Food for thought and thoughts on food : the consumer factor in a WTO world

(1)

U n i v e r s i t e i t v a n A m s t e r d a m | U n i v e r s i t y o f A m s t e r d a m

Food for Thought and Thoughts on Food: The

Consumer Factor in a WTO World

Andrea Sindova

LL.M. International Trade and Investment | Master Thesis | 12 ECs

Academic Year

(2)

Acknowledgements

There are many people whom I would like to thank for their support and contribution, each in their own unique way. Firstly, I would like to express my gratitude to all the University of Amsterdam academic staff I had the pleasure of meeting over the past year. You have equipped me with knowledge and insight, which will be undoubtedly indispensable for my future career. My special thanks go out to my supervisor Dr. James H. Mathis, for his advice, comments, and patience during the different stages of this paper.

Furthermore, I would also like to thank my friends for their support, and interesting epicurean (occasionally slightly too philosophical) discussions into the wee hours of the night after a great meal. While I am grateful for each and every home-cooked and restaurant-made meal we have shared, most of all, I thank you for sharing my love for food, and encouraging my fascination with food, which undeniably inspired this paper.

Finally, I would like to thank my family who allowed me to follow my academic interests, and when needed, reminded me to take things with a grain of salt. Mom, thank you for always putting the secret ingredient of love into every meal, and always being my cheerleader. None of this would be possible without you.

(3)

Introduction

Food is an essential part of our lives. The absence thereof would inevitably lead to our demise. However, food is more than simply the fuel driving our bodies. If we are lucky enough to have it, we share it – online and offline. Food is a necessity and indulgence at the same time. Nowadays, as consumers, we pay attention to how food is presented, or its nutritional value. One thing we generally do not do, however, is question the safety of what we consume. We trust that as a consequence of stringent regulation, and undoubtedly correct implementation thereof, it is safe.

Quality of food is important; but it is the safety of our food that is essential. It is important that standards are set high enough to prevent our nourishment from turning into poison. A recent survey reported that practically all chain restaurants in the U.S. serve beef, chicken and pork that have been fed antibiotics.1 News like this often strikes a chord with the average consumer. It can be rather baffling that while doctors suggest skipping antibiotics, unless absolutely necessary – as to not build up resistance – at the same time the average Joe and Jane are fed antibiotics as part of their daily diet. The 21st century consumer cringes upon the sight of a greyish mass before it becomes a chicken nugget, denounces food waste, and demands quality.

Since in the present day of globalization foodstuffs are goods that are traded internationally, the regulation of the food sector and food safety has become internationalized. States have translated the implications of globalization and modernization trends into international trade agreements, committing themselves to the harmonization of safety measures by creating and adhering to international set standards. For World Trade Organization (hereafter: WTO) members this is currently achieved under the umbrella of the Agreement establishing the WTO, and the Agreement on the Application of Sanitary and Phytosanitary Measures (hereafter: SPS Agreement) in specific.2

1

Food Safety News, 'Report Ranks Antibiotics Policies At Fast Food Chains | Food Safety News' (2015) <http://www.foodsafetynews.com/2015/09/report-ranks-antibiotics-policies-at-fast-food-chains/#.VflUcGQyOjg> accessed 6 November 2015

2

Other relevant WTO instruments are the Agreement on Technical Barriers to Trade (hereafter: TBT Agreement), and the General Agreement on Tariffs and Trade (hereafter: GATT).

(5)

Like all WTO agreements, the SPS Agreement has the difficult task of balancing the right of governments to set policies and requirements on one hand, and the WTO objective to free trade from unnecessary barriers on the other. While the SPS Agreement allows individual states to implement measures “necessary to protect human, animal or plant life or health”3, this right is subject to some requirements. It is argued by many academics that this requirement can sometimes be at odds with the right of individual states to set their own level of protection, and hence their regulatory sovereignty.4 Nonetheless, regulators understand and accept this trade-off, as while indeed reducing state sovereignty, the requirement ensures the maintenance of a liberal global trade system.

When assessing a trade hindering measure, the tendency seems to be to allocate more weight to trade values than non-trade values. When assessing a trade restrictive measure falling under the SPS Agreement, the Panel, or Appellate Body, will in principle weigh and balance the trade value of trade liberalization with the non-trade value of human life and health protection. The SPS Agreement requires a measure aimed at protecting human life and health to be based on a scientifically driven risk assessment5. Moreover, reading the text of the Agreement, it seems that the scientific factor is the single most important element of the assessment, neglecting other factors. This de facto supremacy of the scientific factor can be problematic, especially in cases of scientific uncertainty.

The problem with regard to food safety regulation is that citizens often see the above-mentioned trade-off in terms of making personal health and safety concessions for the sake of an abstract trading system. Citizens expect their governments to consider their attitudes and reflect their interests when making policies and regulations. Consequently, this creates a disparity between what the government ought to do as a WTO member state on one hand, and what a government owes to its constituents on the other.

Therefore, the intention of the present paper is to examine the weight of the consumer factor in the assessment of the legality of a food safety measure, and the possible implications for regulatory sovereignty of individual WTO member states.

3

Agreement on the Application of Sanitary and Phytosanitary Measures (15 April 1994) LT/UR/A-1A/12 [hereinafter: SPS Agreement], first paragraph.

4_{Alan O. Sykes, "Domestic Regulation, Sovereignty And Scientific Evidence Requirements", Trade and Human}

Health and Safety (1st edn, Cambridge University Press 2006).

(6)

To this end the paper aims to answer:

- In how far is the consumer factor considered in the evaluation of a measure

falling within the ambit of the SPS Agreement?

o What, if any, are the implications of excluding this element on the

regulatory sovereignty of an individual WTO member state in case of scientific uncertainty?

