1

Dr. Sachin Chaturvedi

Short-term Orientation Course on “Biosafety and Biotech Regulations”

TERI School of Advanced Studies

9th February, 2006

Biosafety and Trade Related Issues

2

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

Positive features

Negative Aspects

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.

4

5

The Organizational Structure of the WTOWorld Trade Organization

Dispute Settlement Trade Policy review

Trade in goods Trade in services Intellectual property

Textiles and clothing

Rules of origin

Technical barriers to tradeTrade-related investment measures

Anti-dumpingCustoms valuation

Import licensingSubsidies and countervailing measuresSafeguards

Sanitary/phytosanitaryAgricultureGATT 1994

Pershipment inspection

Plurilateral trade agreements

Civil aircraft

Government procurement

Dairy products

Bovine meat

6

* 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.

Developments at WTO

7

* Harmonisation of International Standards

* Environmental Standards - Precautionary/Protectionist

- Food Safety Regulations

- Labelling Requirements

- Quality Standards

* National Standards and Global Standard Setting Process

Emerging Issues in Trade and Environment

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

* 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.

SPS and TBT Agreements

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 maize accounted 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 SPSWTO 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

Developing countries

Central and Eastern European countriesDeveloped countries

Share of developing country agricultural exports to:

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

18

Number of Employees of the biotechnology Industry in India

2001 2003

Total Technical Total TechnicalAgriculture 28520

(38.53)

3066

(20.74)

32623

(20.28)

12206

(31.29)

Healthcare 28520

(38.53)

3066

(20.74)

85600

(53.20)

11948

(30.63)

Environment 66

(0.09)

30

(0.20)

6136

(3.81)

3295

(8.45)

Industrial

Biotechnology

-- -- 14514

(9.02)

3335

(8.55)

Others 16905

(22.84)

8619

(58.31)

22026

(13.69)

8228

(21.09)

Total 74011 14781 160899 390152

Source: RIS based on BCIL 2001 and 2003. Figures in parenthesis are percentage share.

19

India’s Export of (Potential GM) Crops to World

US $ Million

2002 2003 2004

Vegetable 236.72

17.53

254.29

14.52

329.48

17.92

Corn 19.17

1.42

14.03

0.80

77.34

4.21

Rice 667.82

49.46

1221.43

69.73

909.44

49.48

Soybean 416.66

30.86

251.49

14.36

509.91

27.74

Mustard 9.95

0.74

10.43

0.60

11.94

0.65

Total 1350.32 1751.67 1838.11

Source: India Trades: CMIE (2005).

Figures in Pink are percentage share.

20

India’s Import of (Potential GM) Crops from World

US $ Million

2002 2003 2004

Vegetable 720.66

98.25

631.86

99.68

572.15

99.65

Corn 0.68

0.09

0.05

0.01

0.3

0.05

Rice 0.01

0.00

0.23

0.04

0.06

0.01

Mustard 9.68

1.32

1.77

0.28

1.64

0.29

Soybean 2.46

0.34

0.01

0.00

0.03

0.01

Total 733.49 633.92 574.18

Source: India Trades: CMIE (2005).

Figures in Pink are percentage share.

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

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)

Key Policy Issues

25

2. Cooperation with Other MinistriesThe 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