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A New and Controversial Mandate forthe SPS Agreement:

The WTO Panel's Interim Report in theE. C.-Biotech Dispute

Andrew Thomison"

In trod u ctio n ................................................................................................. 288I. Background and H istory ......................................................................... 288

A. The WTO and its Core Functions ..................................................... 288B. W TO Side Agreem ents ....................................................................... 290C. The Disputed EC Regulations ........................................................... 292D. Procedure and Claims of the Complaining Parties ......................... 293

II. T he Panel's D ecision ............................................................................. 296A. The Applicability of the SPS Agreement .......................................... 297B. The General Moratorium on GMO Product Approval ................... 299C. Application of Safeguard Measures by EC Member States ............. 303

III. A ssessm en t ............................................................................................. 304IV . C on clu sion ............................................................................................. 307

* J.D. Candidate 2007, Columbia University School of Law; B.A. 2004, Williams College;Administrative Editor, Columbia Journal of Environmental Laur, Managing Editor, ColumbiaJournal of European Law. I wish to thank Columbia Journal of Environmental Law Editor-in-ChiefGeoff Roughton for providing me with an opportunity to write on such a deeply importantcase and for his insightful and helpful feedback throughout the editing process. I would alsolike to extend my thanks to Professor Richard Gardner for serving as my advisor on thisproject. Lastly, I thank my parents, John and Rena Thomison, along with family and friends,for their patient support and forbearance during the writing and revision of this CaseComment.

COLUMBIAJOURNAL OF ENVIRONMENTAL LAW

INTRODUCTION

In May of 2003, pursuant to the World Trade Organization's(WTO's) Understanding on Rules and Procedures Governing theSettlement of Disputes (DSU),' the United States, Canada, andArgentina (the "Complaining Parties") initiated a disputesettlement proceeding against the European Community (EC) 2 inregard to an alleged "moratorium on the approval of biotechproducts.0 Among the world's leading producers of GeneticallyModified Organisms (GMOs) , the Complaining Parties hold akeen interest in gaining access to the European agricultural marketfor their GMO products. Between October of 1998 and theinitiation of dispute settlement, however, not a single GMOproduct had been approved for marketing within the EC.'Through the use of DSU mechanisms, the Complaining Partieshoped to negotiate changes to the EC regulatory scheme whichwould end the moratorium on GMO product approval andexpedite the approval process. Negotiations proved unsuccessful.On August 7, 2003, after failing to reach a satisfactory conclusionthrough discussion with the EC, the Complaining Parties requestedthe establishment of a WTO panel to investigate the dispute. 6

I. BACKGROUND AND HISTORY

A. The WTO and its Core Functions

On January 1995, the WTO superseded the General Agreement

1. Understanding on Rules and Procedures Governing the Settlement of Disputes, Apr.15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, LegalInstruments-Results of the Uruguay Round, 33 I.L.M. 1125 (1994).

2. The EC is the successor to the European Economic Community and represents theeconomic and social arrangements of the single market within the European Union.

3. Panel Report, European Communities-Measures Affecting the Approval and Marketing ofBiotech Products, 1, WT/DS291, WT/DS292, WT/DS293 (Feb. 7, 2006).

4. United States, Argentina, and Canada represented 96 percent of the world's acreage ofgenetically modified or transgenic crops in 2002. See HEIKE BAUMOLLER, DOMESTIC IMPORTREGULATIONS FOR GENETICALLY MODIFIED ORGANISMS AND THEIR COMPATIBILITY WITH WVTORULES 8 (2003). The U.S. State Department declared that by 2002 the U.S. had lost $300million in sales of genetically modified corn and soy products alone. See European CommissionOpts not to Push for End of GMO Moratorium, INSIDE U.S. TRADE,Jan. 25, 2002.

5. Panel Report, supra note 3, at 29.6. Id. at 1.

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on Tariffs and Trade (GATT) as the premier forum for thenegotiation of trade issues.7 In its preamble, the AgreementEstablishing the World Trade Organization (WTO Agreement)included among its stated goals the "expanl[sion of] the productionof trade in goods and services," the "protect[ion] and preserv[ationof] the environment," and agreement on "reciprocal and mutuallyadvantageous arrangements directed to the substantial reduction oftariffs and other barriers to trade and to the elimination ofdiscriminatory treatment in international trade relations."8 Whilethe WTO was in many ways innovative, it represented to someextent a continuation and expansion of the GATT systemoriginating half a century earlier. Indeed, the WTO Agreementincludes implementation of the GATT 1994 agreement, located inAnnex IA, as one of the WTO's primary functions.9 The result isthe assimilation of GATT principles and requirements into theWTO. As reflected in the WTO Agreement's preamble andexplicitly incorporated in Annex IA, these requirements include,among others, GATT Article I, requiring that a product made inone member country must be treated no less favorably than a likegood that originates in another member country, and GATTArticle III, requiring that foreign-produced goods must be treatedno less favorably than like or directly competitive domestically-produced goods, once they have come across a member nation'sborders.'0 As emphasized by Petros Mavroidis, these non-discrimination obligations, designed to prevent nations from

7. See Final Act Embodying the Results of the Uruguay Round of Multilateral TradeNegotiations, 1 3, Apr. 15, 1994, 33 I.L.M. 1125 (1994).

8. Marrakesh Agreement Establishing the World Trade Organization, Final ActEmbodying the Results of the Uruguay Round of Multilateral Trade Negotiations, Apr. 15,1994, 33 I.L.M. 1125, preamble (1994).

