymaking, and risk assessment 92–4 Pollack, R.A. 100 pollution 122, 129 Powell, D. 109 precautionary principle 29–31, 220, 232–3 EC communication 249–52 and the environment 20–21 Germany 120 international risk 90–91 and quarantine risk analysis 186 and risk analysis 101 product standards 34 product standards and regulations, WTO 21–3 production and processing methods (PPMs) 220 products differentiation 17 discrimination 18, 21 protection 53 protection levels 101–2 protectionist measures 235 public consultation, as a communication strategy 114 public health and safety 38 public opinion, and biotechnology 111 public policy, and risk 122–6 Pusztai, A. 211

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quantification, in risk assessment 99–100 quarantine 119–20, 130, 182–8, 242 and food labelling 213–15 measures 65, 158, 159–60, 164 and risk assessment 185–7 regulations 1, 3 restriction, market effects 173–6 risk analysis 9–10 Australia 162–4 and the precautionary principle 186 risk management practices 162 radiation risk management 124 Raffia, H. 232 Rajasekar, S. 182 reductionist approach to risk management 234–6 regional economic agreements 3 regional standards 44–8 Reiss, M. 110 review standards 49–54 Rio Declaration 20, 29, 30, 233 risk approaches to 231–3 as a barrier to trade 28 defined 3–4 estimation 123 evaluation 123 from transgenic products 209 and international agreements 3 level, and WTO members 70 in multilateral negotiations 126–30 and public policy 122–6 and science 239–41 in setting standards 95–105 and trade 241–3 and trade agreements 1 and trade liberalization 229 voluntary or imposed 109 see also international risk risk analysis 7–8, 95, 97, 216, 231 determining the type 98 and food standards, Codex 162 and the precautionary principle 101 and regulatory agencies 97 risk assessment 15, 27–8, 57–8, 95, 97 approaches 230 for chemicals 143–5 defined 170 evidence 67–8

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factors, review 50–51 and GM foods 215–17 in international policy 93 methods for 98–9 multidisciplinary approach 103 in policymaking 92–4 quantification in 99–100 and quarantine measures 185–7 review of scientific evidence 51–2 and risk management 237–8 and science 233–5 and social values 246 and the SPS agreement 65–7, 165–6 and TBT agreement 23 risk communication 87–8, 95 international risk 89–90 risk management 57–8, 95, 97, 121, 123, 230–231 approaches 145–7 and environmental problems 125 and information 85–6 major phases in 91–2 and MEAs 128 principles 84–5 problems 83–4 and risk assessment 237–8 and science 122, 131 social, economic and ethical factors 52–4 and stakeholders 86–9 and trade 229 and WTO 164–8 risk perception 83, 84, 107–8, 109 and control 110 Roberts 173 Roberts, D. 63 Robertson, D. 11, 18, 230 Rodricks, J.V. 124, 125 ‘Rome principles’ 139, 141, 143, 147, 148, 149 Rosenbaum, J.T. 239 Royal Society 114, 209, 211 Royal Society for the Protection of Birds 119 Rycroft 237 SA/SNZ (Standards Australia/Standards New Zealand) 95

salmon dispute 5, 24, 41, 45, 46, 47, 49, 50, 52, 55, 63, 64, 71, 165–6, 167, 184, 185–6, 213, 235 implementation of reports 75 risk assessment 67 Sampson, G.P. 30 Sandbrook, R. 244 Sands, P. 20 Sapolsky, H.M. 240 Sarin, R. 177 Schmeidler, D. 177 Schomberg, R. 111 Schrader-Frechette, K. 125, 231 Schweitzer, G.E. 120 science and risk 239–41 and risk assessment 233–5 and risk management 122, 131, 237–9 scientific evidence 186–7 in disputes 49–52 in SPS agreement 171 scientific experts, and SPS disputes 74–5 Scott, A. 236 sensitivity analysis 100–101 Shepherd, R. 110, 113 Shin, Yukan 41 shrimp-turtle dispute 5, 19, 30, 33, 37, 44, 216, 217, 242 Shue, H. 121 Skolnikoff, E.B. 127 Slovic, P. 108, 113, 234 Snape, R. 33 social values, and risk assessment 246 Solomon, J. 113 sovereignty 3, 43, 45 Sparks, P. 110 SPS agreement 5, 23–4, 35, 41, 44, 49, 96, 155–6, 164, 170, 213–15, 217, 229, 231, 240 application 64–5 article 2.2 164, 186 article 3 159, 183 article 3.5 97 article 5 170 article 5.3 241–2 article 5.5 158, 167, 184 article 5.7 164, 186 consistency 55, 167–8, 184 core function 42–4 deficiencies 57–8

