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GATT/WTO inactions have contributed to BSE spread

by Chakravarthi Raghavan

Geneva, 13 Feb 2001 -- The mad cow disease and its likely dangers to humans and cattle across the world is now moving from the arena of public health to the explosive trade front as a result of the Canada-Brazil disputes and the Canadian ban on imports of $5 million worth of beef annually from Brazil, effected in such a way as to cause damage to nearly $800 million worth of Brazilian exports.

And when the history of our times is written, it should perhaps be noted that the spread of BSE through the use of meat and bone meal (MBM) in animal feed and exports of such animal feed from the UK and Europe to the rest of the world became possible - even after its link with the BSE became known - because of the failure of the GATT and the WTO to act on a recommendation from a British envoy (as chairman of a working group in the GATT) on a simple notification procedure on the exports of domestically prohibited goods.

While the Brazilian government has been protesting, talking and raising the issue at the WTO, according to Brazilian media reports, the Brazilian trade and industry have taken their own private retaliatory action and have announced that they would not import potash intermediates (used in manufacturing fertilizers) and bovine semen for cattle breeding from Canada, two products whose annual imports from Canada are estimated at $200 million.

Though Canada’s own import of Brazilian beef is valued at no more than $5 million annually, the way the imports were banned and the reasons announced (of the danger of Brazilian beef being contaminated by cattle that could be carrying the bovine spongiform encephalopathy (BSE) or mad cow disease), has affected some $800-900 million worth of annual Brazilian beef exports to North America (some $120 million to the United States) and about $700 million to Europe.

Canada has claimed that it has acted in banning Brazilian beef, and has acted well within its rights, under the WTO’s Agreement on Sanitary and Phytosanitary (SPS) measures, to safeguard public health; few outside of Canada (and for that matter, even inside Canada) accept this at its face value, and seem willing to accept the Brazilian contention that this is part of Canada’s pressure against Brazil to force the latter to yield on the aircraft export subsidy dispute over the inroads made by Brazil’s Embraer aircraft into a hitherto Canadian-dominated world market for this type of aircraft used by regional airlines.

The government of Brazil, and its trade mission to the WTO, have made protests and warned that they would raise the issue at the WTO bodies. But given the dispute settlement system, and the way it operates—even if Brazil wins the case before a panel and the Appellate Body, no remedy can be expected for at least 15 months, and it will be impossible for Brazil or its cattle industry to get compensation for the damage caused or the loss of the market in beef.

The nature of BSE is such that there is no reliable method so far, by which to test live cattle and judge that it is free from BSE. The presence or absence of BSE can only be conclusively proved after the cattle is slaughtered and the carcass is tested.

Thus, what view a panel, and the experts who will be consulted - even panels and experts functioning more objectively and independently than how the WTO panels are now being seen to be by the public - will take on the danger of BSE in the Brazilian cattle, and the ‘soundness’ of the exercise of the ‘precautionary principle’ by Canada is anybody’s guess.

Brazilian media reports and Brazilian official comments suggest that they believe that Canada might be banking that Brazil would be forced to yield to Canada on the aircraft subsidy dispute because of the trade pressure caused by its action on Brazil (without any damage to Canada) and the unlikelihood of Brazil forcing a crisis in the WTO (by withholding consensus on a range of issues, including a new trade round and the ministerial meeting in Doha).

But the Brazilian private sector’s own retaliation and boycott of Canadian products may change this dynamics.

It is possible that the two sides may try to find a compromise and end the escalation of their trade dispute.

But the underlying public health and consumer concerns aroused by the spread of the mad cow disease around the world, highlight a major failing of the trading system, and the fact that the major industrialized countries have prevented, at the old GATT and the WTO, even ‘simple remedies’ in the shape of notifications on their exports of hazardous or domestically prohibited goods.

The Rome-based Food and Agriculture Organization (FAO), in a statement on 1 February, said that between 1986-96 and up to today, meat and bone meal (MBM) from Europe had been exported to more than 100 countries (and some of them re-exported MBM to third countries); and 100 countries had also imported live cattle from Europe. All countries that have imported cattle or MBM originating from Western Europe during and since the 1980s, the FAO said, can therefore be considered at risk from BSE. The regions that imported sizeable quantities of meat meal from the UK during and since the 1980s include the Near East, Eastern Europe and Asia. The least likely risks are in Latin America, Australia and New Zealand, because of the nature of their industries, systems of production and sources of MBM, the FAO said. A country’s particular risk of BSE depends on the quantities and source of MBM imported, where and how it was used - in dairy feeds as opposed to poultry feeds - and its national system of rendering and recycling cattle/animal waste.