9. Id. at Art. 111(1).10. The General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A3, 55 U.N.T.S.

188 (1947). Article I(1) requires that "any advantage, favour, privilege or immunity grantedby any contracting party to any product originating in or destined for any other country shallbe accorded immediately and unconditionally to the like product originating in or destinedfor the territories of all other contracting parties." Article 111(1) states that "internal taxesand other internal charges, and laws, regulations and requirements... and internalquantitative regulations ... should not be applied to imported or domestic products so as toafford protection to domestic production." Article 111(4) notes that "[t]he products of theterritory of any contracting party imported into the territory of any other contracting partyshall be accorded treatment no less favourable than that accorded to like products ofnational origin in respect of all laws, regulations and requirements affecting their internalsale, offering for sale, purchase, transportation, distribution or use."

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enacting protectionist measures, represent the "cornerstone of theGATT."" In order to ensure member state compliance with thesecore tenets and to resolve disagreements between members quicklyand, if possible, congenially, the Agreement Establishing the WorldTrade Organization included in Annex 2 the Understanding onRules and Procedures Governing the Settlement of Disputes (DSU)and called for WTO administration of the DSU's provisions. 1

2

B. WTO Side Agreements

Among the other multilateral agreements to be included inAnnex 1A of the Agreement Establishing the World TradeOrganization were the Agreement on Technical Barriers to Trade("TBT Agreement") and the Agreement on Sanitary andPhytosanitary Measures ("SPS Agreement"). 13 The general purposeof these agreements was to allow member states to adopt measuresdesigned to protect human health or animal life or plant life whileat the same time preventing the use of such measures as a means of"arbitrary or unjustifiable discrimination" between member statesor as a "disguised restriction on international trade."'14 The SPSAgreement, by its terms, applies to "all sanitary and phytosanitarymeasures which may, directly or indirectly, affect internationaltrade." 15 The SPS Agreement defines an SPS measure in AnnexA(1) as any measure applied

to protect animal or plant life or health within the territory of theMember from risks arising from the entry, establishment or spread ofpests, diseases, disease-carrying organisms or disease-causingorganisms;to protect human or animal life or health within the territory of the

11. Petros C. Mavroidis, Technical Barriers: TBT and SPS Agreements, in THE WORLD TRADEORGANIZATION (Petros C. Mavroidis et al. eds., 2006).

12. Agreement Establishing the World Trade Organization, supra note 8, art. 111:3. For adescription of DSU procedure, see Suzanne Bermann, EC-Hormones and the Case for an ExpressWTOPostretaliation Procedure, 107 COLUM. L. REV. 131, 134-38 (2001).

13. Agreement Establishing the World Trade Organization, supra note 8, annex IA.14. Agreement on the Application of Sanitary and Phytosanitary Measures, Apr. 15, 1994,

Marrakesh Agreement Establishing the World Trade Organization, annex IA, MultilateralAgreements on Trade in Goods, 33 I.L.M. 1154 (1994) [hereinafter the SPS Agreement];Agreement on Technical Barriers to Trade, Apr. 15, 1994, 1868 U.N.T.S. 120, Preamble(1994) [hereinafter the TBT Agreement].

15. Agreement on the Application of Sanitary and Phytosanitay Measures, supra note 14,art. 1.1.

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Member from risks arising from additives, contaminants, toxins, ordisease-causing organisms in foods, beverages, or feedstuffs;to protect human life or health within the territory of the Memberfrom risks arising from diseases carried by animals, plants or productsthereof, or from the entry, establishment or spread of pests; orto prevent or limit other damage within the territory of the Memberfrom the entry, establishment or spread of pests.'1

The SPS Agreement requires, however, that members of theWTO ("Member States") "ensure that any... measure is appliedonly to the extent necessary.. . , is based on scientific principles,and is not maintained without sufficient scientific evidence ....Furthermore, the SPS Agreement requires that such sanitary orphytosanitary measures ("SPS measures") be based on "anassessment, as appropriate to the circumstances, of the risks tohuman, animal or plant life or health, taking into account riskassessment techniques developed by the relevant organizations."'If scientific evidence is insufficient, the SPS Agreement allowsMember States to adopt provisional SPS measures on the basis ofavailable pertinent information. If a Member State chooses toadopt such a provisional measure, that Member State must seek toobtain additional information necessary to conduct a moreobjective risk assessment. Once the Member State has conductedthe new risk assessment, it should review its provisional measureswithin a "reasonable period of time."'19 Lastly, the SPS Agreementmandates that any protective SPS measures not be more trade-restrictive "than required to achieve [their] appropriate levels ofsanitary or phytosanitary protection"2 and that all SPS proceduresbe "undertaken and completed without undue delay.",

2'

The TBT Agreement attempts to secure a similar balancebetween permitting measures to protect human, animal, and plantlife or health and preventing such measures from being used in adiscriminatory or protectionist manner. It applies to technicalregulations2 and standards that do not fall within the ambit of the

16. Id. annexA(1).17. Id. art. 2.2.18. Id. art. 5.1.19. Id. art. 5.7.20. Id. art. 5.621. Id. annex C(1) (a).22. See Appellate Body Report, European Communities-Trade Description of Sardines, 175,

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SPS Agreement. 23 Like GATT Article I, Article 2.1 of the TBTAgreement requires that treatment of products imported from theterritory of any member be no less favorable than treatment givento like products of national origin and to like products originatingin any other country.2 4 The TBT Agreement also contains limitingprovisions with regard to regulatory content similar to those seen inthe SPS Agreement. Technical regulations, for instance, shouldnot be adopted or applied with the effect or intent to createunnecessary obstacles to international trade.' Nor shouldtechnical regulations be more trade-restrictive than necessary tofulfill a legitimate objective.26 Compared to the SPS Agreement'srisk assessment inquiry, however, the TBT Agreement's inquiryfocuses less on the scientific justification for protective measuresand instead places greater emphasis on any discriminatory effectsthe measures have on international trade. The result is thatmeasures which do not fall within the ambit of the SPS Agreement,but are regulated by the TBT Agreement, receive a less demandingassessment in the case of WTO disputes. 7

