ICTSD Outputs and Activities on Biotechnology, Trade and Sustainble Development

Biotechnology: Addressing Key Trade and Sustainability Issues

B.2 Multilateral trade rules

Q12 Are mandatory traceability and labelling requirements unnecessarily trade-restrictive?

Labelling and traceability requirements are considered by many consumer groups to be an essential tool for implementing the right of consumers to receive information about the products they purchase. The Transatlantic Consumer Dialogue (TACD), for example, has repeatedly urged the EU and the US to recognise and advocate to other WTO Members that consumers have the right to know about the products they purchase, and that both voluntary and mandatory labelling programs that support the rights of consumers to know about the products they purchase are not a priori inconsistent with WTO rules.

In the biotechnology context, labelling and traceability requirements are also considered important due to concerns relating to food safety and the perceived need for public awareness and informed public debate, a broader precautionary approach and promoting economic efficiency by the internalisation of risks and costs (Stilwell, 1999a). On the other hand, the biotechnology industry and some civil society organisations consider that labelling and traceability requirements, particularly mandatory systems, could actually confuse or mislead consumers by suggesting that biotechnology products are inherently different or pose safety concerns when compared with traditional foods (e.g. BIO, 2000). In addition, these groups consider that mandatory traceability and labelling requirements for biotechnology products are fast becoming significant barriers to trade, often implemented in a way that violates key elements of WTO agreements. In particular, critics of mandatory traceability and labelling systems for biotechnology products argue that these systems often do not meet the requirement, established in both the SPS and TBT agreements, for measures to be “no more trade restrictive than necessary” (this is raised especially in relation to products derived from but no longer containing genetically modified organisms, as it is argued they are ‘like’ products under WTO rules – see discussion in Q13).

The SPS and TBT agreements require measures and technical regulations to be no more trade restrictive than necessary when those measures and regulations do not conform to international standards, guidelines or recommendations, and are thus not presumed to be consistent with WTO rules. Given that currently there are no international standards for labelling and traceability in regard to products of biotechnology (see Q14), determining the application and impact of this requirement is particularly important.

Under the SPS Agreement, countries must ensure that sanitary and phytosanitary measures are “not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility”. A footnote clarifies that, for the purposes of that article of the SPS Agreement, “a measure is not more trade-restrictive than required unless there is another measure, reasonably available taking into account technical and economic feasibility, that achieves the appropriate level of sanitary or phytosanitary protection and is significantly less restrictive to trade”. As a result, the United States, Canada, Australia, Argentina and other countries have argued that there are less trade-restrictive measures than a mandatory approach to biotechnology-related labelling. These less trade-restrictive measures might include labelling requirements to address particular health concerns such as allergenicity or toxicity, management strategies to deal with potential environmental risks, or voluntary labelling schemes for non-biotechnology foods to provide consumer information (Baumüller, 2003). Nevertheless, it is important to highlight that, under the SPS Agreement, WTO Members have the right to determine the level of protection deemed appropriate to safeguard human, animal or plant life or health within its territory, and may even find ‘zero’ to be the acceptable level of risk. Commentators point out, however, that because the level of protection only refers to human, animal or plant life or health, mandatory labelling and traceability systems that require labelling of all biotechnology products, regardless of their risks to health, may be considered more trade restrictive than required (Stilwell, 1999b).

Labelling and traceability systems seeking, for example, to provide consumers with information, facilitate monitoring of the effects of products of biotechnology on the environment and on health, and enable the rapid withdrawal of these products if an unexpected risk to human health or to the environment is detected, would thus likely be considered under the TBT Agreement (for more information on the scope of the TBT Agreement, see Q8). Article 2.2 of the TBT Agreement requires technical regulations established by WTO Members to “not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create”. The meaning of “not more trade restrictive than necessary” has not been authoritatively determined in the context of the TBT Agreement. The word “necessary” has been interpreted in some dispute settlement cases as “least trade restrictive,” but such an interpretation in the TBT context would place undue limits on governments’ abilities to pursue their policy goals. In this regard, the definition of not more “trade-restrictive than required” in the SPS Agreement is seen as more adequate.

The debate on these issues has been particularly heated around the European traceability and labelling regulation for products of biotechnology. In the EU, GMOs and food products derived from GMOs placed on the market must comply with labelling and traceability requirements. These requirements are found in Regulation EC 1829/2003 and in Regulation EC 1830/2003 concerning the traceability and labelling of genetically modified organisms and the traceability of food and feed products produced from genetically modified organisms. For instance, food products containing or consisting of GMOs, produced from GMOs or containing ingredients produced from GMOs must be labelled, regardless of whether or not the final product contains DNA or protein resulting from genetic modification. The traceability rules determine that anyone who places a biotechnology product on the market or receives a biotechnology product placed on the market in the EU must be able to identify their supplier and the companies to which the products have been supplied. There is an exemption from both labelling and traceability, however, for conventional products, i.e. those produced without genetic modification, which were contaminated unintentionally by GMOs during harvesting, storage, transport, or processing if they contain GMO traces below a 0.9 percent threshold level.

The United States, Canada and other countries and industry groups have argued that these regulations are unnecessarily trade-restrictive. The US Grocery Manufacturers Association (GMA), for instance, in a letter to the Office of the U.S. Trade Representative in February 2003, stated that it considers the EU mandatory labelling and traceability system to be inconsistent with the TBT Agreement. In particular, the GMA highlighted the technical difficulties associated with compliance, including the lack of a single validated test for determining whether a food is derived from biotechnology and should be labelled, and what it considers are “exceedingly low” thresholds that would not accommodate accidental residues in grain handling and food systems. The European Commission, on the other hand, has stated that it expects the transmission and retention of the information required in the mandatory labelling and traceability systems to be largely incorporated into existing systems for transactions and would therefore not imply significant extra costs for operators (Baumüller, 2003). Moreover, civil society groups within Europe argue that such a strict system is necessary for clearer information to be passed on to the consumer and for governments to be able to remove GMOs from the food chain as soon as possible should new evidence of harm arise.