Consultations on FTAA and WTO Negotiations
Sectoral Consultations - Sanitary and Phytosanitary Measures
Discussion Paper (May 1999)
Sanitary and Phytosanitary Measures
Table of Contents
A key result of the Uruguay Round of multilateral trade negotiations was the development of the Agreement on Sanitary and Phytosanitary (SPS) Measures. The SPS Agreement is designed to prevent the misuse of SPS measures as disguised restrictions on trade, while safeguarding a country's right to take the measures necessary to protect human, animal, or plant life (including forestry) health. The SPS Agreement has been in force since 1995 and is working reasonably well. There are no planned negotiations for the SPS Agreement. Nevertheless, several issues could be raised in the upcoming WTO Agriculture negotiations.
A key result of the Uruguay Round was the development of the SPS Agreement. This agreement is designed to prevent the misuse of SPS measures as disguised restrictions on trade, while safeguarding a country's right to take the measures necessary to protect human, animal, or plant life (including forestry) health. It recognizes the sovereign right of countries to establish their level of tolerance for risk which is usually referred to as their appropriate level of protection (ALP).
At the same time, the Agreement places certain obligations on countries to ensure that SPS measures are applied only to the extent necessary to achieve their ALP, are based on scientific principles, and are not maintained without scientific evidence. Countries are further obligated to ensure that their measures do not arbitrarily or unjustifiably discriminate between other countries where identical or similar conditions prevail, and are not applied in a way that constitutes a disguised restriction on trade. This includes the objective to be consistent in the application of ALP in different situations.
a) Triennial Review of the Agreement
The SPS Agreement has been in force since January of 1995 and is working reasonably well in making the trading system more transparent, in identifying the misuse of SPS measures, and in promoting the use of science-based risk assessments when establishing new measures. The Agreement has also provided a basis for resolving SPS-related trade disputes both formally and informally. Through participation in the WTO SPS Committee, the body responsible for the operation and implementation of the Agreement, countries have been able to raise and resolve concerns about measures being applied by other countries. The Agreement has also had some success in promoting the development and use of international standards.
One of the most significant benefits of the Agreement has been increased transparency in international trade. Through implementation of the notification procedures in the Agreement, countries are now more aware of measures that are being proposed by other countries, and have the opportunity to comment at an early stage on the impact that the proposed measure could have on trade. Members must continue to improve transparency, particularly in the areas of risk assessment methodologies used by countries in establishing measures, and bilateral mutual recognition agreements between trading partners.
Under the terms of the Agreement, the SPS Committee was mandated to review the operation and implementation of the Agreement three years after it came into force, and could make proposals to the Council on Goods to amend the text based on experience gained from implementation of the Agreement. The review began in March of 1998 and a final report was agreed to at the March 1999 meeting of the Committee. Several implementation and operational problems were identified and discussed during the review; however, nothing emerged from the review that the Committee felt warranted an amendment to the text. In general, most countries feel that, as the Agreement is relatively new, efforts should focus on fully implementing the Agreement rather than renegotiating its provisions. Most countries further believe that any re-negotiation of the Agreement would lead to pressures to weaken the existing disciplines and jeopardize its scientific foundation.
The Agreement is helping the international standards-setting bodies (Codex Alimentarius, OIE, IPPC) to prioritize their work in developing and adopting harmonized international standards, furthering progress in the application of equivalency, assisting countries in the application of the concept of area-freedom, and providing technical assistance to developing countries to build adequate regulatory systems, particularly in carrying out timely and credible risk assessments.
b) Resolving Trade Irritants
While the SPS Agreement has improved international trade in food, animal, plant and forestry products, a significant number of SPS trade irritants continue to exist. In general, these problems have been the result of poor implementation of the Agreement. Countries have been slow to implement provisions such as improving transparency, increasing harmonization, recognizing equivalence, basing measures on sound science, carrying out timely risk assessments, recognizing area freedom, and simplifying inspection and certification procedures. Improved implementation of these provisions would, in the long run, significantly reduce trade irritants by providing for more stability and homogeneity in international trade.
