Where's the beef? Mad cows and the blight of the SPS agreement.

• Author: Thomas, Ryan David
• Position: GATT Sanitary and Phytosanitary Standards Agreement

1. INTRODUCTION

   The policies of a nation are seldom as susceptible to criticism from other nations as those policies that attempt to regulate international commerce. Indeed, even the internal regulations of one country can often have pervasive effects well beyond its own borders. In the wake of the "Mad Cow" scare, the European Union (EU) proposed a ban on any use of animal remains believed to have a specific risk of harboring Bovine Spongiform Encephalopathy (hereinafter BSE),(1) which will become effective January 1, 2000.(2) This ban is justified by the EU as prudent in response to public health needs.(3)

   The ban is absolute and extends to foreign imports which contain any materials at high risk of carrying BSE.(4) One such use of the animal remains is the production of tallow, or animal fat, by boiling whole animal carcasses.(5) This is a common practice in U.S. slaughterhouses which claim the ban is unfair because it forces them to change their production methods,(6) particularly since there is no conclusive evidence that BSE exists in the domestic U.S. cattle market from which these producers draw their supplies.(7) Tallow derivatives are used in an estimated eighty percent of pharmaceuticals and in cosmetics and lubricants.(8) Additionally, the ban reaches cattle byproducts such as gelatin and gelatin-based cosmetics.(9) Collectively, this ban potentially affects up to $4.5 billion in U.S. pharmaceuticals exports which use tallow derivatives as key ingredients.(10)

   The United States has threatened to submit a complaint to the World Trade Organization (WTO) if it is not exempted from the ban.(11) The ban is questionable under the GATT Sanitary and Phytosanitary Standards Agreement from the Uruguay Rounds (SPS Agreement).(12) The SPS Agreement allows a WTO member to choose the level of regulatory protectionism it wants to employ to preserve "public health" and to protect the environment from "risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs."(13) However, the Agreement established a framework within which the decision is to be made. This framework specifically outlines the need for "scientific" considerations to be made in the "risk assessment" phase of the regulatory process when a measure, such as the current EU proposal, is on the table.(14) These considerations are primarily to ensure that bona fide health regulations are passed, not "protectionist" devices under the pretext of "public health."(15) But the statute has been plagued by several interpretational difficulties by the Member States.(16)

   The most glaring examples of these interpretational problems have arisen in the hormone dispute(17) over a ban by the EC (now the EU) of the administration of certain hormones (excepting those for medical purposes) to cattle, and also the marketing and slaughtering of cattle given the hormones, or selling or processing the meat or meat products derived from such cattle.(18) The United States argued the hormones were "scientifically" proven safe if used correctly and brought its complaint to the WTO for resolution.(19) Both sides were split (among other things) as to: (1) the meaning of "scientific justification," (2) what "based on" international standards means when choosing a level of protection, (3) the role of the Precautionary Principle, and (4) the precise contours of a "risk assessment" in the context of the SPS Agreement.(20)

   For better or for worse, the recent resolution (and appellate decision) of the Beef Hormones Dispute by WTO dispute resolution panels shed some much needed light on a statutory text wrought with ambiguities. The decisions are likely to greatly influence the outcome of the SRM dispute should the United States formally go before the WTO. Since this is the first case interpreting the SPS Agreement, the decision is the first step in the development of what will inevitably become the "common law" of science in the realm of world trade disputes.(21)

   Unfortunately, the decisions are likely more harmful than beneficial to the necessary goal of harmonizing the needs of international trade and public health and welfare. First, the decision announced a limited applicability of the Precautionary Principle under the Agreement even though the Precautionary Principle is not yet an accepted norm of international law.(22) The dispute resolution panel also emphasized that considerations other than empirical science may be accounted for during risk assessment.(23) The natural inference from this holding is that social, political, and economic values outside of the realm of science have a role under the Agreement.(24)

   These holdings seem to undermine the true purpose of the statute -- making science a more prevalent factor in international trade regulation for public health.(25) As a result, as long as the EU conforms to the Agreement's demands for risk assessment -- demands which now seemingly permit social influences as part of the equation -- the proposed ban may be acceptable regardless of any political or social motivations behind it.