In December last, after an initial expert consultation, the WHO and the FAO’s Office International des Epizooties have decided to convene a wider expert consultation to review and synthesize the current knowledge on the pathogenesis, epidemiology, distribution, the likely course, and the prevention and control of BSE/nvCJD, and based on this, advice is to be provided to developing countries. But the WHO, on the basis of some preliminary consultations, had said in Geneva in December that while all countries that had imported MBM or cattle from Europe faced the risk of BSE and its human form, the new variant of Creutzfeldt-Jakob disease (nvCJD), the spread to cattle herds and the danger of BSE would depend on whether the country had a rendering industry to recycle animal waste into animal feeds.

BSE is now known to have originated in the practice in the UK of rendering cattle and bone and converting them into meat and bone meal and mixing them with animal feed, though the actual link or source of the disease itself (including the crossing of species from sheep scrapie to cattle and humans) has not clearly been established, more so given the long incubation period in infected cattle as well as in humans who have ingested that meat.

Though the MBM, as the source, was suspected from the late 1980s in the UK, no action was taken until some years later; and even after the use of MBM in cattle feed was banned in the UK, the animal feed manufacturers exported it to Europe and elsewhere, to some 100 countries, as the FAO has now estimated.

But Third World trade experts note that if the 1982 GATT Ministerial Declaration and its decision on exports of domestically prohibited or hazardous products had been implemented and followed up as envisaged, the spread of the disease and the dangers and uncertainties would not be there.

Though the developing countries had raised the issue of exports of prohibited or severely restricted hazardous products, as early as 1982, they never followed it up and kept the pressure. The developed countries, and certainly the majors, successfully prevented any actions, and even holding up simple notification decisions.  The issue was brought up before the 1982 Ministerial meeting among others by Sri Lanka. The 1982 Ministerial Declaration decided that all Contracting Parties (CPs) “shall to the maximum feasible extent, notify GATT of any goods produced and exported by them, but banned by their national authorities for sale on their domestic markets on grounds of human health and safety.” The Ministers asked the CPs, at their session in 1984, to consider, on the basis of the experience of the notification procedures, the need for a study of the problem relevant to GATT in the exports of such products.

The 1982 decision was a response to the call from Third World countries for international regulatory actions to deal with exports of dangerous drugs, pesticides etc, whose sales were prohibited by industrial countries on their own domestic markets on grounds of health or safety, but permited their enterprises to export abroad.

Often, Third World governments or authorities do not even know that the goods being imported by them are prohibited for health or safety reasons in the export countries.

Though the 1982 GATT Ministerial declaration did not go as far as the developing world had wanted, even the mere issue of notification was ignored.

In November 1984, the GATT spokesman confirmed that there had been “very few replies” to the call for notification, and no “returns” whatsoever to the questionnaire sent by the GATT secretariat. Only a few countries had replied, and said that they had no goods prohibited for domestic sale that they exported.

And the issue then disappeared from the GATT agenda. When the GATT Council met on 6 November 1984, for a review of the GATT work programme and report to the Contracting Parties, the hazardous products issue did not even figure in the Council’s draft agenda. It was brought up before the Council at its meeting on 20 November, when the Council decided to issue another call to CPs about their obligation to notify under the Ministerial Declaration of 1982.

The issue again came up at the 1985 CPs session, when several developing countries - Sri Lanka, Egypt, Zaire, Chile, Singapore and India among them - complained that though this issue of domestically prohibited goods was a part of the GATT work programme, little action had been taken.

At that time, the US and EC wanted trade in counterfeit goods in GATT, arguing that this was necessary to maintain ‘purity’ and ‘safety’ in international trade, but did not agree that the exports of domestically prohibited goods was also necessary to maintain purity and safety of international trade. And though they insisted on ‘services’ and other issues being dealt with in other fora into GATT, they said that the domestic prohibited goods issue was being dealt with in the WHO and should not come into GATT.

