TCS Daily

WTO and Biotech Food: Who Really Won?

By Dr. Henry I. Miller & Gregory Conko - February 27, 2006 12:00 AM

The long-awaited World Trade Organization decision on biotechnology applied to agricultural products, finally released earlier this month, elicited a great deal of buzz throughout the business, financial and biotech communities. Most analyses scored it a resounding victory for the United States and its co-complainants, and a stinging defeat for European protectionism.

The reality is that it is a partial and largely hollow victory. For not having achieved a more complete and meaningful success, the United States, Canada, and Argentina, which jointly filed the complaint, have only their own unscientific, excessively risk-averse regulatory policies to blame.

Details of the 1,000-plus-page decision are still largely confidential, but a leaked copy of the conclusions and recommendations section makes clear that the WTO bluntly scolds the EU for denying it had imposed a moratorium on biotech food approvals from 1998 to 2004.

That finding was a foregone conclusion. Until the WTO case was filed, European politicians freely admitted that a moratorium existed. Although anti-biotechnology activists hailed it as a sign of European moral superiority, in 2001 then-EU Environment Commissioner Margot Wallström acknowledged that the moratorium was "an illegal, illogical, and otherwise arbitrary line in the sand." When it came time for a WTO defense, the Europeans flip-flopped by attempting to deny that a moratorium had ever existed -- but still, they argued, if it had existed, it would have been perfectly legal. This strategy is reminiscent of the lawyer who claims on behalf of his client: "My client denies that he was at the scene of the crime, but even if you can prove that he was, he denies that he was responsible. And if you can prove that he committed the crime, he didn't mean to. And he promises never to do it again."

Although the EU's position was weak, it is reassuring, nevertheless, to see both its illegal practices and mendacity acknowledged.

The WTO decision also makes clear that existing national bans on certain biotech foods in Austria, France, Germany, Greece, Italy, and Luxembourg are blatant violations of those countries' treaty obligations. When the United States filed its initial complaint in 2003, European politicians insisted the move was unnecessary. EU Trade Commissioner Pascal Lamy boasted, "We are confident that the WTO will confirm that the EU fully respects its obligations." But then, as now, the European Commission was famously impotent in persuading its rogue members to conform to EU policies. That those violative national bans all still exist argues the need for intervention by the international community. (Ironically, reflecting Europe's ongoing game of bureaucratic musical chairs, the current WTO Director General is none other than Pascal Lamy.)

The most important victory for the United States and its partners is the WTO's judgment that the EU failed to abide by its own regulations and has violated the provision against "undue delay" -- a significant term of art -- in its voting on applications for the marketing of twenty-five agbiotech products. The culprit here is the European Commission's highly politicized, sclerotic, two-stage approval process: Each application first must be cleared for marketing by various scientific panels, and then must be voted on by politicians.

Significantly, the WTO assumed the validity of "the conclusions of the relevant EC scientific committees regarding the safety evaluation of specific biotech products." Although all twenty-five product applications already had been approved by EU scientists, for transparently political reasons rather than concerns about consumer health or environmental protection, the EU Regulatory Committees and Council of Ministers repeatedly refused to sign off on the final approvals.

In this context, it is important to recall, as discussed further below, that these are superior products made with a state-of-the art technology. In 2003, EU Commissioner for Health and Consumer Affairs David Byrne acknowledged that the official European Commission position was that currently marketed, gene-spliced crop varieties pose no greater food safety or environmental threat than the corresponding conventional food varieties. The safety and usefulness of the technology have been endorsed by dozens of scientific bodies around the world, including the French Academies of Science and Medicine, UK Royal Society, U.S. National Academy of Sciences, American Medical Association, and many others.

The good news, then, is the WTO panel's chastisement of the European Union for failing to follow its own regulatory rules. The bad news is the absence from the panel report of any condemnation of those rules themselves, in spite of the fact that they are blatantly unscientific and clear violations of the trade treaties enforced by the WTO.

Under the various WTO-enforced treaties, member countries are free to enact any level of environmental or health regulations they choose -- with the stipulations that (1) every so-called sanitary or phyto-sanitary regulation must be based on the results of a risk analysis showing that some legitimate risk exists, and (2) the regulation must bear a proportional relationship to that risk. Every risk analysis performed by countless scientific bodies worldwide has shown that the splicing of new genes into plants, per se, introduces no incremental risks, and a report summarizing the conclusions of 81 different EU-funded research projects spanning fifteen years concluded that because gene-spliced plants and foods are made with highly precise and predictable techniques, they are at least as safe, and often safer, than their conventional counterparts.