C. The Disputed EC Regulations

The EC has enacted some of the world's most demandingrequirements for importation of GMOs. 2 Directive 2001/18/EC,which itself represented a modification and strengthening of itspredecessor, Directive 90/220/EC, 9 imposes a series of stringentimport hurdles that GMOs must pass before they may be placed onthe market or released into the environment. The requirements ofthe Directives include a case-by-case environmental risk assessment

WT/DS231/AB/R (Sept. 26, 2002).23. Agreement on Technical Barriers to Trade, supra note 14, art. 1.5.24. Id. art. 2.1. While GATT Article I is a provision of general applicability, Article 2.1 of

the TBT Agreement applies only to technical regulations.25. Id. art. 2.2.26. Id.27. Joost Pauwelyn, The WTO Agreement on Sanitary and Phytosanitary (SPS) Measures as

Applied in the First Three SPS Disputes EC-Hormones, Australia- Salmon and Japan Varietals, 2 J.INT'L ECON. L. 641, 644 (1999).

28. BAUMCLLER, supra note 4, at 8.29. Directive 2001/18/EC of the European Parliament and of the Council, On the

Deliberate Release into the Environment of Genetically Modified Organisms and RepealingCouncil Directive 90/220/EC, 2004 O.J. (L 106) 1, available at http://europa.eu.int/eur-lex/pri/en/oj/dat/2001/1_106/1_10620010417en00010038.pdf.

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taking into account cumulative long-term environmental effects, 30

satisfactory field testing, appropriate labeling, 2 and opportunityfor public comment.3 Furthermore, Article 23 of Directive2001/18/EC permits an EC member state to provisionally restrictof the sale or use of GMO products, even when such products havealready passed EC inspection, so long as that member statepossesses "new or additional information ... affecting theenvironmental risk assessment., 34 This so-called "Safeguard Clause"permits EC member states to raise an additional barrier to theadmission of GMO products if evidence exists to support suchaction.

Regulation (EC) 258/97 of the European Parliament and of theCouncil lays out administrative procedures necessary to gainapproval for placing food products and ingredients on the market.The Regulation applies to foods or ingredients containing orconsisting of GMOs 35 but also includes foods and ingredientsproduced from, but no longer containing, GMO material s6 Theadministrative procedures required by Regulation (EC) 258/97 aresimilar to those laid out in Directive 2001/18/EC, and, like theDirective, the Regulation includes a Safeguard Clause allowing anEC member state to object to otherwise-approved marketing of thefood product if the member state possesses new or additionalinformation affecting the environmental risk assessment.

37

D. Procedure and Claims of the Complaining Parties

On May 13, 2003, the United States, Canada, and Argentinainitiated the dispute settlement process against the EC under theauspices of the WTO. 3' Each party first requested consultation with

30. Id. at 5.31. Id.32. Id. The directive mandates that all products containing or consisting of GMOs have

either a label or an accompanying document containing the sentence "This product containsgenetically modified organisms."

33. Id. at 8.34. Id. at 13.35. Within the meaning of Directive 2001/18/EC. See Regulation (EC) No. 258/97 of the

European Parliament and of the Council, Concerning Novel Foods and Novel FoodIngredients, 1997 OJ. (L 43) 1, 2, available at http://www.fsai.ie/legislation/food/eudocs/NovelFoods.andIngredients/Reg258.97.pdf.

36. Id. at 2.37. Id. at 4.38. Panel Report, supra note 3, at 1.

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the EC, as required by Article 4 of the DSU, Article 11 of the SPSAgreement, Article 19 of the Agreement on Agriculture, Article 14of the TBT Agreement, and Article XXII of GATT. 5 On June 19,2003, the United States and Argentina held the requestedconsultations, but failed to reach a mutually satisfactory resolutionof the dispute.40 Canada's consultation with the EC followed onJune 25, 2003, and the process again failed to produce a satisfactoryresolution of the dispute.4' On August 7, 2003, the ComplainingParties requested the establishment of a single WTO panel toexamine their claims,42 and on August 29, 2003, the DisputeSettlement Body of the WTO established such a panel 3 OnFebruary 23, 2004, pursuant to a request from the ComplainingParties, the Director-General of the WTO determined thecomposition of the three- person Panel.44 The first substantivemeetings of the Panel began in early June of 2004, and on February

457, 2006, the Panel issued its interim report to the parties.In its complaint to the panel, the United States46 alleged that the

EC's failure to approve any GMO products between October 1998and August 2003 constituted a de facto moratorium on productapproval. With this moratorium on approval of GMO products, theEC had violated its obligations to the WTO and specifically hadfailed to adhere to the standards required by the SPS Agreement.

47

The United States alleged that because the EC had violated Article5.1 of the SPS Agreement, which requires that SPS measures bebased on a risk assessment, 4s the EC was also in violation of Article

39. Id.40. Id.41. Id.42. Id. at 1-2.43. Id. at 2.44. Id. Mr. Christian Hdberli served as the Panel's chair, with Mr. Mohan Kumar and

Professor Akio Shimizu serving as the Panel's members.45. Id. at 3.46. Canada and Argentina lodged analogous complaints with regards to the de facto

moratorium. Canada did not, however, allege a violation of Annex C(1) (b). It also alleged aviolation of Article 5.6 of the SPS Agreement, which requires that sanitary or phytosanitarymeasures be no more trade-restrictive than necessary. See SPS Agreement, art. 5.6.Argentina too made largely the same allegations as the United States, but did not allege anEC violation of Annex C. Argentina made an additional claim that the EC breached itsobligations under article 10.1 of the SPS Agreement, which requires that Members "takeaccount of the special needs of developing country Members." See SPS Agreement, supra note14, art. 10.1.

