RECONCILING BIOSAFETY PROTOCOL AND WTO BY INTERPRETATION?

by Chakravarthi Raghavan

Geneva, 6 June 2000 -- The legal division of the WTO secretariat has suggested recourse to Article IX.2 of the Marrakesh Agreement to get the General Council of the WTO to provide an authoritative, harmonious interpretation of the WTO agreements with those of the Cartegena Biosafety Protocol to the UN Convention of Biodiversity (CBD) in order to avoid conflicts.

The Biosafety protocol concluded at Montreal on 29 January 2000 was opened for signature at the recent meeting of the Conference of Parties of the CBD at Nairobi and, as of 26 May, 68 countries have signed the protocol. It will enter into force when 50 parties to the Biodiversity Convention have ratified the protocol.

In terms of the WTO, and the rights and obligations under it of members, any issues of conflict as between two parties to the WTO invoking the WTO agreement provisions and raising dispute would be resolved by the dispute panels and the appellate body.

The outcome of such a process, and the ad hoc nature of the trade law that would be built up, could bring the WTO and its processes, and thus its legitimacy into question before the environment and development community. An authoritative and harmonious interpretation of the provisions of the WTO agreements and the Cartegena protocol could avoid such a conflict, the WTO secretariat has suggested.

The WTO secretariat legal division's view on the possible conflicts between the protocol and the WTO agreements, and need to avoid conflicts, appears to have been provided in an internal note to the WTO Director-General in February.

The secretariat has suggested that the same approach could be used to reconcile the provisions of the WTO agreements with multilateral environment agreements (MEAs).

However, the carving out of MEAs and trade restrictions pursuant to them, as exceptions under GATT 1994, mooted by the EC and US during the Uruguay Round, and since then has run into problems in the Committee on Trade and Environment (CTE) in terms of an agreed or acceptable definition of MEAs to reflect a representative range of countries, geographically and at different levels of development. Without it, the MEAs could easily be turned into protectionist instruments by some of the developed countries to keep out imports from the developing world.

The secretariat note on the Biosafety Protocol and the WTO, and its contents have percolated down to some trade officials and some governments, as well as to some non-government organizations.

According to some NGOs who did not want to be identified, the United States which is not a party to the CBD and which, with the CBD members of the "Miami Group" (Argentina, Australia, Canada, Chile, Uruguay and the US) resisted the biosafety protocol and got some preambular paragraphs inserted, has reportedly been upset by the legal division's view. And according to some reports, there have been some attempts to get the views of the secretariat of the appellate body.

The WTO media office would not confirm, deny or comment on these reports or the note and the legal division's views, a copy of which has been obtained by the SUNS.

Any division of the secretariat providing a note to the head of the secretariat on his request would not ordinarily attract much attention.

However, the legal division of the secretariat also services the panel processes, and guides the panels, including by providing panellists with notes and views, and has become controversial -- more so because of the ideological and nationality dominance in the secretariat and the non-transparent rule-making process of the WTO becoming reinforced by an even more non-transparent secretariat role in disputes.

The secretariat of the appellate body performs a similar function visavis cases that are taken in appeal.

The role of panels in encroaching on the rights of the collectivity of Members (who along have been vested with authority to provide interpretations), in effect undertaking a 'legislative role' and giving rulings based on 'evolutionary view' of the international law has already become controversial, more so because by a strange coincidence the rulings seem to impose new obligations in terms of the trade agreements themselves, visavis developing countries, with the US more often than not as a beneficiary.

The use of the panel process to reconcile conflicting rights and obligations under different treaties, and more so those involving environment and development and other considerations would quickly strain the WTO and its dispute settlement system even more, raising questions of credibility and legitimacy.

The Cartegena protocol will apply to all Living Modified Organisms (LMOs), including those used in food, feed and in processing, but excluding products thereof. According to the protocol, exporters of LMOs have to provide certain information in order to get the importing country's prior (informed) import consent. Some of the commodities have to be clearly labelled and identified as 'may contain LMOs'.