Thus, in the EU's regulatory approach, not only is there not a proportional relationship between regulation and risk, there is actually an inverse relationship between degree of risk and amount of regulatory scrutiny. This is both absurd and illegal.

It is disappointing that the WTO did not condemn the clearly illegitimate European policies, but the WTO's actions were limited by the fact that the complainants did not even challenge them.

How can that be? Simple -- the United States, Canada, and Argentina didn't challenge those policies because they use the same flawed basic approach as the EU. Their regulations all discriminate against the products of gene-splicing.

At American regulatory agencies, for example, the approach to regulation is both internally inconsistent and also incompatible with the official overarching federal policy, which stipulates that oversight of biotechnology products should be "risk-based," "scientifically sound," and focused on "the characteristics of the biotechnology product [but] not the process by which the product is created."

In other words, products with more risk should have more regulatory scrutiny, which is only common sense. But confounding official policy, scientific consensus, and logic, the U.S. Environmental Protection Agency and Department of Agriculture have crafted exactly the opposite: regulation that has an inverse relationship to risk (where have we heard that before?), and that is triggered by the use of more precise and more predictable gene-splicing techniques. This is like imposing extra regulation only on those cars that have disk brakes and radial tires -- and then limiting them to 20 miles an hour on the freeway.

The compulsory case-by-case review and costly field test design requirements have made biotech plants disproportionately -- and unnecessarily -- expensive to develop and test. In the United States, a field trial with a gene-spliced plant may be 10-20 times more expensive than the same experiment performed with a plant that has identical traits, but that was modified with less precise and less predictable genetic techniques. The main difference between the EU and the nations that lodged the WTO complaint is that in the latter, biotech products move through the regulatory gauntlet and are approved -- albeit slowly and at a hugely inflated cost.

It's no wonder then, that the United States and its partners didn't mount a broader challenge to EU policies. They would have been laughed out of Geneva for challenging a regulatory approach not fundamentally different from their own.

The European regulations are, however, far more discriminatory and debilitating than those in the United States, Canada, and Argentina. For example, capitulating to green activists, the EU now requires those few biotech foods that are allowed on the market to be labeled in such a way that every ingredient can be traced back to the farm on which it was grown. This is hugely expensive, utterly gratuitous, and except for stigmatizing food that contains gene-spliced ingredients, accomplishes nothing.

It is unlikely that WTO's slap on the wrist will induce any major change in EU policy. At a "background" briefing on February 8, an "EU official" lashed out at the WTO decision: "It is nevertheless clear, beyond any doubt, that the EU will not have to modify its GMO ["genetically modified organisms"] legislation and authorization procedures and that the main thrust of the panel's conclusions concern the past . . . It is therefore not clear, and it never was, why the complaining parties brought this case forward in August 2003 when they were fully aware that the new EU regulatory system was to be applicable only a few months later." (In other words, we deny that we committed the crime, but if it can be proved that we did, we promise not to do it again.)

As long as these defiant pronouncements and unscientific policies remain, Europe will continue to foster a hostile legal environment for biotech products. Even if the EU does approve some of the twenty-five pending biotech products, because uncertainty is anathema to R&D -- especially in a sector in which most new products are low-value-added -- few companies are likely to risk the tens of millions of dollars in regulatory costs to pursue new ones. Even worse, the less developed nations of Asia, Africa, and Latin America, which once anticipated that agricultural and food biotechnology could provide them a brighter and more self-sufficient future, will continue to be shut out of the important European market by policymakers' callous obstructionism.

The limitations of the WTO decision are not the fault of the organization, but of national regulatory policies worldwide that defy sound science and common sense. The only winners from such wrong-headed public policy are European and other government regulators, whose bureaucracies will remain fat, happy and gratuitous; and anti-science activists, who rejoice at excessive, unscientific, stultifying regulation. The biggest losers are the rest of us, who systematically will be denied access to safer, more nutritious, and affordable products.

Gregory Conko is director of food safety policy at the Competitive Enterprise Institute. Henry I. Miller, a physician and fellow at the Hoover Institution, headed the FDA's Office of Biotechnology from 1989 to 1993. Barron's selected their book, "The Frankenfood Myth...," as one of the 25 Best Books of 2004.

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