Scope

The paper aims to analyze the ability of governments to take into consideration consumer interests and preferences when regulating international trade in foodstuffs. The focus will be on measures regarding the protection of human life and health, i.e. sanitary measures regulated by the SPS Agreement. The departure point of the paper is the opinion that while the scientific requirement is necessary so as to avoid abuse of regulatory sovereignty, it should not be the de facto only relevant factor. A very important factor, presently only marginally included in the assessment, is the consumer factor.

The consumer factor, as used in the current paper, is a non-trade value element. It includes the perception of, and attitudes towards, food-related health risks. This element is the interest of consumers not only to avoid the most fatal, and immediate danger to their life and health, but also the prevention of adverse consequences in the more distant future. It is argues, that especially in cases of scientific uncertainly, inherent to novel foods or products of technological innovations, the interest includes the maximal mitigation of possible adverse effects on consumers’ life and health. Furthermore, the consumer factor can offer the necessary flexibility to the rigid science based assessment when evaluating measures taken with regard to products resulting from modernizing processes and technological advances in the agri-food sector. The main goal of the present paper is to identify and explore the weight of the consumer factor in the assessment of a food safety measure.

Furthermore, the paper can add to the greater research focusing on the relationship between an individual state within the WTO and the WTO as a collective

(7)

of states, by appreciating the tension between the right to self-regulate on one hand and duty to allow the free movement of goods on the other.

Relevance

While trade in food has arguably existed as long as organized society, present-day safety concerns are related to the modernization of the food sector. Besides rapid technological developments in the agriculture and food sector, the modern day regulator needs to deal with foodborne illness outbreaks such as BSE and E-coli. In 2013 the United States Centers for Disease Control and Prevention published a paper analyzing foodborne illnesses in the U.S. between 1998 and 2008. From the available data, the research concluded that while most illnesses were attributed to plant commodities, most deaths were attributed to animal commodities. 6 Due to globalization and modernization of the food industry, the regulator is required to be flexible and proactive, frequently revisiting safety standards and methods of modern as well as traditional production.

The Agreement Establishing the WTO Organization, including the GATT, GATS, SPS Agreement and TBT Agreement came into force in the European Union on the 1st of January 1995.7 While all 28 EU Member States remain members of the WTO in their own right, the Council Decision also extended the WTO membership to the European Union. At the formal meeting of the WTO SPS Committee mid-July 2015 a “record number of trade concerns on food safety, animal and plant health” was registered.8 Amongst others, the US, supported by Argentina, Paraguay, Uruguay, Brazil and Canada, voiced a concern regarding European Union’s proposal to amend the approval procedure for biotech products. Furthermore, the Committee also discussed concerns raised at previous meetings, including the application and modification of the EU regulation on novel foods.

As the incidence of tariffs declines, the significance of non-tariff barriers increases. The SPS Agreement allows states to implement measures in order to

6

J. Painter et al (2013) “Attribution of Foodborne Illnesses, Hospitalizations, and Deaths to Food Commodities by using Outbreak Data, United States, 1998-2008”, Emerging Infectious Diseases, Vol. 19(3), 410

7_{Council Decision 94/2008.EC of 22 December 1994, OJ 1994 L336/1} 8

WTO, “WTO members raise record number of trade concerns on food safety, animal and plant health” (WTO.org – News Item) <https://www.wto.org/english/news_e/news15_e/sps_15jul15_e.htm> accessed 5 November 2015

(8)

protect health and safeguard food safety. Local culture, tradition and attitudes can have a significant impact on food safety and commerce regulation. The danger when implementing such measures, however, is that they might limit trade more than necessary. Thus, the SPS Agreement has set in place constraints limiting this right.9 The effect of these factors is limited by “constitutional and case law and by the Agreement on the Application of Sanitary and Phytosanitary Measures”.10

Dr. Chris Downes argued in his book that it is rather remarkable how “an international agreement, perceived to be of marginal importance by many regulators, has stirred such emotions among legal writers”.11 With the ongoing negotiations of the Transatlantic Trade Investment Partnership, the discussion around SPS measures, as well as TBT measures, is in full vigor.12 The European public has voiced its concerns, suggesting that the TTIP will force the EU to lower food safety standards, and allow the large-scale use of GMOs. Moreover, the EU and the US have a longstanding disagreement when it comes to scientific evidence and safety of modern food technologies, such as hormone treated beef.13 The Beef Hormones dispute is a prime example of the clash of these two agri-food industry players and their opposing attitude. Furthermore, the dispute was a stellar showcase of the difficulties posed by trade liberalization on one hand, and the responsibility towards the consumers on the other.

Methods

The present research was informed by a variety of governmental and WTO documents available on the website of the World Trade Organization. The WTO documents included Agreements, communications, notifications, DSB reports, and minutes from the formal meetings of the SPS Committee. Furthermore, the analysis

9

Frank J. Garcia, "The Salmon Case: Evolution Of Balancing Mechanisms For Non-Trade Values In WTO", Trade and Human Health and Safety (1st edn, Cambridge University Press 2006).

10

Marsha A. Echols, 'Food Safety Regulation In The European Union And The United States: Different Cultures, Different Laws' (1998) 4 Columbia Journal of International Law. 527

11

Chris Downes, The Impact Of WTO SPS Law On EU Food Regulations (Springer 2014), 13

12

European Commission, 'Report Of The Eleventh Round Of Negotiations For The Transatlantic Trade And Investment Partnership, (Miami, 19-23 October 2015)' (2015)

<http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153935.pdf> accessed 8 November 2015.

13

Renée Johnson, "The U.S.-EU Beef Hormone Dispute" (2015) <https://www.fas.org/sgp/crs/row/R40449.pdf> accessed 31 January 2016.

(9)

took account of existing academic research, dealing with the WTO in general, and the SPS Agreement in specific.