47. Panel Report, supra note 3, at 28.48. SPS Agreement, supra note 14, art. 5.1.

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2.2 of the SPS Agreement, which requires that measures be "basedon scientific principles and [not be] maintained without sufficientscientific evidence" and that such measures be applied "only to theextent necessary to protect human, animal or plant life or health. 49The United States also stated that the general moratorium onGMO product approval represented a violation of Article 5.5 of theSPS Agreement, which prohibits "arbitrary or unjustifiabledistinctions [in the level of sanitary or phytosanitary protection], ifsuch distinctions result in discrimination or a disguised restrictionon international trade."' Thus, the United States argued, becausethe EC was in violation of Article 5.5, it was also in violation ofArticle 2.3 of the SPS Agreement, which also forbids application ofSPS measures "in a manner which would constitute a disguisedrestriction on trade. 5 The United States also alleged that becausethe EC's de facto moratorium on GMO product approval had notbeen enacted into law, it represented a violation of Annex B(1) andAnnex C(1)(b) of the SPS Agreement, which require all SPSregulations, along with the standard processing period of eachprocedure, to be published promptly. 52 Lastly, the United Statesalleged that the de facto moratorium represented an outrightviolation of Annex C(1)(a) of the SPS Agreement,5 3 which requiresthat SPS procedures be undertaken and completed without "unduedelay and in a no less favorable manner for imported products thanfor like domestic products.

' 4

The United States also alleged that a number of product-specificmeasures, which resulted in the failure to approve productapplications, resulted in similar violations of the EC's WTO treatyobligations. 55 Additionally, the United States stated that certain EC

49. Id. art. 2.2.50. Id. art. 5.5.51. Id. art. 2.3.52. Id. annex B(I), annex C(1)(b). With these violations, the EC would also violate

Article 7 of the SPS Agreement, which requires notification of changes in sanitary orphytosanitary measures in accordance with Annex B, and Article 8 of the SPS Agreement,which requires that members observe the provisions of Annex C.

53. Again, the violation of Annex C(1) (a) also represents a violation of Article 8.54. Id. annex C(1)(a).55. Panel Report, supra note 3, at 37.. The United States again alleged breaches of

Articles 5.1 (and consequently 2.2), 5.5, Annex C(1)(a) and C(1)(b) (and consequently,Article 8), and Annex B(1) (and consequently, Article 7). Canada's allegations on product-specific measures mirrored its allegations on the general moratorium, except it dropped theallegation that the EC violated Annex B(1) (and consequently, Article 7), and included anallegation of a violation of Article 111:4 of GATT 1994, which requires national treatment by

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member states5" had used the safeguard provisions of Directive2001/18/EC and Regulation (EC) 258/97 in a way that did notconform to the WTO and SPS obligations mentioned above.

The EC, in response, argued simply that there was nomoratorium on GMO product approval; in order to have amoratorium, the EC stated that it would have had to adopt a legalinstrument halting approval of GMO products. 57 Because it hadnot taken such action, the EC stated that the moratorium hadnever existed.5 The EC further asserted that any delays in theapproval process were justified on a number of bases,5" in additionto grounds such as the difficulties of scientific and technical reviewand the requirements of the labeling process. 6 The EC alsodisputed the applicability of the SPS Agreement to many of themeasures at issue, saying that they were measures designed toprotect the environment and thus were outside the scope of theSPS Agreement. The TBT Agreement, the EC asserted, was themore appropriate instrument for addressing the dispute. 61 Withregard to national safeguards, the EC stated simply that suchsafeguards fell outside of the scope of the SPS Agreement andtherefore should not be held invalid with regards to theAgreement's demands. 62

II. THE PANEL'S DECISION

In a document dated February 7, 2006, and weighing in at overone thousand pages, the WTO Panel issued its interim report onthe EC-Biotech dispute. In public, neither side admitted defeat.64

Members of products imported from the territory of another Member. Argentinamaintained its allegations of violations of Articles 5.1 and 5.5 of the SPS Agreement, and alsoalleged EC violations of Article 5.6 of the SPS Agreement, violations of Article 111:4 of GATT1994, and violations of Annex C(1)(a), C(1)(b), C(1)(c) and C(1)(e) of the SPS Agreement.

56. These members include Austria, France, Germany, Greece, Italy, and Luxembourg.See Panel Report, supra note 3, at 831-1029.

57. Id. at 147.58. Id.59. These grounds include risk considerations, acceptance of delay by the applicant,

entry into force of new legislation, delay caused by applicant, delay necessary to ensurecompliance with EC and international standards, and efforts to manage SPS risks. See Id. at145-146.

60. Id. at 146.61. Id. at 334.62. Id. at 147.63. Interim Panel Reports generally are not released to the public. In this case, a copy of

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In reality, the Panel's decision was more nuanced than either sideacknowledged, ruling in favor of the United States, Canada, andArgentina on some procedural matters but declining to decidemany of the substantive claims regarding EC regulatory law.

A. The Applicability of the SPS Agreement

The Panel first determined the extent of applicability of the SPSAgreement to Directive 90/220/EC, along with its successorstatute, Directive 2001/18/EC, and the SPS Agreement'sapplicability to Regulation (EC) 258/97.65 The ComplainingParties had alleged that the above measures fell in their entiretywithin the scope of the SPS Agreement. The EC, in contrast, onlyacknowledged applicability of the SPS Agreement to portions ofthe measures and desired the remainder to be interpreted inaccordance with the less-stringent TBT Agreement. 66 The Panelnoted that the avowed purpose of the two Directives was "to protecthuman health and the environment from adverse effects... whichmight result from deliberate release of GMOs into theenvironment.6 7 Annex A(1) (a) of the SPS Agreement, it noted,was designed to "protect animal or plant life or health. . . fromrisks arising from the entry, establishment or spread of pests,diseases, disease-carrying organisms, or disease-causing organ-

the report was leaked on May 10, 2006, but the official release of the decision did not occuruntil September 29, 2006.