In some cases, slow implementation appears to be a result of capacity limitations. In other cases, countries appear reluctant to provide improved access to their markets. Canada has used WTO dispute settlement procedures to challenge unjustified SPS measures taken by our trading partners, most notably with respect to the European Union's (EU) ban on Canadian meat products from animals treated with growth promoting hormones, and the Australian ban on Canadian salmon exports. Canada has also held consultations with the EU on its ban of Canadian non-heat-treated softwood lumber, and joined the United States in its consultations on Korea's government-mandated shelf-life requirements.
While there is general satisfaction with the SPS Agreement, several issues related to the Agreement could be raised during negotiations on the Agreement on Agriculture. These issues fall into two broad categories. The first category reflects a concern that the SPS Agreement does not go far enough in giving countries what they need to gain access to foreign markets. This is largely an issue for developing and least developed countries, who are concerned that, absent significant additional capacity building, increasingly sophisticated standards systems in the developed countries will lead to increased barriers to trade. The second category reflects a concern that the Agreement does not give countries sufficient flexibility in establishing measures; therefore some countries would like to see certain disciplines removed or weakened. The focus on scientific factors only and not allowing for the consideration of socio-economic factors when establishing health and safety measures is an example of where some countries feel that the Agreement is too limiting.
a) Consideration of Non-scientific Factors
The intent of the SPS Agreement is to allow countries to take the measures that they feel are necessary to protect human, animal, or plant life and health, but at the same time, not to use SPS measures as a way to protect domestic industries from foreign competition. In order to achieve this balance, the Agreement incorporates the use of scientific risk assessment in establishing and maintaining SPS measures that vary from international standards. If a country is not able to demonstrate that a risk to human, animal, or plant life health exists through a scientific risk assessment, then it is not allowed to establish or maintain a measure that places a restriction on foreign produced products being imported into the country. A limited exception exists in the agreement that allows countries, where scientific information is insufficient, to adopt a provisional SPS measure.
Over time, consumer perceptions have developed about the safety of certain food products that cannot be substantiated through scientific evidence. This has been largely a result of the emergence of new food safety concerns and growing interest in process and production methods (PPMs), such as genetic modification of foods. This has happened at a time of growing skepticism, in some countries, of inspection and regulatory systems and the ability of governments to adequately protect consumers. Because of this public concern, there is increasing pressure from a few countries to amend the risk assessment provisions in the Agreement to allow countries to consider non-scientific factors when establishing SPS measures. Most countries agree that consideration of non-scientific, including socio-economic, factors should be done when a country sets its appropriate level of protection (i.e., establishes its level of tolerance for risk), and that the measures taken to achieve that level of protection should be based solely on scientific risk assessment.
b) Scientific Uncertainty
The SPS Agreement permits countries to adopt preliminary SPS measures where scientific evidence is insufficient. In such cases, however, countries are then obligated to seek further scientific data and review the measure within a reasonable period of time. If after a reasonable period of time, such an interim measure cannot be justified scientifically, it must be withdrawn. This SPS provision achieves a reasonable balance between giving a country the ability to protect domestic health, safety and the environment where there is insufficient scientific evidence, and not allowing a country to use provisional measures as disguised restrictions on trade. This provision on interim measures reflects a precautionary approach.
c) Processes and Production Methods (PPM's)
There are two types of PPMs; those where the production technology affects the relevant characteristics of the final product (product related), and those where it does not (non-product related). The SPS Agreement readily deals with the first type through its focus on the scientific assessment of risks associated with the consumption of a product; however, public pressure in some countries is mounting for governments to put in place measures that deal with issues such as animal welfare and transportation, and environmental impacts of production in the producing country. Some with concerns about the treatment of animals or abuse of the environment in agricultural practices in foreign countries see the international trading system as a way to put pressure on foreign producers to change their practices.
This has resulted in a significant and sensitive international debate about the extraterritorial aspect of such actions with respect to forcing increased production costs onto foreign producers and to imposing the ethical and moral values of one country on the citizens of another country. The issue of chickens in cages versus those that are free range is an example. If a country put a measure in place that would ban imports of Canadian eggs and products containing eggs unless Canada enacted a regulation that prohibited keeping chickens in cages, then that country is, in effect, imposing its own values on Canadians through the international trading system. This is in spite of the fact that the egg from achicken in a cage does not present a greater health risk. In addition to imposing additional costs on Canadian producers, such actions take away the right of Canadians to decide what production methods are acceptable in Canada.