The paper will start off by briefly introducing the SPS Agreement. The following section will explore the concept and relevance of consumer factor, as used in the present research. Thereafter, the paper will provide a brief overview and analysis of some relevant case law, i.e. reports of the Panel and Appellate Body of the WTO, including the EC-Beef Hormones dispute. This will illustrate the importance of the social context in food safety matters. Finally, by taking into account existing case-law regarding hormones and biotech, the paper will make some observations regarding the difficulties the mobility of science poses within the static system of WTO Agreements.

(10)

Chapter 1 – An Introduction to the SPS Agreement

The Uruguay Round “brought about the biggest reform of the world’s trading system since GATT was created at the end of the Second Word war”.14 It led to the establishment of the World Trade Organization, and regulation of international trade, as we know it in present day. The Round also resulted in the renegotiation of the Standards Code, and creation of two separate agreements dealing with non-tariff barriers to international trade – the Agreement on the Application of Sanitary and Phytosanitary Measures (hereafter: SPS Agreement) and the Agreement on Technical Barriers to Trade (hereafter: TBT Agreement) – dealing with food safety and product standards. Thus, these two agreements focus on non-tariff related measures with the potential of affecting international trade.

1. Trade Barriers v Sanitary Measures

Prior to the SPS Agreement, the GATT rules regulated measures pertaining to food safety, and human, animal and plant health protection. Up until 1979 Articles I, III, and the exception under XX(b) of the GATT applied to necessary protective measures. During the Tokyo Round, from 1974 to 1979, the WTO Members discussed non-tariff measures and managed to negotiate a series of agreements in this regard - codes. The resulting Standards Code, covering technical barriers to trade, got translated during the Uruguay Round into what is now known as the TBT Agreement. Technical barriers, however, are only one type of non-tariff barriers. Sanitary and phytosanitary measures have the potency to effectively restrict trade. The WTO Members, who agreed that there must be clearer rules regarding these types of measures, recognized this. As a result, the Uruguay Round produced the SPS Agreement. The starting point for both types of measures - TBT as well as SPS – is

14

Wto.org, 'WTO | Understanding The WTO - The Uruguay Round' (2015)

(11)

that they should be based on international standards. Whether a measure is a measure in the meaning of the SPS, or TBT Agreement depends on its purpose.

For a measure to be considered a measure within the meaning of the TBT Agreement: “(a) the measure affects one or more given products; (b) the measure specifies the technical characteristics of the product(s) which allow them to be marketed in the Member that took the measure; (c) compliance is mandatory”.15 Article 1.5 of the TBT Agreement excludes SPS measures from its ambit, by stating that “the provisions of this Agreement do not apply to sanitary and phytosanitary measures as defined in Annex A of the Agreement on the Application of Sanitary and Phytosanitary Measures”.16 Appendix A of the SPS Agreement defines a sanitary and phytosanitary measure as such if it is applied:17

From the definitions above it can be concluded that the two types of non-tariff measures are mutually exclusive; a measure is either a technical barrier, or a sanitary / phytosanitary measure. In terms of food, an example of an SPS measure is setting rules with relating to food hygiene; an example of a TBT measure is a rule requiring that the packaging of a product include a list of ingredients. The focus of the present

15

Annex 1.1 TBT Agreement; application: Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, para. 61

16

ibid, Art 1.5

17_{SPS Agreement (n.3) Annex A, para 1}

“(a) to protect animal or plant life or health within the territory of the Member form risks arising from the entry, establishment or spread of pests, diseases, carrying organisms or disease-causing organisms;

(b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants toxins or disease-causing organisms in foods, beverages or feedstuffs; (c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants, or products thereof, or form the entry, establishment or spread of pests; or

(d) to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of pests.

(12)

research is the first type of measures – food safety measures falling under the SPS Agreement.

2. The Agreement on Sanitary and Phytosanitary Measures

The SPS Agreement is one of the Uruguay Round agreements, which form the basis of the present-day WTO system. The Agreement is consistent with the aim of the WTO, namely, to “inhibit the ability of politicians to provide protection to domestic producers”.18 The SPS Agreement “applies to all sanitary and phytosanitary measures which may, directly or indirectly, affect international trade”.19 According to the Agreement, SPS measures are trade restrictions that should be based on three factors: international standards, science, and temporary precautionary principle in the absence of international standards or scientific evidence. Even though some international standards might be higher than the national standards of many countries, individual members are allowed to apply higher standards than the ones established by the

Codex Alimentarius.

The implementation of such measures is, by its nature, restrictive to free trade. Nonetheless, WTO Members accept such restrictions, if they are necessary for ensuring food safety. Sometimes, however, governments might go beyond what is necessary due to domestic pressures. With tariff barriers disappearing, a legitimate protective measure can easily turn into disguised protectionism. This consideration can be seen as the fundamental motivation behind the negotiation of an agreement regarding food safety measures. Nonetheless, as Sykes points out, a non-discriminatory measure can be just as, or even more, restrictive on trade as a discriminatory one.20

Reflecting upon the negotiation of the SPS Agreement, as well as economic theory, according to Rigod it can be said that the “purpose of the SPS is to secure market access, which may be impeded by domestic politics, manipulating a country’s

18

Nicholas Perdikis, William A. Kerr Shelburne and Jill E. Hobbs, 'Reforming The WTO To Defuse Potential Trade Conflicts In Genetically Modified Goods' (2001) 24 The World Economy. 383

19_{Article 1, SPS Agreement} 20

Alan O. Sykes, "Domestic Regulation, Sovereignty And Scientific Evidence Requirements", Trade and Human Health and Safety (1st edn, Cambridge University Press 2006) [Sykes]

(13)

terms of trade”.21 Thus, if a government chooses for a stricter measure under the SPS Agreement than provided by the international standard, it might be asked to provide scientific justification for the stricter standard. It could thus be argued that by creating a system based on objective science-based criteria, the negotiators of the Agreement intended to limit the effect of producer pressures on national policy.