64. U.S. Trade Representative Susan Schwab declared "[t]he WTO has ruled in favor ofscience-based policymaking over the unjustified, anti-biotech policies adopted in the EU."See Press Release, United States Trade Representative, U.S. Trade Representative SusanSchwab and U.S. Agriculture Secretary Mike Johanns Announce Favorable Ruling in WTOCase on Agricultural Biotechnology (Sept. 29, 2006), available at http://www.ustr.gov/Document-Library/Press-Releases/2006/September/US-Trade-Representative -Susan-SchwabUS.AgricultureSecretaryMikejohanns AnnounceFavorableRulingin ,rrO_Case_on.Agri.html. In contrast, Adrian Bebb, the GMO Campaigner for Friends of the Earth,stated "[t] his is no victory for the United States or the biotech companies." See Press Release,Friends of the Earth Europe, U.S. Did Not Win Transatlantic GM Trade Dispute (May 11,2006), available at http://www.foeeurope.org/press/2006/AB11_MayWTO.htm. PeterPower, an EU Spokesman downplayed the importance of the decision, saying that it was"largely of historical interest" and would not "alter the system or framework within which theEU takes decisions on GMOs." See Sam Cage, U.S., EU again at Loggerheads on Trade as BothClaim Victory in WFTO Biotech Ruling, ASSOCIATED PRESS, Feb. 9, 2006, available athttp://www.tradeobservatory.org/headlines.cfm?reflD=78485.

65. Panel Report, supra note 3, at 321.66. Id. at 322.67. Id. at 334.

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isms. ' ' 68 After determining that GMOs could be considered "pests"in some circumstances,69 the Panel next decided that geneticallymodified seeds, even those used for the purpose of planting, couldbe considered "food, beverages, or feedstuff' within the meaning ofAnnex A(1) (b) of the SPS Agreement due to their potentialconsumption by wild animals.7 0 The Panel also concluded thatAnnex A(1) (c) " and Annex A(1) (d)7 2 of the SPS Agreement wereapplicable to GMO products due to the potential for a geneticallymodified plants to produce allergenic effects in situations otherthan when consumed as food and the potential for physicaldamage to property or economic damage that could result fromintroduction of a GMO into the environment.13 In light of thedangers that the SPS Agreement was intended to address, the Paneldetermined that "Directives 90/220 and 2001/18 constitute SPSmeasures" and were thus within the scope of the SPS Agreement.

7 4

With regard to Regulation (EC) 258/97, the Panel placed greatemphasis on Article 3(1) of the Regulation, which states that foodand food ingredients (1) must not present a danger to theconsumer, (2) must not mislead the consumer, and (3) must notdiffer from foods or food ingredients which they are intended toreplace to such an extent that their normal consumption would benutritionally disadvantageous to the consumer. The Panelconcluded that to the extent the Regulation seeks to achieve thefirst of the three purposes-i.e., preventing danger to theconsumer-it falls within the scope of Annex A(1) (b) of the SPSAgreement and therefore constitutes an SPS measure. To theextent that the Regulation is designed to achieve the remaining two

76purposes, however, it would not constitute an SPS measure.The Panel next analyzed the applicability of the SPS Agreement

68. Id. at 336.69. Id. at 340. The Panel makes considerable use of various versions of the Oxford

English Dictionary during the course of its reasoning.70. Id. at 357.71. Covering measures "to protect human life or health.., from risks arising from

diseases carried by animals, plants, or products thereof." SPS Agreement, supra note 14,annex A(1) (c).

72. Covering measures "to prevent or limit other damage... from the entry,establishment or spread of pests." Id. annex A(1) (d).

73. Panel Report, supra note 3, at 373, 375.74. Id. at 382.75. Id.76. Id. at 387.

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nine safeguard measures taken by six EC countries, includingAustria, France, Germany, Greece, Italy, and Luxembourg. 7 Thesesafeguard measures included regulations adopted pursuant toArticle 16 of Directive 90/220/EC, which were later reviewed andmaintained under Article 23 of Directive 2001/18/EC, 79 as well asmeasures adopted pursuant to Article 12 of Regulation (EC)258/97.80 The United States claimed in its complaint that these ECmember states failed to base their safeguard measures onappropriate risk assessments as Articles 5.1 and 2.2 of the SPSAgreement required. The United States further alleged that thesafeguard measures represented arbitrary and unjustifiabledistinctions in the levels of protection against risks and that thesemeasures therefore constituted discrimination or disguisedrestrictions in violation of Articles 5.5 and 2.3 of the SPS5 2Agreement.8 Applying much the same reasoning as used withregard to Directives 90/220/EC, 2001/18/EC and Regulation (EC)258/97, the Panel arrived at the conclusion that each of the ninesafeguard measures lay within the scope of the SPS Agreement andwas therefore subject to its provisions. s

B. The General Moratorium on GMO Product Approval

The Complaining Parties asserted that the EC's failure to

77. Id. at 831.78. Id. at 833.79. Id. Article 23 allows a state to take provisional safeguard measures where new

information regarding a product's risk assessment becomes available after the date ofconsent, and such information provides detailed grounds for considering that a GMOproduct may present a risk to human health or the environment. See Directive 2001/18/ECof the European Parliament and of the Council, On the Deliberate Release into theEnvironment of Genetically Modified Organisms and Repealing Council Directive90/220/EC, 2004 O.J. (L 106) art. 23.

