Dr. Sachin Chaturvedi Short-term Orientation Course on “Biosafety and Biotech Regulations”

1. Biosafety and Trade Related Issues Dr. Sachin Chaturvedi Short-term Orientation Course on “Biosafety and Biotech Regulations” TERI School of Advanced Studies 9th February, 2006

2. Positive features Negative Aspects Structure of the Presentation • Where Do We Stand in Biotechnology? • What are our Trade Interests? • Basic WTO Framework • SPS and TBT Issues • Trade Dispute • Balanced Perspective • India’s Trade Interests • Recommendations

3. Emergence of Biotechnology • Adoption and diffusion of biotechnology has raised several policy challenges for the governance of biotechnology • * Trade regime, • * International regulatory arrangements Cartagena Protocol on biosafety • * Regional and national standards • * Release, safety assessment food use of genetically modified organisms.

5. World Trade Organization Dispute Settlement Trade Policy review Trade in goods Trade in services Intellectual property GATT 1994 Plurilateral trade agreements Agriculture Sanitary/phytosanitary Textiles and clothing Civil aircraft Technical barriers to trade Government procurement Trade-related investment measures Dairy products Anti-dumping Bovine meat Customs valuation Pershipment inspection Rules of origin Import licensing Subsidies and countervailing measures Safeguards The Organizational Structure of the WTO

6. Developments at WTO * WTO Ministerial Conference stated at Doha that negotiations on issues relating to SPS measures will be addressed on priority basis in the next ministerial conference. * The Committee on Trade and Environment (CTE) has been instructed to give particular attention to the effect of environmental measures on market access and trade. * This has become relevant in light of the fact that the past decade has seen a global proliferation of environment and health related standards along with a rise in the trade in environmentally sensitive goods. * Since the inception of WTO some 12000 notifications have been received and almost 17 per cent of them are related to environment.

7. Emerging Issues in Trade and Environment * Harmonisation of International Standards * Environmental Standards - Precautionary/Protectionist - Food Safety Regulations - Labelling Requirements - Quality Standards * National Standards and Global Standard Setting Process

8. SPS and TBT Agreements * GMOs were not a trade issue when the SPS and TBT Agreements were negotiated in 1994. * National Governments are free to choose their own standards or follow international standards. * Currently, there are no international standards that specifically govern GMOs nor is there a harmonization of regulatory approaches mandated, although the SPS and TBT Agreements have spurred countries to modify their regulatory systems. * OECD is in the process of attempting to provide a process that will allow its member countries to harmonize their regulatory approaches for GMOs.

9. SPS and TBT Agreements • * The International Plant Protection Convention (IPPC) covers plant health and the environment but doesn’t make any distinctions between traditionally developed products and GMOs. • TBT Agreement: • – technical regulations and standards, • – packaging, • – marking and labeling requirements • – procedures for the assessment of conformity. • * The disciplines of the both the SPS and TBT Agreements are designed to prevent technical regulations from creating unnecessary and arbitrary obstacles.

10. WTO: Trade Dispute • The US, Canada and Argentina introduced their first-time panel requests regarding EC-level measures, the moratorium maintained since October 1998 on the approval of biotech products had restricted the imports of agricultural and food products. • Regarding the EC member State-level measures, the complainants said that a number of EC member States maintain national marketing and import bans on biotech products even though those products have already been approved by the EC. • The US further clarified that the Sanitary and Phytosanitary Agreement recognizes that WTO members may adopt approval procedures for crops and food products, including biotech products, in order to protect health and the environment.

11. WTO: Trade Dispute • The US emphasized that the EC procedures, as written, are not the focus of the US complaint. It is the EC's application of its measures governing the approval of biotech products. • The US also expressed its concern that the EC measures were hindering the worldwide development and application of agricultural biotechnology – a technology which, according to the US, has great promise for raising farmer productivity, reducing hunger and improving health in the developing world, and improving the environment. • Argentina added that agricultural products account for over half of Argentina's total exports, and that it is the second largest producer and exporter of biotech products in the world. Argentina said that the EC's “behaviour” discourages the introduction of the biotech process, and that it is particularly detrimental because EC has the ability to influence other WTO members.

12. WTO: Trade Dispute • In response, the EC expressed surprise and disappointment at the panel requests. The EC said that it had repeatedly made clear that the approval of genetically-modified organisms and genetically-modified food was possible in the EU that a number of applications were being examined and decisions would be taken shortly. • The EC further pointed out that 18 GMOs and 15 food products derived from GMOs have been approved and that these GM products are imported each year by the EC. • The EC said that we need to chose the path of international cooperation to build an appropriate framework for the development of biotechnology, while seriously addressing any potential risks and social concerns.

13. Balanced Perspective!! Positive Points * Possible to better understand the genetic mechanisms behind key traits in the agro-industry, crop, fisheries, forestry and livestock sectors and to use this information to produce GMOs with the desired characteristics. * Molecules for Biofuel * Vaccines through Plants/Fruits etc. Status The development, adaptation and use of GMOs have already made significant inroads (18 countries; 47 fold increase in area under GMOs in 1996-2004) * GM soybeans account for almost 85 per cent of the global area planted, and have virtually replaced conventional varieties in the United States and Argentina; * Transgenic cotton varieties cover about 20 percent of world cotton area; * GM maizeaccounted for 45 percent of the global area in 2004.