SPS Committee and the Codex Alimentarius Commission

The SPS Committee and the Codex Alimentarius Commission are two bodies that influence international safety measures in the area of food. The SPS Committee is established under Article 12 of the SPS Agreement, and charged with the task of facilitating and implementing the Agreement.22 The SPS Committee reports to the Council on Trade of Goods.23 One of the tasks of the SPS is to discuss specific sanitary measures that WTO Members regard as encroaching on trade. While the SPS Committee Decisions are not binding, they serve as assessment methods for WTO behavior.24 The SPS is also given the task of monitoring the harmonization and use of international standards.25

The Codex Alimentarius Commission is one of the three organizations entrusted with setting international standards with regard to SPS measures. The other two are the World Organization for Animal Health and the Secretariat of the International Plant Protection Convention. The Food and Agriculture Organization and the World Health Organization established the Codex Alimenarius Commission (hereafter: CAC). The CAC has “a dual function of ‘protecting consumers’ health and ensuring fair practices in the food trade”26, “and promoting coordination of all food standards work by international governmental and non-governmental organizations”.27 It seems from this description that the consumer is the central consideration when it comes to international standard setting. Yet, the CAC

21

Boris Rigod, 'The Purpose Of The WTO Agreement On The Application Of Sanitary And Phytosanitary Measures (SPS)' (2013) 24 European Journal of International Law, 529

22

SPS Agreement (n.3) Art 12.1, 12.2.

23

ibid, Art 12.7.

24

Panel report, US – Certain Measures Affecting Imports of Poultry from China, WT/DS392/5, para. 7.136

25

SPS Agreement (n.3) Art 12.1, 12.4.

26_{European Commission (n12) 21.)} 27

Jürgen Kurtz, "A Look Behind The Mirror: Standardisation, Institutions And The WTO SPS And TBT Agreements" (2007) 30 UNSW Law Journal. 518

(14)

Commission has been criticized for leading their work process according to producer interests, who lobby via the member state governments.28

The Codex Alimentarius (hereafter: Codex) is a collection of all internationally recognized standards and practices relating to food production and safety. It includes general standards on food labeling, and risk assessment. The Codex is recognized by the WTO as a reference point for international standards.29 When a measure is being challenged, states must justify their departure from the established standard. Thus, while strictly speaking a recommendation, in reality a standard set out in the Codex is the basis for national legislation.

3. Overview of the Relevant SPS Agreement Provisions

The following section will outline some of the SPS Agreement provisions, focusing on Articles 2 and 5. The science element in these two articles gives the SPS Agreements its special character. In fact, according to Gruszczynski, it can be argued that the science-based provisions of Articles 2.2, 5.1 and 5.7 are the crux of the SPS Agreement.30

Article 2.1 acknowledges the right of the contracting parties to “take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of the Agreement”. In exercising this right, States must observe the requirements laid out in paragraphs 2 and 3 of Article 2. The scrutinized measure needs to be necessary for its purpose, based on scientific principles, and not maintained without scientific evidence.31 Furthermore, the measure must not be applied in a discriminatory manner, or “be applied in a manner which would constitute a disguised restriction on international trade”.32 Clearly, according to Article 2, the scientific element is the departing point of any assessment.

28

ibid.

29

SPS Agreement (n.3) Preamble, 6th recital

30

Lukasz Gruszczynski, Regulating Health And Environmental Risks Under WTO Law (Oxford University Press 2010). 219

31

SPS Agreement (n.3) Art 2.2.

(15)

Article 3 suggests that individual Member States harmonize SPS measures by basing them on “international standards, guidelines or recommendations”.33 Should the individual Members decide on more stringent measures, however, according to paragraph 3 of the article these should be scientifically justified.34 When Member States wish to enforce stricter sanitary or phytosanitary measures, they need to observe the provisions of Article 5 of the SPS Agreement, such as Article 5.5, allowing for a more stringent regulation, if applied consistently, and warranted by the available data. It is not clear from the SPS Agreement what would constitute an adequate scientific justification on which a health-related measure can be based.

According to paragraphs 1 and 2 of Article 5, “Members shall ensure that their sanitary or phytosanitary measures are based on an assessment [of the risk]”,35 in which they “shall take into account available scientific evidence”.36 This can be regarded as the rule for setting SPS measures. Paragraph 4 of Article 5 illustrates the delicate balance between safety and trade interests. According to the paragraph, “Members should, when determining the appropriate level of sanitary or phytosanitary protection, take into account the objective of minimizing negative trade effects”.37 Downes points out that these provisions are a clear coercion of the national regulatory freedom.38

Article 5.7 of the SPS Agreement allows for temporary precautionary measures in the absence of scientific evidence. Nonetheless, the implementation of such measure is provisional, and the individual state “shall seek to obtain the additional information necessary for a more objective assessment of risk and review the [measure] within a reasonable period of time”.39 Thus, paragraph 7 provides an exception to the rule set out in first two paragraphs of Article 5. Nonetheless, this expectation is a conditional one.

The Appellate Body held in Japan – Apples that “the application of Article 5.7 is triggered not by the existence of scientific uncertainty, but rather by the insufficiency of scientific evidence”.40 In order to maintain a provisional measure, 33 ibid, Art 3.1. 34 ibid, Art 3.3 . 35 SPS Agreement (n.3) Art 5.1 36 ibid, Art 5.2. 37 ibid, Art 5.4. 38_{European Commission (n 26) 8.} 39 SPS Agreement (n.3) Art. 5.7.