80. Id. Article 12 allows a state to take provisional safeguard measures where newinformation regarding a food or food ingredient's risk assessment becomes available whichpresents detailed grounds for considering that the food or food ingredient endangershuman health or the environment. See Regulation (EC) No. 258/97 of the EuropeanParliament and of the Council, Concerning Novel Foods and Novel Food Ingredients, 1997O.J. (L 43).

81. Panel Report, supra note 3, at 834. Canada's and Argentina's claims were somewhatsimilar. See supra text of note 46.

82. Again, the Panel looked at the risks the measures were intended to prevent and foundthe scope of the SPS Agreement broad enough to include them.

83. Panel Report, supra note 3, at 1035-38.

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approve any GMO products since 1998 despite having a statutoryframework in place proved the existence of a de facto moratoriumon assessment of GMO products. 4 The EC denied the existence ofa moratorium, claiming that the evaluation process had neverstalled and that all pending applications had been subject torequests for additional information. 5 It further stated that thealleged moratorium represented an inherently proceduralcomplaint, rendering inapplicable the substantive provisions of theSPS Agreement. Only the obligations contained in Article 8 andAnnex C (1) of the SPS Agreement should apply. 86

The Panel determined that a moratorium had indeed been ineffect since 1998, when the last GMO product had been grantedapproval. Among the strongest evidence supporting theComplaining Parties' positions was a statement made by severalstates in June 1999; five EC states had declared that they had theauthority to prevent the approval of applications pending theadoption of EC rules governing labeling and traceability of biotechproducts. 17 The Panel concluded that this action-along withvarious documents and statements made by the EC or by ECmembers regarding a moratorium on GMO product approval-proved that a de facto (but informal) moratorium had been inexistence until August 2003. This moratorium, the Panel stated,had been applied to all applications for approval of biotechproducts that were pending or had been submitted during theperiod from October 1998 to August 2003. The moratorium, itnoted, was characterized by the effective suspension by the EC offinal approval decisions regarding biotech applications.88

After determining the existence of a general de factomoratorium on GMO product approval, the Panel next determinedthat the moratorium did not represent an SPS measure within themeaning of Annex A(1) and Article 5.1 of the SPS Agreement. 89The Panel reasoned that the decision to apply a general

84. Id. at 391.85. Id. at 393.86. Id. at 590.87. NATHALIE BERNASCONI-OSTERWALDER & MARiA JULIA OLIVA, EC-BIOTECH: OVERVIEW

AND ANALYSIS OF THE PANEL'S INTERIM REPORT 11 (2006). These member countries wereDenmark, Italy, France, Greece, and Luxembourg.

88. Panel Report, supra note 3, at 395.89. The complaining parties had asserted that the moratorium itself represented an SPS

measure, and thus the EC was required to conduct a risk assessment in its support. Id. at590.

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moratorium was not a substantive decision to reject all applications,but rather was more akin to a procedural decision not to make finaland favorable substantive decisions until certain conditions weresatisfied. 90 Thus, the moratorium did not represent a"requirement[] or procedure[]" within the meaning of AnnexA(1) of the SPS Agreement, but rather represented only a decisionregarding the timing and application of such a procedure. 91Because the moratorium was not an SPS measure, the EC was notobligated to accompany its decision with a risk assessment asrequired by Article 5.1 of the SPS Agreement. The Panel followeda similar line of reasoning 92 to conclude that Articles 5.6, 5.5, 2.3,2.2, 7 and Annex B(1) of the SPS Agreement also did not apply tothe EC's moratorium. 9 The Panel disposed of the product-specificmeasures in an analogous manner, reasoning that, once again, theEC's inaction, in the form of the general de facto moratorium, didnot itself represent an independent procedure, which would havefallen within the scope of the SPS Agreement, but rather,represented only a choice about how to implement their alreadyexisting procedures.

94

The United States and Canada, however, made an additionalclaim that the general de facto moratorium had caused the EC toviolate its obligations under Article 8 and Annex C(1) (a) of the SPSAgreement. 95 Unlike the statutes which had been subject of theearlier claims, Article 8 and Annex C(1) (a) of the SPS Agreementcontain procedural language governing the application of SPSmeasures. Article 8 requires members to "observe the provisions ofAnnex C in the operation of control, inspection and approvalprocedures .... Annex C(1) (a), in turn, requires that anysanitary or phytosanitary procedure be "undertaken and completedwithout undue delay..., The United States and Canada arguedthat the general de facto moratorium represented such an "unduedelay" in the EC's sanitary and phytosanitary procedures. The

90. Id. at 594.91. Id. at 604.92. The Panel again concluded in each case that the moratorium did not qualify as an

SPS measure, which would be regulated by these provisions.93. Id. at 608-21.94. Id. at 672-74.95. Argentina did not make a claim under Article 8 or Annex C(1). Id. at 622.96. SPS Agreement, supra note 14, art. 8.97. Id. annex C(1) (a).

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Panel agreed.The Panel began by clarifying the boundary line between an

"undue delay" and a justifiable delay. It concluded that the lengthof the delay was not itself a dispositive factor and that the reasonfor the delay was critical to the analysis. 98 The Panel noted thatthere was no formulaic approach that could calculate whether adelay was "undue" in every situation, but rather a case-by-caseanalysis would generally prove necessary. 99 With regard to thepresent dispute, the Panel identified two fundamental reasonsbehind the delay in GMO product approvals: (1) the perceivedinadequacy of EC approval legislation in force from June 19991" toAugust 2003 and (2) the evolving nature of scientific informationon GMO products and the desire to adopt a prudent andprecautionary approach. 1 The Panel found neither rationaleconvincing. The Panel noted that if it allowed the EC to halt itsapproval process pending improved legislation, it would in effectbe allowing the EC "to use procedural delay as a substitute for asubstantive risk management measure... that would not beimposable under existing approval legislation." The result ofapproving such a course of action would be to allow members toavoid their substantive SPS Agreement obligation to conduct riskassessments and instead to use procedural delay as an instrumentto control risks. 10 2 In regard to the second rationale, the Panelnoted that it perceived "no inherent tension" between the SPSAgreement's proscription of undue delay and a Member State'sdesire to approach GMO product approval with prudence. 0 3 ThePanel did note, however, that there was a limit to the compatibilitybetween adopting a precautionary approach and avoiding delay. Itstated that "if a Member could endlessly defer substantive decisionson the grounds of a perceived need for caution and prudence inthe assessment of applications, Annex C(1) (a), first clause, wouldbe devoid of any meaning or effect." 104 It further emphasized the"core obligation" under the SPS Agreement of members to come to

