Brian Fallow: GM ruling important for trade

A World Trade Organisation disputes panel has found in favour of the United States, Canada and Argentina in cases they have brought against the European Union over genetically modified crops.

They claimed it had a de facto moratorium on approving "biotech products" which was a breach of international trade rules.

US Trade Representative Robert Portman hailed the decision, saying agricultural biotechnology was a safe and beneficial technology that was improving food security and helping to reduce poverty worldwide.

At the other end of the spectrum, the decision will reinforce the conviction within the anti-globalisation movement that the WTO is the compliant tool of multinational corporations, a threat even to the safety of the food we eat.

Reality, of course, lies about equidistant between these two extremes.

For one thing, the disputes panel expressly said it did not examine the question of whether biotech products were safe or not.

Rather, its concern was whether the Europeans had breached the WTO's Sanitary and Phytosanitary (SPS) Agreement.

The agreement gives countries the right to adopt measures necessary for the protection of life or health of people, animals or plants.

But it seeks to balance that right with rules to ensure that those measures do not restrict trade any more than is necessary.

Measures have to be based on scientific principles and cannot be maintained without sufficient scientific evidence. (Australian apple growers please note.)

The agreement also requires approval processes to be undertaken and completed without "undue delay".

From a New Zealand point of view, it is the precedent value of the ruling that matters.

It adds to the body of international jurisprudence bearing on the delicate balance that has to be struck between countries' rights to ensure their food is safe and their environment protected on the one hand and the risk that such procedures are exploited as non-tariff barriers to trade to protect local producers on the other.

It is about how far Governments can take the precautionary principle, that a new technology such as genetic engineering should be treated as harmful until proven safe, rather than the other way around.

The panel has concluded that the EU did have a de facto moratorium on approving GM crops between mid-1999 and August 2003 (when the WTO dispute procedure kicked in), and that that constituted undue delay under the agreement.

The US et al had also challenged prohibitions imposed by Austria, Belgium, France, Germany, Italy and Luxembourg on particular biotech products which had already been approved at EU level.

The panel thought there was sufficient scientific evidence available to permit a risk assessment as required under the agreement.

"For each of the products at issue the European communities' relevant scientific committee had evaluated the potential risks to human health and/or the environment prior to the granting of community-wide approval, and had provided a positive opinion. The relevant EC committee subsequently also reviewed the arguments and the evidence submitted by the member state to justify the prohibition and did not consider such information called into question its earlier conclusions ... Hence in no case was the situation one in which the relevant scientific evidence was insufficient to perform a risk assessment such that the member state might have recourse to a provisional measure under article 5.7 of the SOS Agreement."

The panel's full reasoning will not be known until its report, said to run to more than 1000 pages, is released in a couple of months. What we have so far are the leaked bottom-line conclusions of its interim report, sent to the parties for feedback. And it is almost certain to be appealed.

In one sense, the issue has been overtaken by events.

At the EU level - where the commission has tended to be more permissive and pro-biotech than at least some member states where public opinion is strongly anti-GM - the regulatory approach has switched to requiring labelling and traceability. The Americans are expected to take a case to the WTO over that too.

More to the point, if there is little demand for GM foods, indeed a positive aversion to them, there is little reason for farmers to grow them or supermarkets to stock them.

This has led some commentators to conclude that the US's main reason for taking its case against the Europeans was not about the European market and all about making it easier for its agribusiness companies to gain or keep access to markets in Asia, Latin America and Africa.

New Zealand is among the countries that attached themselves to the cases as third parties.

Not because it has GM produce to export to Europe or anywhere else. It doesn't.

Or because it has a problem with countries regulating in the cause of food safety and environmental protection. We have our own Environmental Risk Management Authority after all.

But, as a food exporter, New Zealand has a systemic interest in maintaining the integrity of a science-based, least trade restrictive regime for such matters.

On the preliminary evidence available so far the WTO's decision does that.

Joseph Daul, chairman of the European Parliament's agriculture and rural development committee and a possible future French agriculture minister, during a visit to Wellington last week cited popular concerns about food safety as one of the reasons European consumers and taxpayers tolerate a system that pushes up the price of food and disburses nearly half of the EU Budget on agricultural subsidies.

"I am convinced the European citizen is ready to continue to pay to have food safety and maintenance of the land and environment," he said.

The concern appears to be that without subsidised farming, large tracts of France will revert to forest and be swept by forest fires, for which the citizenry would have to pay anyway. Critics of the Common Agriculture Policy and this notion of multifunctionality, of course, argue that if the Europeans want to pay their farmers to be custodians of the countryside they should do that directly and not through trade-distorting subsidies.

To which the Europeans reply that the latest reforms of the CAP, still in the throes of being implemented, move in exactly that direction through decoupling subsidies from production.

The brutally swift axing of New Zealand's subsidy regime 20 years ago could not be replicated in Europe, Daul argues. Here it took place amid comprehensive reform to the whole economy.

"If we could do that too, I think farmers would take the bet," he said.

But as it is, European farmers face stiff local land taxes and the costs of the European social model, which funds generous levels of social spending from taxes which create a wide wedge between what it costs to employ someone and his or her take-home pay.

Even if there were the political appetite to change all that, it would have to be agreed by 25 member states under a constitution which still requires unanimity for much of what the EU does.