(16)

the four requirements posed by the Article must be met. According to the Appellate body in Japan – Agricultural Products II, the requirements must be met cumulatively.41 The requirements for the provisional measure are:42

Looking at the core provisions mentioned above, it can be argued, that the role of the SPS Agreement is to balance the need to ensure that the consumers are getting safe food on one hand, with the maintenance of the purpose of the WTO – the liberalization of international trade – on the other. In EC-Hormones the Appellate Body, confirming Panel’s stance, stressed that Articles 2.2 and 5.1 should always be read together, as “the elements that define the basic obligation set out in Article 2.2 impart meaning on Article 5.1”.43 Considering the text of the Agreement, it is clear that the scientific element is a very significant factor when assessing a measure. Nonetheless, recognizing the need to accommodate safety concerns of individual states when scientific evidence is insufficient, Article 5.7 the Agreement allows contracting parties to set and enforce measures necessary to guarantee the safety of food. It can be argued, however, that since this is conditional on a temporal application, indeed in the absence of scientific evidence, trade liberalization outweighs any other possible factors.

41_{ibid, para 89.}

42

ibid.

43_{Appellate Body Report, EC-Hormones (WT/DS26/AB/R) para. 180}

Pursuant to the first sentence of Article 5.7, a Member may provisionally adopt an SPS measure if the measure is:

(1) Imposed in respect of a situation where “relevant scientific information is insufficient”; and

(2) Adopted “on the basis of available pertinent information”.

Pursuant to the second sentence of Article 5.7, such a provisional measure may not be maintained unless the Member which adopted the measure;

(1) “seek[s] to obtain the additional information necessary for a more objective assessment of risk”; and

(2) “review[s] the … measure accordingly within a reasonable period of time”.

(17)

4. Dispute Settlement

Pursuant to Article 11 of the SPS Agreement, the dispute settlement provisions of Articles XXII and XXIII of GATT 1994 apply to SPS measures. Article XXII of the General Agreement on Tariffs and Trade (hereafter: GATT), titled ‘Consultation’, is a general provision, and starting point for the settlement of disputes related to provisions of WTO instruments. Article XXIII GATT, ‘Nullification and Impairment’ takes a step further. It sets out a system dealing with situations in which a Member feels that a “benefit accruing to indirectly or indirectly under [the] Agreement is being nullified or impaired or that the attainment of any objective is being impeded”.44

The rules regarding the settlement of disputes covered by the SPS Agreement are further elaborated on in Understanding on rules and procedures governing the settlement of disputes (hereafter: DSU).45 Article 1 of the DSU defines the competence of the WTO Dispute Settlement Body (hereafter: DSB). Pursuant to Article 2 DSU, the DSB has “the authority to establish panels, adopt panel and Appellate Body reports, and authorize suspension of concessions and other obligations under the covered agreements”.46 The covered agreements are listed in Appendix I of the DSU.47 Thus, once adopted, the reports of the Panel and the Appellate Body are binding on the parties, and if not observed can lead to sanctions. In practice, the dispute settlement institutions of the WTO function as an international trade court.

4.1 Articles 2 and 5 of the SPS Agreement clarified

Earlier, in section 3, the chapter outlined the textual provisions of SPS Articles 2 and 5. Rather unsurprisingly, the requirements of the SPS Agreement, which the Members need to observe when setting sanitary or phytosanitary measures, are not unambiguous. Fortunately, the dispute settlement cases since the entry into force of

44

Article XXIII:1 GATT 1994.

45_{SPS Agreement (n.3) Art 11.} 46

Article 2:1 DSU

(18)

the SPS Agreement have shed some light on the meaning of certain provisions. The following section will delve into the meaning of SPS Agreement provisions that can be derived from disputes examined by the Panel and the Appellate Body.

When a Member implements measures that “conform to international standards”48, there is a presumption of consistency with the Agreement.49 If the State, however, choses for a stricter measure, it must be preceded by an adequate risk assessment.50 As Downes points out, “the Agreement establishes a fundamental tension between, on one hand, the national regulator’s freedom to choose the measures deemed appropriate, and on the other, a notable scientific evidentiary burden”.51 This is reflected in the various paragraphs of Article 5.

The analysis of SPS Article 5.1 is twofold. First, it shall be examined if there was a risk assessment appropriate to the circumstances. In Australia-Salmon the Appellate Body indicated three core elements of risk assessment: (1) identification of the diseases and their potential consequences; (2) likelihood of materialization of the event that the measure aims to prevents; (3) likelihood of materialization if the prospective SPS measure is applied.52

Second, it should be examined whether the scrutinized SPS measure was based on said assessment.53 The Panel clarified in US – Poultry that “where a measure is not based on a risk assessment as required by Article 5.1 and 5.2 of the SPS Agreement, this measure is presumed not to be based on scientific principles and maintained without sufficient scientific evidence”.54 According to the Appellate Body in

EC-Hormones, the requirement to be “based on a risk assessment” implies a rational

relationship between the risk assessment and the measure.55

Furthermore, the SPS case law sheds some light on the relationship between the different provisions of the SPS Agreement. In EU – Biotech the Panel noted that a claim under Article 2.2 is a consequential claim. It held that a claim under Article 2.2, based on the existence of a breach of Article 5.1, will be unsuccessful if and the act of

48

49

Appellate Body report, Japan – Measures Affecting Agricultural Products, WT/DS76/AB/R) para 170.

50

EC-Hormones (n 43) para. 177.

51

supra. n.27, at 10

52

Appellate Body report, Australia-Salmon, (WT/DS18/AB/R) para. 121

53_{US-Poultry (n 24)} 54

ibid, para. 7.201

(19)

a respondent was not inconsistent with Article 5.1.56 In case of a violation of Article 5.1 and 5.2, a violation of the more general Article 2.2 provisions can be presumed.57 In EC-Hormones, the Appellate Body used Article 2 as the starting point for the analysis of a claim under Article 5.58. However, in Australia-Salmon the Panel deemed beginning with Article 5 as more fitting, as it provided “for more specific and detailed rights and obligations” than Art.259. Consequently, it can be argued that in the assessment of the measure, the starting point is the more specific provision.

As established in the first introductory statement, and underscored in Article 2, the intention of the SPS Agreement’ is to ensure that safety measures are not disguised restriction. In Australia – Salmon the Panel identified three ‘warning signals’ indicating that a SPS measure is a disguised restriction on international trade.