98. Panel Report, supra note 3, at 629.99. Id.100. June 1999 was the date that the Group of Five declared their authority to bring a halt

to the approval process.101. Panel Report, supra note 3, at 632-35.102. Id. at 634.103. Id. at 635.104. Id.

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decision on applications. 05To test whether the general de facto moratorium had actually

resulted in an "undue delay," the Panel considered the approvalprocedure for MS8/RF3 oilseed rape, a product used for animalfeed and for the production of vegetable oil.'0 6 The Panel foundthat the moratorium did indeed lead to an "undue delay" in theapproval procedure for MS8/RF3 oilseed rape, and thus the EChad breached its obligations under Annex C(1) (a) and Article 8 ofthe SPS Agreement. 0 7 With respect to product-specific measures,the Panel found that the EC had breached its duty to avoid unduedelay under Annex C(1) (a) and Article 8 of the SPS in twenty-fourof the twenty-seven measures challenged by the complainingparties. 10s

C. Application of Safeguard Measures by EC Member States

The Panel found all nine of the challenged member-statesafeguard measures to be inconsistent with the requirements of theSPS Agreement.'O In each case, the Panel found the safeguardmeasures not to be based on a risk assessment, as Article 5.1 of theSPS Agreement mandated."" The Panel further concluded that theprovisional safeguard measures that would have been allowedunder Article 5.7 of the SPS Agreement if there had beeninsufficient evidence to conduct a risk assessment wereinappropriate in the current situation. In each case mentioned bythe Complaining Parties, the Panel concluded that sufficientscientific evidence on which to conduct a risk assessment had beenavailable."' The Panel also discussed claims in the alternative madeby Canada and Argentina that, should the national safeguardmeasures not fall within the scope of the SPS Agreement, theywould nevertheless violate the provisions of TBT Agreement. The

105. Id.106. Id. at 637.107. Id. at 646.108. Id. at 1034-35.109. These measures include Austria's safeguard measures with regards to Bt-176 maize

and MON 810 maize; France's safeguard measures with regards to MSI/RF1 oilseed rapeand Topas oilseed rape; Germany's safeguard measures with regards to Bt-176 maize;Greece's safeguard measures with regards to Topas oilseed rape; Italy's safeguard measureswith regards to T25 maize, MON 810 maize, MON 809 maize, and Bt-11 maize; andLuxembourg's safeguard measures with regards to Bt-176 maize. Id. at 835-1024.

110. Id.111. Id.

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Panel noted that since each safeguard measure represented in itsentirety an SPS measure within the meaning of Annex A(1) of theSPS Agreement, each measure should be assessed within the SPSAgreement framework. 112 Thus, under Article 1.5 of the TBTAgreement, which states that "[t]he provisions of this Agreementdo not apply to sanitary and phytosanitary measures as defined inAnnex A of the Agreement on the Application of Sanitary andPhytosanitary Measures,"1l 3 the Panel concluded that it need notaddress the alternative claims of Canada and Argentina." 4 ThePanel disposed of the GATT Article 111(4) claims of Canada andArgentina with the same reasoning; since the national safeguards atissue fell within the scope of the SPS Agreement, in the interest ofjudicial economy there was no need to resolve the alternativeargument. "1

5

III. ASSESSMENT

The Panel explicitly noted the issues that it did not address in thecourse of its opinion. These unresolved issues included whetherbiotech products were indeed safe, whether biotech products were"like" their conventional counterparts, 6 and whether Directives90/220/EC and 2001/18/EC and Regulation (EC) 258/97 wereconsistent with the EC's WTO obligations. " 7 The Panel did,however, come to several critical conclusions with regards to issuesit chose to address. First, the Panel noted that Directives90/220/EC and 2001/18/EC and Regulation (EC) 258/97 wereindeed SPS measures and thus came within the ambit of the SPSAgreement."" The Panel's decision, which interpreted the SPSAgreement to include a variety of health and environmental risks,represented a broader application than many had foreseen." 9

112. Id. at 1026.113. TBT Agreement, supra note 14, art. 1.5.114. Panel Report, supra note 3, at 1026.115. Id. at 1028.116. If biotech products were "like" conventional couterparts, then they could be

protected from measures designed to discriminate between GMO and "like" non-GMOproducts under GATT Article 111:4.

