Syed Wajid H. Pirzada
E-mail: wajidpirzada@hotmail.com
Dispute settlement under WTO
While a member's ability to establish requirements to protect human, animal and plant life/health is not restricted, another member can challenge a specific requirement. Typically, a dispute arises if a member believes that another member either has taken some action that violates WTO trade rules or has not met its obligations as a member in some other respect.
The rules and procedures governing the settlement of disputes are set out in Annex 2 of the Agreement establishing WTO. Briefly, the dispute settlement procedures encourage the members involved to find a mutually acceptable solution through formal consultations. If consultations break down, the complaining party may ask the Dispute Settlement Body (DSB) to establish a panel to hear the dispute and recommend that the member bring its measure(s) into conformity with its obligations within a reasonable period. Either party may appeal the panel's findings on points of law and legal interpretation, but not on the science or evidence presented.
While the SPS Agreement is an imperfect instrument in a number of ways (for example, the meanings of many of the terms it contains are unclear), and it is to some extent uncertain what its full impact will be in the longer term, the early dispute settlement cases suggest a number of interim conclusions.
First, they indicate the SPS Agreement rules apply effectively to all WTO members and that they are enforceable.
Second, these cases have highlighted contentious areas of the Agreement that need to be clarified.
Third, these cases have highlighted the enormous costs involved in engaging in formal dispute settlement and the advantages, in terms of cost savings, and conformity to WTO rules. For example, the EU is subject to about US$ 150 million annually in retaliation measures following its failed defence of its ban on the import of hormone-treated beef from the US. Another example is the salmon dispute between Australia and Canada, which has made heavy demands on both countries' resources, with direct costs that exceed US$ 2 million.
Fourth, these cases highlight the advantages of using informal consultative processes to resolve SPS disputes.
Last, involvement in formal SPS dispute proceedings has the potential to damage the international credibility of a WTO member in terms of its commitment to the objectives and spirit of the SPS Agreement and other WTO obligations.
Some of the significant areas of the SPS Agreement that formal dispute cases have left unresolved include:
- What constitutes sufficient scientific evidence as the basis 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 consistency in the application of the appropriate level of SPS protection be achieved and verified?
The SPS Agreement has been in force for the past seven and a half years. Many countries are reforming their SPS measures/quarantine laws in order to conform to the WTO regime on SPS measures. They understand the consequences of non-compliance. It is likely that many of the trading partners might enter into equivalence arrangements in order to save them from the loss of markets.
Harmonization, equivalence and WTO law
The SPS Agreement seeks to encourage harmonization of national SPS standards with international standards for purpose of uniformity, with the view to promote trade and discourage protection of domestic food and agriculture industry from competition. The international SPS, guidelines, recommendations and standards, developed by CAC, OEI and IPPC have been mentioned specifically in this regard under the Agreement. The premise is the introduction and harmonization of SPS measures, based on science and aimed at providing protection from external risks in the form of pests, diseases carried by animals and plants, or health risks associated with food additives, contaminants, toxins or disease-causing organisms in food, beverages and feedstuff.
The members have the option of choosing or not accepting international standards, and they may as an alternative option base their SPS measures on the relevant international standards or even adopt SPS measures of their own, ignoring international standards, provided those are science-based and afford an equal level of protection sought under the Agreement. In other words, the SPS Agreement recognizes that WTO members may have different SPS measures for reasons such as geographic or climatic conditions and/or consumers needs.
Given these possible differences in SPS measures of the WTO member countries, the Agreement encourages the members to agree on their different standards, provided they afford a similar level of protection, through equivalence arrangements. Equivalence, in fact, is an understanding reached through formal or ad hoc agreements, between/among trading partners, whereby they mutually recognize that their different national SPS measures are equivalent in terms of health and food safety requirements. Thus, this arrangement helps to promote trade among those countries.
The WTO Agreement on the application of SPS measures requires, under Article 4, that:
(a) Members will accept the SPS measures of other members as equivalent, even if those measures differ from their own or from those used by other members trading in the same product, if the exporting member objectively demonstrates to the importing member that its measures achieve the importing member's appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access will be given, upon request, to the importing member for inspection, testing and other relevant procedures;
(b) Members will, upon request, enter into consultations with the aim of achieving bilateral and multilateral agreements on recognition of the equivalence of specified sanitary and phytosanitary measures.
Yet another WTO Agreement i.e. Technical Barriers to Trade (TBT), addresses quality aspects, as against the health and safety aspects addressed under the SPS Agreement, in terms of the types of measures related to technical regulations, standards or conformity assessment procedures. The TBT Agreement also recognizes the concept of equivalence in Article 2.7, which requires that "members to give positive consideration to accepting as equivalent, technical regulations of other members, even if these regulations differ from their own, provided they are satisfied that the regulations adequately fulfill the objective(s) of their own regulations".
Thus, the objective test for equivalence is to meet the health and food safety and quality objectives, as envisaged under the national regulations, with the view to affording a similar level of protection.
It is within this context that Asian countries, as a starting point, should study, evaluate and enter into equivalence arrangements in the area of SPS measures and technical regulations. This will help to harmonize SPS measures at the regional level. In addition, a regulatory framework, recognition of conformity assessment certification bodies, quarantine settings, a laboratory infrastructure, and human resource capacity and capability would be a prerequisite. Shortfalls, if any, need to be identified and deficiencies made up through collective, collaborative and concerted efforts.
This will help build up regional capacity in the area of seed quality and safety management, and thus promote intra-Asian trade.
Seed industry, international seed standards and Asian countries
Seed is the most important input into any crop or pasture. Seed is carefully assessed to ensure value for money and quality - varietal purity, physical purity and physiological qualities. Seeds comprise one of the most important commodities in international trade, in terms of potential productivity and, consequently, standards of living. Most crops throughout the world are dependent on seeds, and it is becoming increasingly important that scientific standards and directions be maintained.
Having discussed SPS and TBT standards/measures as they relate to diseases and pests, residues and contaminants, we now review the potential impact of prevailing seed-related SPS/TBT issues on the seed trade in Asia.
Diseases and their impact on the seed industry
The regulation of seed-borne diseases in the worldwide movement of seeds has a significant impact on the interests of the seed industry, germplasm banks and international research organizations. While most of the Asian countries, as members of WTO, are signatories to the SPS/TBT Agreements, many fail to understand their obligations under those Agreements. Many also lack the technical capacity to meet those obligations, especially with regard to standards and regulations that are relevant to the seed industry.
To be continued
(The author is Director/Coordinator WTO, Pakistan Agricultural Research Council (PARC), Islamabad)
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