Furthermore, with regard to “assessment, as appropriate to the circumstances” in Article 5.1, the Panel clarified in EC – Biotech that “a change in relevant circumstance could in some cases render a completed risk assessment no longer ‘appropriate to the circumstances’”.60 It could be argued that this can be seen as an indication of a degree of flexibility of risk assessment, and the ability of the Agreement to accommodate the changing environment in the food industry.

Regarding to the exemption to the rule set out in Article 2, the Panel confirmed in Japan-Agricultural Products II that a measure maintained without scientific evidence is not a violation of Article 2.2 per se, provided that it fulfills the requirements set by article 5.7.61 Moreover, the difference between the implications of Article 5.1 and 5.7 can be illustrated by the observation of the Appellate Body in

Australia-Apples: “If a Member chooses to base SPS measures on a risk assessment

[…] it must have made the preliminary determination that the relevant scientific evidence is sufficient to perform a risk assessment. If, however, the member considers that scientific evidence is insufficient to perform a risk assessment, it may instead choose to take provisional SPS measures based on Article 5.7 of the SPS

56

Panel report, EC-Approval and Marketing of Biotech Products, para. 7.1757

57 Australia-Salmon (n 52) para. 8.52. 58 EC-Hormones (n 43), para 250. 59 Australia-Salmon (n 52) para. 8.48. 60

Panel report, EC-Biotech, para. 7.3032 and 7.3033

(20)

Agreement”. 62 Furthermore, the Appellate Body in US-Continued Suspension reasoned that: 63

Thus, the individual state may take a provisional measure, if there is insufficient scientific evidence. Consequently, when considering provisional measures, it must be first assessed whether there is sufficient scientific evidence. If that is the case, a risk assessment must be performed, forming the basis of the intended measure.

4.2 Risk and Precaution

In the attempt of defining ‘risk assessment’, the Panel in Australia-Salmon pointed out that the phrase “as appropriate to circumstances” warrants the assessment of the relationship between the scrutinized measure and risk assessment on a case-by-case basis, taking into account the products and its circumstances.64 Later, the Appellate Body held that “risk assessment under Article 5.1 is not only risk ascertainable in a science laboratory operating under strictly controlled conditions, but also risk in human societies as they actually exist, in other words, the actual potential for adverse effects on human health in the real world where people live and work and die”.65 Furthermore, the Appellate Body pointed this out that the phrase “as appropriate to

62

Appellate Body report in Australia-Apples, para. 230

63_{Appellate Body Report, United States – Continued Suspension of Obligations in the EC – Hormones Dispute,}

WT/DS320/AB/R, para. 674

64

Australia-Salmon (n 52)para. 8.71.

65_{EC-Hormones (n 43) para. 187.}

[…] where the relevant scientific evidence is sufficient to perform a risk assessment, as defined in Annex A of the SPS Agreement, a WTO Member may take an SPS measure only if it is "based on" a risk assessment in accordance with Article 5.1 and that SPS measure is also subject to the obligations in Article 2.2. If the relevant scientific evidence is insufficient to perform a risk assessment, a WTO Member may take a provisional SPS measure on the basis provided in Article 5.7, but that Member must meet the obligations set out in that provision.

(21)

circumstances”, enshrined in Article 5.1 provides for a certain level of flexibility when assessing an SPS measures.66

The concept of precaution, or the precautionary principle as such, is not explicitly mentioned in the text of the SPS Agreement. Nonetheless, the Appellate Body pointed out in its EC-Hormones report that even though the precautionary principle is not explicit in the wording of Article 5.7, it is reflected in Article 5.7.

Yet, it also stressed that “the precautionary principle does not, by itself, and without a clear textual directive to that effect, relieve a Panel from the duty of applying the normal (i.e. customary international law) principles of treaty interpretation in reading the provisions of the SPS Agreement”.67 Later, in its

US/Canada – Continued Suspension cases reports, the AB added in that the four

conditions of Article 5.7 “must be interpreted keeping in mind that the precautionary principle finds reflection in [the provision]”.68 While shedding light on Article 5.7, these clarifications also underscore the importance of context.

5. Seeing the greater picture

Without disregarding the importance of the implications of any other case that has come before the Appellate Body, it can be asserted that the Beef Hormones case is probably the most notorious dispute case in the discipline of international trade law. It centers on a modern issue in the food sector – the use of hormones. The case aggregated a lot of attention, involving regulators, producers and consumers alike.

Besides the actual findings of the Appellate Body, the significance of the

Hormones cases lies in the societal context. The societal context might be of most

relevance to the insufficiently analyzed precautionary principle. A lot of the commotion stemmed from the discovery of the adverse effects of the DES hormone in the 1980s. When the Uruguay round instruments entered into force in the European Union, there was a prohibition on the import of hormone treated beef.69 The first EU Regulation regarding the prohibition of hormones dates back to Regulation 66 Ibid, para. 129. 67 EC-Hormones (n 43) para.124. 68_{ibid, para. 124.} 69

Council Directive 81/602/EEC of 31 July 1981, OJ1981 L222/32, Council Directive 88/146/EEC of 7 March 1988, 88/299/ECC of 17 May 1988, IJ 1988 L128/36

(22)

81/602/EEC in 1980, which was later expanded to a wider range of hormones with Regulation 88/146/EEC. These instruments not only prohibited the use of the listed hormones, but also the import of hormone treated beef from third countries. In 1996 the United States and Canada brought parallel proceeding before the WTO DSB, regarding the ban on hormone fed beef. The U.S. claimed that the measure, i.e. ban, imposed by the European Community had no scientific basis, violating the SPS Agreement, and was based on protectionism.70 In the case, the U.S. negotiators had the idea that “the objectivity of science would counter the subjectivity […] of culturally based food safety measures”, and that consumer influence should be limited to the nature of the measure, and not “at the stage of determining whether there is a food safety risk”.71 However, recalling Appellate Body’s view in the Hormones case, the relevant risk is not only risk as observed in a laboratory, but also risk in the real world. At the risk of interpreting the AB’s opinion too broadly, it could be asserted that the risk outside of the laboratory would also include the perception of risk by the consumers.

