A WTO dispute settlement panel’s rulings on U.S., Canadian and Argentine cases against the EU on approval of biotech crops released on September 29th are critical for the WTO in establishing a rules-based system for handling trade disputes on biotech crops. The cases were not about biotech crops being safe, but did the EU act as it had agreed to as a WTO member.

The WTO case against the EU on biotech crops is actually three separate cases filed by the U.S., Canada and Argentina with supporting countries. The cases were combined into one ruling, but issues from each case are included. In May of 2003 the three countries had asked for consultations with the EU to address concerns about the EU’s failure to use its regulatory system to approve biotech crops. When those consultations failed to resolve the issues, in August of 2003 the countries requested a dispute settlement panel be established. The WTO panel began its work in March of 2004.

The EU’s history of regulating biotech crops began in 1990 when the EU Commission established a regulatory approval process under Directive 90/220. From 1994-1998 the EU approved nine biotech crop varieties, mostly corn, soybeans and rapeseed for importing into the EU. In February of 1997 Austria banned imports of a corn variety that had been approved by the EU, and the EU did not challenge the ban. In the following three years Austria and five other countries banned other EU approved crops. The EU stopped approving all new biotech crop applications in October 1998. After repeated promises that approvals would resume, the U.S. Canada and Argentina ran out of patience in 2003 and filed the WTO cases.

The cases came down to two key points on the timeliness of actions by the EU and the individual countries making decisions based on risk assessment.

The timeliness issue was rather clear. Prior to 1998 the EU had established a process for approving biotech crops and had approved nine applications. From October 1998 until the panel was requested in August 2003 no new biotech crops were approved. The U.S. and the other parties charged that this was a defacto moratorium and the WTO panel agreed. They found undue delays with applications for 24 of 27 relevant products.

The risk assessment issue dealt with nine safeguard measures (prohibitions against marketing and imports of specific products) taken by Austria, France, Germany, Greece, Italy and Luxembourg on biotech field corn, sweet corn, oilseed rape, cotton and sugar beets. The WTO panel ruled that the safeguards were “not based on risk assessments as required by Article 5.1 of the SPS Agreement.” The EU approval process had previously considered the potential risks to human health and the environment and had found the risk level to be acceptable. EU scientific committees also considered information provided by the countries and then reaffirmed their earlier assessments.

The panel’s findings on risk assessment directly touch on the precautionary principle that the EU adheres to on many environmental issues. The ruling concluded that trade barriers cannot be created with out some reasonable science-based efforts to weigh the costs and benefits.

The WTO panel made clear in its ruling that it was not the panel’s task to determine whether biotech crops are generally safe or if they were “like” their conventional counterparts. They also did not consider whether the EU’s product-by-product procedures for considering the safety of biotech crops were appropriate or judge the conclusions reached by various EU scientific committees as part of the approval process. The panel did seek advice from six scientific experts who submitted hundreds of pages of materials and spent two days with the panel and representatives of the two sides.

The WTO is not a standards setting body for biotech crops or any other products. That is left to groups like Codex. It also does not try to second guess the fine points of science and risk assessment. It focuses on how member countries follow the rules as set out in WTO agreements.

The WTO panel’s ruling is not the end of the debate. The report will be adopted by the WTO membership within sixty days, unless one or more of the disputing parties decides to initiate an appeal, which the EU will do. The WTO Appellate Body will then issue its report within 90 days. It is highly unlikely that the Appellate Body report will differ from the panel’s report.

While the EU has approved a few biotech crop applications in recent years, there is no indication they will address all of the 27 applications that were at the heart of the cases filed by the U.S., Canada and Argentina. The individual countries in the EU have also not indicated that they will stop using safeguard measures to block imports of biotech crops. As in the current WTO cotton case brought against the U.S. by Brazil, after a year or so a request will be made for a meeting to discuss progress on implementing the ruling. If sufficient progress has not been made, the winning parties can then ask the WTO to set compensation in the form of tariffs on EU products.

The good news is that the WTO panel drew reasonable conclusions about the obligations of the EU to not “unduly delay” the regulatory approval process for biotech crops. After approving nine over four years, approving none in the following five years clearly falls in the “unduly delay” category. The rulings on the risk assessment issues for the safeguard measure sends the same message that a science-based process must be the basis for prohibiting the importing of specific products. WTO rules cannot force fundamental changes in government policies. That must be done within the political context of each member of the WTO.