The protocol allows for some trade restrictions on imports on the basis of the precautionary principle which is incorporated as an operational article of the protocol.

But some trade experts believe that while big entities like the EU, with the kind of expertise they could command and the scientific opinion they could mobilise, may have some advantage through the precautionary principle, many developing countries may find themselves hard put to do so on their own. They might in fact find themselves discriminated against in developed markets.

The WTO multiilateral agreements, in particular the provisions of GATT 1994, and the Agreements on Sanitary and Phytosanitary Standards (SPS) and the Technical Barriers to Trade (TBT), impose disciplines and restrictions on the importing countries use of standards to keep out imports.

There are thus overlaps between the two agreements.

In general, in such a case as between two parties, a subsequent agreement could be interpreted as modifying the rights and obligations of the Parties under an earlier agreement, and specific provisions of one treaty could have an effect on more general provisions of another.

If the parties to the WTO and that of the Cartegena protocol were the same, it is one thing. But what happens if a WTO member, like the US, is not a party to the CBD and the protocol?

The situation gets further complicated by two preambular paragraphs of the Cartegena protocol:

* Emphasizing that this protocol shall not be interpreted as implying a change in the rights and obligations of a Party under any existing international agreements,

* Understanding that the above recital is not intended to subordinate this Protocol to other international agreements.

In the absence of the first preambular paragraph cited above, in effect the WTO's agreements could be claimed to have been subordinated. But one view of the protocol and this preambular paragraph, among some trade diplomats, has been that the WTO's agreement received a further lease of life. But the second preamble goes in the contrary direction.

This is the kind of 'soft language' of compromise that international treaty negotiators resort to -- and without that the treaty itself might not be possible. But the WTO and its dispute settlement system, where the views of three panellists (and modified by the appellate body) become automatically binding in effect means that the panel system, the judicial organ of the WTO, has taken on the role of the legislative organ in 'interpreting' the compromises in soft language used, and create more obligations. Perhaps it is a mere coincidence, but perhaps it is something worse too, that the interpretations appear to have an ideological line and creates new obligations for developing countries.

The secretariat note talks of the 'evolutive' principles of interpreting the WTO, citing the appellate body ruling in the gasohol case (brought by Venezuela against the US), where the appellate body talked of interpreting WTO and GATT in terms of evolution of contemporary law and principles.

The Art. XX of GATT (the various general exceptions to trade obligations) was framed in 1947. But in the Uruguay Round negotiations, there were efforts to change the provisions of Art.XX exceptions for environment considerations, but this was rejected. And GATT 1994 (separate and distinct from GATT 1947), was GATT 1947 (including the Art XX) plus the understandings and decisions thus represented the considered view of the negotiators in 1994 on these 'exceptions', when they concluded the Marrakesh agreement.

But ignoring this 'history', and citing the evolutive principle, the appellate body provided a very questionable and mind-boggling ruling, as if contemporary international law had evolved between 1994 and 1996 (when the appellate body ruling was handed down).

The secretariat note cites the evolutive principle and argues that panels and the appellate body were obliged, in interpreting the WTO agreements, to take into account other relevant international rules and principles as well as treaties, especially when concluded between a large number of WTO members.

In any trade dispute, the protocol is likely to be invoked as a defense by an importing country to justify restrictions on market access based on policy considerations other than trade.

But the country taking such a defense has to prove or justify itself.

But the WTO dispute settlement system cannot be used to enforce the provisions of the protocol.

While panels and the appellate body, on a case by case basis, may provide interpretations that may reconcile both, these are likely to prove controversial. A General Council interpretative decision, the secretariat note argues, could however find more legitimacy among WTO members than ad hoc panel interpretations. Such an interpretative process would ensure that both the treaties are mutually supportive, increase the transparency of the adjudicating functions, and ensure consistency of WTO treaties with other international agreements.

In terms of the GATT 1994, TBT and SPS agreements -- the agreements have been interpreted as cumulative, with members required to observe all the agreements simultaneously.