Article 5.7 allows for a measure not based on scientific evidence, if such evidence is not present. Thus, a measure taken under this provision is more precautionary than preventive. An interesting aspect of the Hormones case is that the Appellate Body had to address the relationship between the precautionary principle and the SPS Agreement. When arguing its position, the EC substantiated its imposed measures by taking recourse to the precautionary principle. By taking the precautionary approach, the EC placed “the attainment of a high level of consumer protection before the commercial interests”.72 Favorably towards this position on precaution, the Appellate Body pointed out that with regard to measures maintained without sufficient scientific evidence, the Panel “should bear in mind that responsible, representative governments commonly act from perspectives of prudence and precaution where risks of irreversible, e.g. life-terminating, damage to human health are concerned”.73 Ultimately, and unfortunately, however, the relationship between the precautionary principle and the SPS Agreement has not been entirely deciphered. Also, the Appellate Body did not deal with the role of the consumer.

70

Report of the Panel, EC-Hormones, 18 August 1997, para. 4.17

71

Marsha A. Echols, 'Food Safety Regulation In The European Union And The United States: Different Cultures, Different Laws' (1998) 4 Columbia Journal of International Law 541

72

Panel report, EC-Hormones, para. 4.105

(23)

The principle reoccurred in the consecutive US/Canada – Continued Suspension cases. In its report, the Appellate Body clarified the purpose of Article 5.7. In the Hormones case, the AB rejected EC’s scientific studies, arguing that they were not sufficiently specific and did not address the specific risk, and thus concluded that there was no risk assessment reasonably supporting the measure implemented by the EC. With regard to Article 5.7, the AB has set out four obligations, two of which need to be fulfilled before applying a provisional measures, and the other two once the measures has been taken. The first two are that there is not sufficient scientific information, and it must be adopted on the basis of available pertinent information. The other two, which must be met after the adoption of the measure, are that the member seeks to obtain information for an objective assessment, within a reasonable period of time.74

In US/Canada – Continued Suspension the AB pointed out, however, that the four requirements must be interpreted with the precautionary principle in mind, as “in emergency situations […] a WTO Member will take a provisional SPS measure on the basis of limited information and the steps it takes to comply with its obligations to seek to obtain additional information and review the measure will be assessed in the light of the exigencies of the emergency”.75 In the case, the AB once again points out the importance of performing a risk assessment.76 Furthermore, while acknowledging that scientific evidence might not be available, the AB states that “that the WTO Member has chosen to set a higher level of protection may require it to perform certain research as part of its risk assessment that is different from the parameters considered and the research carried out in the risk assessment underlying the international standard”.77 Thus, possibly appreciating the difficulties of reacting to changing circumstances in the food industry.

Moreover, the AB held that risk assessment cannot be isolated from the appropriate level of protection.78 This is an intriguing statement, since while consistent with the AB’s opinion in the Hormones case that risk cannot be only assesses in a laboratory, it also possibly cautiously opens the door for the consumer

74

US/Canada - Continued suspension (n 63) para 676.

75 ibid, para 680. 76_{ibid, para. 685.} 77 ibid 78_{ibid, para.534}

(24)

factors not only to be considered as an afterthought for mitigation, but as a strong facto in the evaluation of a measure.

Overall, it is accepted that states can take measures under the precautionary principle. Yet, the level of which they are free to do so, especially in the absence of scientific evidence is note clear. It seems that while it is accepted that a good government protects its citizens, the margin of appreciation is not too large. The state implementing a measure more stringent that the one set by the Codex is subject to vigorous evaluation. Despite possible appreciation of other elements, it seems that the scientific element is the most heavily weighing one. Hence, under the current status the state implementing a measure stricter than the international standard, must equip itself with some kind of scientific basis, or at least show its active pursuit of such evidence.

(25)

Chapter 2 – The Consumer Factor

Regulating the food industry is a duty of the legislator towards the consumer. The government is responsible for making sure that the health of its citizens is protected. However, besides health issues, certain measures can be responses to consumer pressures. The health and safety provisions in the Treaty of Amsterdam reflect these pressures.79 Consumer behavior can have detrimental effect on the food industry itself. An example of this is the collapse of the beef market as a consequence of the BSE crisis in Europe. The BSE crisis influenced policy on domestic and European Union level.

The flowing section will look at the treatment of non-trade and trade values in the WTO system. Thereafter, it will explore the consumer factor not only as a non-trade value element, but also as a non-trade value element due to its special character and impact. In Section 3, the analysis will turn to the role of the consumer in a modernizing food industry. Finally, Section 4 will argue that the individual WTO Member state level is the most efficient level to regulate a continuously modernizing food industry.

1. Non-trade values in the WTO

The crux of the research question is the assumed collision of trade and non-trade values when evaluating a measure. Trade values, as defined by Andersen are “ideas of economic welfare and efficiency where the market serves as means to ends”.80 Already from the beginning of the GATT, the line between the trade and non-trade values was not undisputed. Thus, the GATT dispute settlement mechanism was created, later the WTO dispute settlement mechanism. According to the Appellate Body report in China – Raw Materials, the WTO Agreement as a whole reflects the

79

Vos, E. (2000) EU Food Safety Regulation in the Aftermath of the BSE Crisis, Journal of Consumer Policy, Vol. 23, p.235

80

H. Andersen, "Protection Of Non-Trade Values In WTO Appellate Body Jurisprudence: Exceptions, Economic Arguments, And Eluding Questions" (2015) 18 Journal of International Economic Law. 383

(26)

“balance struck between trade- and non-trade-related concerns”.81 To this day, the WTO DSB plays an essential role in the assessment of measures taken by individual Members.

