ICTSD Outputs and Activities on Biotechnology, Trade and Sustainble Development

Biotechnology: Addressing Key Trade and Sustainability Issues

B.2 Multilateral trade rules

Q13 Are genetically modified and non-modified products ‘like products’?

The most favoured nation treatment and national treatment obligations – two of the core principles of the GATT – prohibit discrimination between ‘like products’. Article III.4 of the GATT – one of the references to ‘like products’ in relation to national treatment – states that “the products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.”

The concept of ‘like products’ is also fundamental to the TBT Agreement. Article 2.1 of the TBT Agreement stipulates that WTO Members are not allowed to treat imported products in a “less favourable” manner than “like products of national origin”. As a result, whether import and other regulations for GMOs would be considered discriminatory vis-à-vis conventional products is a crucial issue in determining their consistency with WTO rules. The concept of ‘like products’, however, is not necessarily the same between the various agreements and their respective provisions (Bernasconi et al., 2005).

No precise definition of ‘like products’ has thus far been developed in the WTO. In relation to the above-mentioned GATT provisions, the WTO Appellate Body has said that an assessment using individual and discretionary judgment must be made on a case-by-case basis (WTO, 2001). Nevertheless, four criteria have been suggested and used in WTO jurisprudence as a framework for analysing the ‘likeness’ of products. To determine if products are the same, the following four kinds of characteristics can be examined:
the physical properties of the products;

the extent to which the products are capable of serving the same or similar end-uses;
the extent to which consumers perceive and treat the products as alternative means of performing particular functions in order to satisfy
a particular want or demand; and
the international classification of the products for tariff purposes.

In each case, a WTO Panel or Appellate Body must examine all of the evidence relevant to a determination of likeness, including the evidence relating to each of those four criteria, before deciding whether the products at issue could be characterised as ‘like’ (WTO, 2001). In the biotechnology context, two of the criteria are likely to be particularly challenging for WTO Panels. First, whether the physical properties and nature of GMOs are the same as those of conventional products is a heated ongoing debate (see Q6 on the concept of ‘substantial equivalence’). Second, the perceptions and behaviour of consumers are remarkably polarised and intense in the context of biotechnology and exhibit considerable regional variations. In the EC-biotech case, the EU had argued that the international community had, through international agreement such as the Convention on Biological Diversity (CBD) and the Biosafety Protocol, accepted that GMOs are not to be treated as being the same as their conventional equivalents, and that special measures of protection, based on the precautionary principle, are justified (WTO, 2006).

Once ‘likeness’ has been established, the complainants would have to show that ‘like’ imported products are given less favourable treatment than ‘like’ domestic products (for the measures to be in violation of WTO rules). Various WTO panels, including in the EC-biotech case, have also stressed that complainants would need to prove that the foreign origin of the product had been the motivation for the alleged discrimination – rather than, for instance, the “perceived difference between biotech products and non-biotech products in terms of their safety” (para. 7.2514) and had resulted in any detrimental effects on an imported product (rather than other factors such as market share of the importer (WTO, 2001; WTO, 2006).

Other concepts that may arise in the determination of likeness in the biotechnology context are also quite challenging in the WTO, including ‘substantial equivalence’ and non-product-related processes and production methods or PPMs. In regard to the PPMs discussions, it must be noted that current interpretations of the GATT do not accept the manner in which a particular product is manufactured, if the production process is not detectable in the final product, as a basis on which to distinguish between products. Therefore, it is uncertain whether consumer concerns related to PPMs – for instance the use of animal testing or biotechnology in developing the product – would be able to support the WTO consistency of import bans or other such measures. In the context of the TBT Agreement, the extent to which PPM-based measures are allowed remains controversial. Some commentators believe that the ‘like product’ test in the TBT Agreement should be narrowly defined to differentiate on basis of processes, regardless of whether physical difference can be easily ascertained, thus allowing disparate measures for genetically modified and non-modified products.

Even if biotechnology and conventional products are found to be ‘like’, it should be noted that WTO Members may still justify regulations that distinguish between them under the exceptions of Article XX of the GATT, which also applies in the context of the TBT Agreement. Article XX of the GATT states that nothing in the GATT Agreement shall prevent WTO Members from adopting measures “necessary to protect human, animal or plant life or health” or “relating to the conservation of exhaustible natural resources” as long as “such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.”