d) Products of Biotechnology
Public acceptance of products produced through the use of biotechnology varies around the world. In general, this has not been a concern in Canada and the United States, where regulators and industry have contributed to a higher level of public confidence. In some countries, there are widespread public concerns over possible unknown effects of this technology. Government regulators have come under pressure to refuse or delay approvals of products of biotechnology for use or sale in the marketplace. This approach has resulted in slow approvals, and an increasing requirement for mandatory labeling for the purpose of consumer information. Canada requires labels on products, including those produced using biotechnology, where there is a health and safety concern, i.e., a change in nutritional content or the introduction of an allergen.
e) Developing Country Concerns
When the SPS Agreement was drafted, it included provisions to help the developing countries and least developed countries become full participants in the international trading arena. The Agreement includes provisions for the developed countries to provide technical assistance to developing and least developed countries to allow them to achieve the sanitary and phytosanitary conditions necessary to meet the requirements of their export markets, and to meet their obligations when imposing measures on imports. The Agreement also incorporated provisions to allow longer time frames for compliance with the Agreement and measures taken under it for developing and least developed countries.
Many developing and least developed countries feel that these provisions have not been properly implemented. They argue that technical regulations and standards continue to create unnecessary obstacles to their exports. Many countries feel that the developed countries continue to impose standards that are either beyond the technical competence of developing and least developed countries, or do not take into account the special development, financial, and trade needs of these countries
Since standards are emerging as one of the major non-tariff barriers to the market access of developing and least developed countries, it is expected that they will seek stronger disciplines to pressure developed countries to use international standards. These countries will be looking for greater participation and influence in international trade and standards-setting bodies, more technical assistance to build the inspection and regulatory systems necessary to meet foreign requirements, and concessions from developed countries on the enforcement of standards. These demands come at a time when developed countries are under increasing pressure from their own public to take stronger action with respect to food products, particularly imports, to ensure they meet increasingly stringent health and safety standards
Maintaining a science-based set of rules for trade in food, animal, plant and forestry products is a keyobjective for Canada. While scientific opinion may sometimes be divided, a scientific approach provides a more quantifiable and tangible set of evidence on which to base domestic regulatory decisions, and on which to assess the legitimacy of the health and safety measures of trading partners. Scientific principles allow governments to achieve the sensitive balance of protecting the public interest, and ensuring that trade is not unjustifiably restricted.
Allowing non-scientific factors to be considered when establishing SPS measures could disrupt this balance by leading to increased discriminatory and unjustifiable trade actions while not providing countries any further ability to protect health and safety. The difficulty seen by many countries with allowing non-scientific factors is how the legitimacy of these factors would be established, as well as, the varying consumer perceptions amongst countries. While countries need to address legitimate consumer concerns in public policy, these concerns should not be used to unjustifiably restrict imports. The appropriate place for non-scientific factors to be taken into consideration is when a country sets it appropriate level of protection, and not when conducting risk assessments or establishing measures.
In order to deal with the growing market access issues for biotechnology products, it is expected that pressure will mount to find a set of international trading rules that can apply to these products. The United States has already indicated that they see this as a priority in the next round of trade talks. Further examination is needed to determine if these market access problems are a result of the regulatory and approval processes in individual countries or are they because of inadequate trade rules. This examination will determine if and how the issue needs to be addressed within the WTO framework.
Within the existing WTO framework, the SPS Agreement is one of two agreements that could be looked at to deal with the biotechnology issue. The other is the Agreement on Technical Barriers to Trade. While it appears that health and safety risks arising from products produced from biotechnology could be handled under the SPS Agreement, it may be desirable to obtain an explicit recognition of the applicability of the Agreement to trade in products of biotechnology. Opening the Agreement for this purpose, however, could have a much larger impact by giving countries an opportunity to ask for other amendments.
Building capacity in developing and least developed countries will, in the long run, be beneficial to Canada by increasing the safety of products coming from these countries into the Canadian market, and by providing for better access of Canadian products into those markets. For example, improving the capacity of these countries to carry out timely risk assessments on imported products could expedite Canadian exports. Increased capacity to regulate would be a significant benefit in dealing with the issue of transboundary movement of products of biotechnology. While Canada does provide technical assistance to developing and least developed countries in the SPS areas, increased technical assistance, within the limit of available resources, by both government and the private sector should be an objective.
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