14. Negative Points * Human health issues have been raised because - GMOs can be a direct source of food (by eating a GM plant, animal or fish) or - An indirect source, where ingredients in processed foods may be GM (e.g. soybeans are widely used in processed foods, - Or where domestic animals or fish, eaten by humans, may be raised on GM feed. * Environmental issues have been raised because of potential consequences of gene flow from GM to non-GM individuals of the same species * The creation of “superweeds” that are resistant to insects, unfavorable ambient conditions, or synthetic pesticides; adverse impacts on “non- target” organisms (e.g., other plants, butterflies).

15. Regulation of GMOs Regulation of GMOs is a central part of the general GMO debate * What kind of regulations they should be; * What exactly they should regulate; * How strict they should be; * How GMOs should be regulated compared to their conventionally-bred counterparts; * What impact of regulation on the trade of GM products and on the research and development climate for GMOs

16. Status * The presence of GM products has affected trade, both in commercial transactions and in food aid deliveries. * Segregated markets are developing for non-GM products to accommodate consumer preferences, * Some countries focusing on supplying the markets for non-GM commodities leading to mandatory labelling, testing and identity preservation throughout the entire marketing chain. * Which, inevitably, has increased handling costs and affected trade flows * For research or commercial purposes there are at least 15 international instruments. Seven of these are legally binding, namely the UN Convention on the Law of the Sea (1982), Convention on Biological Diversity (1992) WTO SPS WTO TBT International Plant Protection Convention (1997), Aarhus Convention (1998) Cartagena Protocol on Biosafety (2000). * FAO/WHO Codex Alimentarius Commission established the Ad hoc Intergovernmental Task Force on Foods Derived from Biotechnology to consider the health and nutritional implications of GM foods

17. Increase in agricultural trade among developing countries, 1985-90 to 1996-2001 The share of agricultural exports from developing countries that went to other developing countries increased from 31 to 44 percent between 1985-90 and 1996-2001. 1985-90 1996-2001 Share of developing country agricultural exports to: Developing countries Central and Eastern European countries Developed countries

21. Corn Export Quantity 2004 60,000 Tonnes 2005 1,50,000 Tonnes Potential 5,00,000 Tonnes Price 12 per cent higher $ 140 Tonnes (FOB) Preference by countries like South Korea and Malaysia over US/China Corn.

22. The EU has been pursuing a three-dimensional strategy that seeks to define and employ the precautionary principle globally: * The EU has sought to inject it within the WTO system at large through creative interpretation of the SPS and TBT Agreements and through incorporation within them of obligations assumed under multilateral environmental agreements * The EU has sought to incorporate the precautionary principle within international standards through active and skilled participation in the international standards development process. * The EU has begun to incorporate it within bilateral and regional free trade and aid agreements and within EU trade capacity-building initiatives offered to developing countries. Apparently, the EU is attempting to elevate the status of the precautionary principle from a limited WTO exception to a ‘norm’ of general customary international law equal in importance to general principles of international trade law. * Even if the EU were able to establish the precautionary principle as a norm of customary international law, its ability to incorporate that norm within the SPS and TBT Agreements remains uncertain.

23. Labelling EU/Japan/South Korea/Australia/New Zealand/China Threshold Value (Tolerance for GM Impurity) EU/Switzerland 0.9 per cent Japan 5 per cent Australia 1 per cent South Korea 3 per cent Brazil 4 per cent Thailand Soybean 5 per cent Corn 3 per cent

24. Key Policy Issues Since the implementation of the Cartegena Biosafety Protocol * Policy and institutional issues to bridge the gap between the protocol and national biosafety guidelines. * In this regard, some of the possible areas for initiative are being listed below: 1. Capacity Building - BCH: Strengthening and Enhancing/Regional- Sub Regional - Zonal Institutional Committees - Capacity of Quarantine Agency - Risk Assessment and Risk Management (Related Methodologies) - Custom & other Document (Trade Facilitation)

25. 2. Cooperation with Other Ministries The implementation of Cartegena crucially depends upon policies and commitments of other ministries such as Ministry of Commerce engaged at WTO especially in its committees like that of TRIPs, SPS and TBT. Similarly, Ministry of Agriculture and their policy towards GM and initiative at forums like FAO should also be engaged. The role of DBT is equally important determinant in the process. 3. Notification Article 8 - Indian biosafety guidelines have yet to come out explicitly on the issue of notification. - The requirements by a party of export to ensure notification and accuracy of information contained in the notification by the exporter - The contours of advance informed agreement and its linkage with BCH also need immense clarification. - Elaborate upon the related liability and redress mechanisms that would be in place.

26. 4. Brief and Clear Trade Information • Summary of what is needed before LMOs can be exported • For any LMO export intended for other than contained use in the importing country, the exporter will need to comply with specific conditions of export pursuant to the Prohibition Order before approval for export will beganted. • The exporter is provided with a reference number confirming the export has been approved (if this approval is not obtained the export cannot proceed). • The exporter provides with the relevant details of nature of proposed export, the intended country of import and the receiving facility.

27. 5. Points for Policy Consideration * Costs and benefits have to be weighed up when considering the monitoring and enforcement aspects of GMO regulations. * Balance between the potential environmental and health risks viz. a viz. economic interest. * Risk analysis and compensation mechanism to be developed. 6. National Biotechnology Regulatory Authority