In 1986, in the run-up to Punta del Este, this issue figured in the proposals, but Nigeria, the prime sponsor and mover, failed to reach Punta del Este, and so it was not pursued in terms of including it in the new round launched there. However, all the issues before that meeting, but not included in the agenda of the new round, were remitted to the GATT machinery for continued work. This included the domestically prohibited goods issue. But after the Uruguay Round was launched and talks got underway, in the preparations for the 1988 Montreal Ministerial meeting, Nigeria had circulated a technical note on the main elements of an agreement on the issue in GATT, along the lines of the Tokyo Round codes, and wanted it to go before the Ministerial meeting.

Though the proposal in the 1988 CPs meeting received a lot of Third World support, and the Chairman of the CPs took note of it in his summing up, the EC expressed its opposition to the issue going to Montreal for a decision by Ministers. Supported by the US and Sweden, the EC had then said that the subject was a “sensitive” issue, engaging the attention of several UN agencies, and should not go to Montreal!

The issue continued to figure in the regular GATT Council meetings, though by fits and starts, and a committee was set up under the then UK Ambassador John Sankey. After the abortive Brussels Ministerial meeting of 1990, the issue again came up in the regular GATT.

Sankey then drew up a draft text of an agreement for the consideration of the GATT Working Group on this issue for recommendations to the Council and CPs (in 1991), for a notification procedure to be adopted as a decision of the CPs; and for those member parties to various international agreements relating to the environment and protection of health, and having trade effects, to ensure that the relevant instruments and the bodies administering them would decide whether the procedures had been followed. Among the treaties mentioned in the Sankey draft were the Ozone treaty, the Basel convention on control of transboundary movements of hazardous wastes and their disposal, the London UNEP guidelines for exchange of information on chemicals in international trade, the WHO certification programme on quality of pharmaceutical products moving in international trade, the ILO convention on use of chemicals at work, and the UN convention on psychotropic substances and illicit traffic in narcotic drugs.

Even such a simple and virtually innocuous notification requirement was held up and opposed by the US, which insisted on the exclusion from its scope of chemical and pharmaceutical products as well as auto parts!

The issue was allowed to remain unresolved, as the Uruguay Round negotiations were concluded at the official level in December 1993. But after questions were raised on this by this writer, the then chairman of the Contracting Parties, Mr.B.K.Zutchi of India, said at the CPs meeting that the issue should be taken up as part of the work of the preparatory committee and in the GATT committee on trade and environment.

After Marrakesh, a preparatory committee for the WTO had been set up, and a number of environmental issues (including the domestically prohibited goods issue) were remitted to that committee.

In October 1994, the then Brazilian ambassador, who later became his country’s foreign minister, Mr. .Felipe Lampreia (as chairman of the committee on environment and trade within the preparatory committee for the WTO)announced that he would be holding informal consultations on an agreement on the exports of domestically prohibited goods.

In February 1995, after the WTO came into being, and its Committee on Trade and Environment was set up (with Argentina’s Amb. Sanchez Arnau as chair), the issue came before that committee. While the US and others did not want any WTO actions and decisions, some of the developing countries too were chary of allowing exporting countries to be able to ban exports. But there was support for the earlier GATT proposals for notifications and prior informed consent before exports.

And in the run-up to the Singapore meeting, there was renewed talk of an agreement at Singapore.

The issue continues to be on the agenda of the CTE, and languishes there, without any decision or action.

The history of the GATT and the WTO show that while developed countries, even if they don’t get their viewpoint on any negotiating agenda or issue, bring the same issue back under another name, and push it (as several of the EC proposals for a new round for Doha show), the developing countries function by fits and starts, and even the original sponsors don’t pursue an item - more so when the ambassador has changed.

But if the very minimal notification (in the 1991 Sankey draft agreement) had been in place, the UK, before exporting the MBM animal feed after its ban and use in the domestic market, would at least have been forced to notify the WTO, and put other countries (within the EC itself and countries elsewhere) on notice, so that they could have banned the import and use of MBM in their animal feed.

But the UK had ‘no obligation’ to notify, nor the EC to others. And, as it has now come out, after an internal debate inside the UK government, the protagonists of trade won over health, and exported it to the rest of Europe and to several developing countries and thus spread the BSE. -SUNS4835

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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