   While social influences and public anxiety are, by their nature, a necessary element of any public policy consideration, more neutral influences such as science should be more heavily weighted where the ramifications of the regulation extend beyond the borders of that particular country. This is not only to protect the needs of the world economy in efficient international trade, but also to protect the interests of those foreign, yet similarly affected, peoples to whom the state owes no political accountability. Thus, a country should be limited in the range of discretion it has to choose the "level of protection" it deems necessary, as under the SPS agreement, in order to protect public health by the regulation of drugs and foodstuffs. Placing restrictions on the global market is not the proper means for regaining "consumer confidence" (a stated goal of the EC in proposing the ban(26)) in what is largely an intrastate issue.

   Accordingly, and opposed to the view of the appellate panel, the WTO should demand adherence to acceptable international regulatory standards, thereby giving every nation a voice in the approval of the ban. If a Member is unhappy with the international standards it can lobby the other Members to conform their views to its own, thereby utilizing the inherent structural protections of the WTO. Furthermore, Members will find it in their best interests to treat other Members fairly, and they would not likely want to establish unfavorable precedents that could ultimately work against them.

   Demanding adherence to the international standards will also help ensure uniformity(27) by inhibiting the opportunity for a country to adversely effect international trade, whether consciously or unconsciously, by establishing trade regulations which, in light of the international standards, are neither necessary nor proper in relation to the actual threat posed.

   Finally, the Agreement's strong emphasis on eliminating "protectionism" tends to overshadow the fact that there are other evils, with potentially more egregious effects, that may arise from giving countries too much discretion in risk management. As with the proposed tallow ban, a Member State's regulation, even with presumably proper(28) motives, can harmfully effect international trade while still adhering to the form of the current SPS Agreement.(29)

   This Note will first outline the SPS Agreement itself -- specifically, Part II attempts to present the relevant articles in a manner providing the necessary background for understanding the WTO dispute panel and Appellate Body decisions. Next, Part III discuss and critique, the dispute panel and Appellate Body decisions, specifically, noting the shortcomings of these decisions in the context of the SPS Agreement and its utility as a precedent of international dispute resolution in the area of international regulation of drugs and feedstuffs. Next, I will addresses the likely effect of these decisions upon a possible WTO resolution of the SRM dispute (should it proceed that far). Finally, Part V offers conclusions and recommendations to help guide future decisions to be more pragmatic and to better promote the goals of the SPS Agreement.

2. THE SPS AGREEMENT

   The Sanitary and Phytosanitary Standards (SPS) Agreement of the Uruguay Round augments the content of GATT Article XX(b) and (g) relating to "measures affecting, plant, animal, and human life or health" and the environment.(30) Prior to the SPS Agreement, GATT scrutiny of discriminatory regulations under the guise of public health was far less rigorous.(31) The SPS Agreement was intended to make "science" a more prevalent factor in the affected areas because of the potential for "protectionist" regulatory devices under the guise of "public health" or "safety".(32) Indeed, as one commentator has noted, "the presence and integrity of scientific support is a principal touchstone for determining the legitimacy of many national regulatory efforts aimed at assuring ... public health.(33) Additionally, the Agreement was intended to aid developing countries which may have economic or political difficulties in complying with SPS measures of other more developed nations.(34)

   The preamble sets forth several goals of the Agreement. Specifically, the Agreement encourages the adoption of those regulations necessary to protect human health.(35) Furthermore, the Agreement promotes harmonization of sanitary and phytosanitary measures between Members based upon internationally accepted norms, but qualifies this by noting that Members should maintain discretion to set their own appropriate levels of SPS protection,(36) Finally, the Agreement seeks to eliminate SPS measures which would result in a "disguised restriction on international trade."(37)

   Article 2 sets out the basic rights and obligations of the Members.(38) Article 2 gives Members...