117. Panel Report, supra note 3, at 1030.118. Id. at 1031.119. SeeJacqueline Peel, A GMO by any other Name.. . Might be an SPS Risk!, 17 EUR.J. INT'L

L. 1009, 1011 (2006). The Panel itself referred to a background paper on the SPSAgreement, which had been cited by the EC, in which the negotiators of the agreementstated that "[m]easures for environmental protection, per se... are not covered by the

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Some commentators had argued that environmental risks felloutside of the scope of the SPS Agreement altogether so long asthey do not involve direct injury to animal or plant life or health asa result of pest or disease.120 The Panel, however, placed greatweight on a broad construction of the phrase "animal or plant lifeor health" and noted that the phrase was intended to be"comprehensive in coverage" and was meant to include wild floraand fauna. 121 By including wild plant and animal life within thescope of the SPS Agreement, the Panel largely brought generalenvironmental concerns within the ambit of the SPS Agreement.Thus, many domestic regulations with the purpose of protectingthe environment that could arguably fall within the scope of theTBT requirements, or even the requirements of the GATT, maynow be framed as SPS measures. While the TBT Agreement andGATT provisions focus primarily on the discriminatory effects ofcertain measures on trade, the SPS Agreement requires a moredemanding inquiry as to the scientific justification for theregulation.' 22 The Panel's interpretation brings into the SPSframework regulations that are, as Jacqueline Peel notes, "linkedonly indirectly to the introduction of GMOs into the environment"and "may have far-reaching effects for the area of sanitary andphytosanitary (SPS) risks management, and environmentalregulation more generally."'2 3 Such an expanded mandate for theSPS Agreement could lead future complainants to attempt to framea broad range of claims in SPS terms in order to benefit from theSPS Agreement's relatively demanding requirements with regard toprecautionary measures.

As noted above, the Panel concluded that the EC had applied ageneral de facto moratorium to approval of GMO productsbetween June 1999 and August 2003.124 Because the moratoriumwas procedural in nature rather than a substantive measure, thePanel found that it did not qualify as an SPS measure within themeaning of the SPS Agreement even though the underlying

proposed Agreement." Panel Report, supra note 3, at 334.120. See Peel, supra note 119, at 1016. Peel notes that this was the position advanced by

the EC. See Panel Report, supra note 3, at 334.121. Id. at 337.122. SeePeel, supra note 119, at 1011.123. Id.124. Panel Report, supra note 3, at 1031.

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legislation had qualified. 125 The moratorium did, however,represent an "undue delay" within the meaning of Article 8 andAnnex C of the SPS Agreement. 12 6 Thus, the Panel's decision dealtsolely with the application of EC approval procedures and did notcome to a conclusion about the legality of the approval proceduresthemselves. As a report by the Center for InternationalEnvironmental Law stated, "nothing in the Interim Reportindicates that the EC will have to make changes to its current GMOlegislation."

1 2 7

In terms of product-specific measures, the Panel determined thatthe EC's measures were not inconsistent with the requirements ofArticles 5.1 (and consequently, Article 2.2), 5.5 (and consequently,Article 2.3), 5.6, and Annex B(1) (and consequently, Article 7).8The Panel also concluded, however, that there was an "unduedelay" and, therefore, a breach of Article 8 and Annex C of the SPSAgreement with regard to twenty-four of the twenty-sevenapplications identified by the complaining parties. 29 The Panelfurther concluded that the national safeguard measures taken by anumber of EC members violated the EC's obligations under theSPS Agreement. 30 The Panel found that in all cases the relevantscientific information had been sufficient to perform a riskassessment and, therefore, that Member States should not havebeen permitted to seek recourse in provisional measures underArticle 5.7 of the SPS Agreement. In its report, the Panel did notrule out adoption of future safeguard measures by EC memberstates. It did, however, limit the scope of precautionary action fordomestic SPS measures to circumstances where relevant scientificinformation is insufficient to conduct a risk assessment.1 32 Becausemuch of national and international biotechnology regulation isprecautionary in nature and seldom fully supported by risk

125. Id.126. Id.127. Bernasconi-Osterwalder & Oliva, supra note 87, at 52.128. Panel Report, supra note 3, at 675-86. As with the general moratorium, the Panel

again concluded that the suspension of consideration of particular applications did not itselfrepresent an SPS measure within the meaning of the SPS Agreement. Id.

129. Id.130. Id. at 1031.131. Id. at 1032.132. This is in keeping with Article 5.7 of the SPS Agreement. Peel notes that this is

considered to be a "fairly weak" form of the precautionary principle. See Peel, supra note119, at 1017.

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assessment data, such regulations will likely be vulnerable to WTOchallenge under a stronger SPS Agreement.

33

The Panel found that, because the EC had approved a relevantbiotech product application after the inception of the dispute, ithad, in effect, brought an end to the de facto moratorium onapproval for GMO products. The Panel therefore refrained frommaking any recommendations on the matter of the general defacto moratorium. 31 With regard to the product-specific measuresthat the Panel found to violate Article 8 and Annex C(1) (a) of theSPS Agreement, the Panel recommended that the DisputeSettlement Body "request the European Communities to bring therelevant product-specific measures into conformity with itsobligations under the SPS Agreement." 35 The Panel made anidentically-worded recommendation to the Dispute SettlementBody in regard to the national safeguard measures that it found toviolate Articles 5.1 and 5.7 of the SPS Agreement.1

36

IV. CONCLUSION

The Panel's report has created more questions with regard toWTO jurisprudence than it has resolved. At the same time that itdisposed of the complaining parties' claims on largely technicalgrounds, and avoided a decision on whether EC biotech measureswere valid under WTO jurisprudence, the Panel engendered abroad and powerful interpretation of the SPS Agreement. Havingbeen given such an extensive scope in the EC-Biotech InterimPanel Report, it appears that the SPS Agreement has now becomeapplicable to issues far beyond the traditional sanitary andphytosanitary realm of preventing the spread of exotic pests andprotecting consumers from contaminants or toxins in importedfood material. 3 7 With its demanding requirements for SPSmeasures and now a broadened mandate, the SPS Agreementappears increasingly likely to surface on the WTO scene as thepremier instrument for attacking disputed health andenvironmental protection measures in the global trade arena.

133. Id. at 1025.134. Panel Report, supra note 3, at 1033-34.135. Id. at 1036.136. Id.. at 1044.137. Peel, supra note 119, at 1014.

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