Index dispute settlement 160–161 and GM foods 214 harmonization of standards 183–4 implementation and enforcement 55–6 implied procedural obligations 54 and international standards 161–2 key features 156–61, 183–5 and national measures 159 obligations 64–72 principles 96–7 provisions 157–8 and risk analysis 159 and risk assessment 50–51, 65–7, 165–6 scientific basis for decisions 158–9 scientific evidence 49–50, 171 substantive rights 64–72 and trade policy implications 179 in WTO disputes 63–78 SPS committee 63, 156 SPS measures 23–4, 34–6 and acceptable level of risk (ALOP) 71 based on acceptable risk assessment 68–9 based on science 65 defined 156–7 and international standards 71–2 provisional 69–70 stakeholders 101–2 and risk management 86–9 standards 57 allowing for risk 95–105 standards of review 49–54 Stanton, G. 182, 183 Straughan, R. 110 subjective expected utility model (SEU) 177 ‘subsidiarity principle’ 245 Sweden lead risk reduction 139–40 oxygen bleaching 129 Swinbank, A. 184, 222 Szerszynski, B. 231 TBT agreement 5, 21–4, 34, 96, 109, 155, 172–3, 182, 213, 214, 215, 220, 229, 244 and risk assessment 23 technical barriers to trade (TBT) 21–4 classification 172–3

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technical regulations 1 ‘terminator’ genes 211 Therapeutic Goods Agency, and GMAC 196 third party damage, from GM crops 209–10 Thompson, P.B. 108, 109 Thornsbury, S. 172–3 Tokar, B. 236 Tokyo round 155, 182 Toronto workshop on lead risk reduction 138, 141 trade and the environment 15–16 and risk 241–3 and risk management 229 volume 221–3 trade disputes 6 trade liberalization 120, 236 and risk 229 trade measures, and MEAs 36–8 trade policy and environmental policy 17 and SPS agreement 179 trade sanctions 32 transboundary exposure risks 142–3 transgenic products, risk from 209 transgenics 208 travaux préparatoires 47 TRIPs (trade related aspects of intellectual property rights) agreement 41, 207, 218–19, 229 tropical deforestation 36 tuna-dolphin dispute 217 turtles 36 UN Biodiversity Convention 20 UN Commission for Sustainable Development 136 UN Conference on Environment and Development (UNCED) (Earth Summit) 20, 135 UN Convention on the Law of the Sea (UNCLOS) 129 UN Economic Commission for Europe (UNECE) 129, 141 UN Environmental Programme (UNEP) 20 regional seas programme 129 Underdal, A. 127, 235

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Understanding on Rules and Procedures Governing the Settlement of Disputes (WTO) see DSU United States and EU, trade disputes 232 GM crops 206 grain exports 206 lead 141 public consultation 114 tuna fisheries 39 see also agricultural products dispute; bananas dispute; beef-hormones dispute United States – Import prohibition of certain shrimp and shrimp products see shrimp-turtle dispute United States – Measures affecting imports of woven wool shirts and blouses from India 45–6 United States – Standards for reformulated and conventional gasoline see gasoline dispute United States – Tuna-dolphin see tunadolphin dispute Uruguay Round 1, 2, 5, 23, 41, 155, 207, 229 US Environmental Protection Agency 125 US Food and Drugs Authority (FDA) 207 Van Vuuren, D.P. 36–7 Vienna Convention 47 Vogel, D. 120, 235 von Moltke, B. 37 Vose, D.J. 98, 100

Waste Policy Institute at Blacksburg, US 88 Waterton, C. 235, 236 Weber, M. 177 Weiss, C. 238 WHO (World Health Organization) 41, 156 Wildavsky, A. 108, 122 Wilson, D. 9, 23, 102, 182 Wirth, D.A. 52, 54, 63 Wooldridge, M. 7, 30, 237 World Trade Organization see WTO WTO 5, 6, 19, 38, 41, 155, 183, 206 and barriers to trade 24–5 and biotechnology 223 dispute settlement procedures 72–5 dispute settlement process 160–161 disputes, in SPS agreement 63–78 and the environment 19 members and risk level 70 product standards and regulations 21–3 risk management issues 164–8 role 27 rules and the environment 17–20 and sanitary and phytosanitary measures 24 see also Appellate Body WTO agreements 1, 2, 15, 229 and environmental protection 157 and GM foods 212–21 harmonization 3 shortcomings 246 Wyndham, A. 99 Wynne, B. 124, 235, 236, 241 Yandle, B. 37, 121, 146

Wagner, W. 107 Wakeford, T. 211 Wakker, P.P. 177 Wall Street Journal, the 206

Zechendorf, B. 111 zero risk 70, 83 Zero risk policy 53

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