The secretariat note is based on some questionable interpretations, and using the concept of 'single undertaking' -- a phrase that is not found in any actual provision of the WTO or of its annexed agreements. While the Marrakesh Final Act provides that "the WTO Agreement shall be open for acceptance as a whole," it does not use the 'single undertaking' at all -- a phrase used in the goods part of the Punta del Este declaration, and subsequently asserted and explained (by the EC, India and Brazil in the Trade Negotiations Committee) as implying no more than a political commitment to start and conclude the negotiations at the same time, and without any legal implications.

In this view, the secretariat argues that any trade measure consistent with the SPS, it would be presumed to be consistent with GATT 1994. Any measure falling under the SPS cannot also fall under TBT - the two agreements are viewed as mutually exclusive by the secretariat. If a measure is not under SPS, it could fall under GATT 1994, and also under the TBT in some circumstances. In any conflict between GATT 1994 and the TBT, the TBT would prevail in view of the general interpretative note in Annex IA of the WTO. But if Art XX of the GATT 1994 were interpreted to alow defense of a measure that would otherwise violate the TBT, an 'effective interpretation' of Art XX should enable the measure to benefit from the wider exception.

A measure could be said to come under the SPS if its aim is to protect human or animal life or health against food or food-borne risks; or to protect human, animal or plant life or health or environment against pests and diseases. But if a measure is used for consumer protection -- informing consumers -- or for moral reasons, the measure would not be an SPS one but a technical regulation, subject to the rules of the TBT.

The SPS has provisions about 'risk assessment', while the TBT has a 'necessity' test: is the measure necessary to achieve the stated goal of protecting the environment or the 'relating to' test of the Art. XX exception.

If the Cartegena protocol is used as an interpretative element, as expressing "contemporaneous concerns of the community of nations", and not independently of the WTO, the protocol would be relevant not only in cases where both WTO disputing parties are also parties to the protocol, but only when one or even none of the WTO are bound by the protocol.

If this is accepted, it would mean a similar argument could easily be used against developing countries through regional multilateral agreements to which they themselves are not parties - a view favoured by some of the Northern environment NGOs (who are courted by the major industrial nations and the WTO secretariat).

In terms of the WTO, only the SPS provides for precautionary principle. As interpreted by the panel in the case against Japan over apple varieties, the SPS precautionary principle allows a member to provisionally maintain an SPS measure "without sufficient scientific evidence" or without "complete risk" assessment.

There are some conditions attached: the measure is imposed in a situation where "relevant scientific information is insufficient", and the measure is adopted "on the basis of available pertinent information". But the member instituting the provisional measure cannot maintain it without seeking to obtain additional information necessary for a more objective assessment of risk, and the measure is reviewed within a reasonable period of time.

But this has not proved non-controversial, as seen in the US-EC beef hormone dispute.

The Cartegena protocol on the other has formulated precautionary principles allowing trade restrictions (for LMO seeds in Art 10.6, and LMO commodities in Art 11.8) in this wording:

"Lack of scientific certainty due to insufficient relevant scientific information and knowledge regarding the extent of the potential adverse effects of a (LMO ) on the conservation and sustainable use of biological diversity in the Part of import, taking also into account risks to human health, shall not prevent that Party from taking a decision, as appropriate, with regard to the import of (the LMO in question) ... in order to avoid or minimize such potential adverse effects."

Which of the two definitions of precautionary principle would the panels accept.

Even under the protocol, the importing country is required to review the precautionary measure, at the request of an exporter, and provide a response to the exporter within 90 days. This could in fact make the precautionary measure against an LMO under the protocol more difficult than under the SPS.

But there are no review procedures for an LMO commodity, and so the SPS may be invoked.

The US or any of the Miami group could conceivable block any agreed interpretation by consensus in the General Council, though the WTO agreement provides for such interpretation by vote. Or, even if one is given, it could be couched in such language that it would provide further fertile field for panels, and thus indirectly the legal firms (environmental and trade law).

But the CBD and biosafety protocol issues are also very emotive, and any WTO ruling falling foul of such public concerns would be one more that brings into question the legitimacy of the WTO system. (SUNS4682)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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