When assessing a measure, however, the arbiters tend to choose the trade values over the non-trade values. According to Andersen, “non-trade values have stronger roots in other international organizations than in the WTO”.82 While the UN, the WHO, or the ILO in fact pursue values such as saving future generations from the horrors of war, equality between genders and nations, protection of health of all peoples, social justice, these rather intangible values are only relevant for the WTO insofar they have an “explicit basis under one of the [WTO] exceptions”.83 Nonetheless, as Anderson points out, “the AB has the constitutional and interpretative space for a wider inclusion of international treaties which can provide for a more complete picture of WTO law in the context of other values”.84 There is thus space for the DSB to consider other non-trade factors, such as the consumer factor.

Moreover, it can be argued that the tendency to favor trade values over non-trade values has two obvious reasons. Firstly, the objective of the WTO – non-trade liberalization – is by comparison much more susceptible for definition or even quantification than more ideologically based values. Secondly, as the WTO is an organization with an economic focus, it is understandable that it would favor the liberalization of trade, i.e. the trade value in the assessment equation.

2. The Consumer Factor

The focus of the research question underlying the present analysis is the non-trade value of consumer interest, or consumer factor. The concept encompasses consumers’ preferences and attitudes with regard to food, not necessarily based on hard science. Borrowing a definition adopted by Brunsø et al in their research regarding values and food-related lifestyle, human values can be seen as “abstract concepts or beliefs

81

WTO Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials (China – Raw Materials), joined cases WT/DS394, 395, and 398/AB/R, adopted on 22 February 2012, para 306

82_{Andersen (n 80) 388.} 83

ibid, 389.

(27)

representing desired goals or end-states”.85 Certain consumer choices, however, have more to do with the lifestyle of a consumer rather than life and health safety issues. When referring to consumer preferences and interest, the present research is not concerned with lifestyle choices regarding food preference, such as veganism or vegetarianism, or religious food restrictions, such as halal or kosher diets.

Consumer factor in the present paper is interest related to the food safety and health, i.e. the requirement that whatever the foodstuff might be, it is not harmful to the health of its consumer. Adopting Chen’s reference to de Jonghe et al, “consumer confidence in food safety can be defined as a general expectation on the part of consumers that the foods they buy are safe to eat and will not have any negative effects on their health or the environment”.86 This paper assumes that food safety is not a variable that distinguishes between products. Thus, the consumer interest in this paper is not about individual food related lifestyle choices, such as between organic and non-organic product, but the desire to minimize hazardous consequences when the risk is scientifically uncertain.

The consumer factor is of great importance when it comes to regulation of the food industry. Consumer attitudes are reflected in their behavior. According to Dr. Chung L. Huang’s research regarding purchasing behavior, “consumers’ perceptions of food-related risks are often skewed from reality and at odds with scientific evidence and expert opinion, and possibly regulatory concerns”.87 Furthermore, Yeung and Morris, Bauer was the first academic to propose that “it is not the objectivity of risk that motivates consumer behavior, but subjective impressions of it, even if consumers could calculate correctly the risk involved”.88 If the argument for avoiding stringent food safety regulation as to aid trade flows and competitiveness, there must be a place for the consideration of the willingness of consumers to buy a product. Should consumers actively avoid a certain type of product, they would effectively influence the trade of that commodity. Alternatively, the products not having the avoided characteristic would have a competitive edge over the ones that

85

Karen Brunsø, Joachim Scholderer and Klaus G. Grunert, "Testing Relationships Between Values And Food-Related Lifestyle: Results From Two European Countries" (2004) 43 Appetite.195

86

Mei-Fang Chen, "Consumer's Trust-In-Food-Safety Typology In Taiwan: Food-Related Lifestyle Matters" (2011) 13 Health, Risk & Society. 504

87_{Chung L. Huang, "Simultaneous-Equation Model For Estimating Consumer Risk Perceptions, Attitudes, And}

Willingness-To-Pay For Residue-Free Produce" (1993) 27 Journal of Consumer Affairs.392

(28)

do. In either case, the consumers and their views, even though often subjective, and not based on rock solid science, affect the implementation of the WTO trade value.

Furthermore, it can also be argued that due to its special character, the consumer factor should be given a bigger role in the assessment of food related measures seeking the protection of human life and health. SPS Article 2 requires an imposed measure to be necessary, and based on sufficient scientific evidence. Article 3 standard higher than the one set out in the Codex must be scientifically justified, or determined appropriate in accordance with Article 5. Article 5 requires measures to be based on an assessment of risks, and take into account “available scientific evidence; relevant processes and production methods; relevant inspection, sampling and testing methods; prevalence of specific diseases or pests; existence of pest — or disease — free areas; relevant ecological and environmental conditions; and quarantine or other treatment”.89 Moreover, even if the in case of scientific evidence being uncertain, Article 5.7 poses an obligation on the Member state to “seek to obtain” evidence.90 Finally, when it comes to foods derived form modern biotechnology, the interests of consumers are only considered when it comes to risk communication.91 It could be suggested that the importance of the scientific element in the SPS Agreement is due to its objectivity and reliably, as opposed to other factors such as consumer attitudes.

However, the scientific element is rather rigid, and often not capable of reacting to changing circumstances in the real world in a timely fashion. The scientific process implies the collection and analysis of data, which is traditionally a rather time-consuming affair. Consumers’ perceptions of risk are possibly unpredictable, yet a much more organic element with a great influence on trade. Yet, while science factor is the leading consideration in the assessment, the consumer factor remains overlooked.

3. Consumers’ perception of risk in a modernizing food industry

It can be argued that consumers’ skepticism is an inevitable effect of the industrialization of the food industry. Despite living in the Age of Information, the

89

90_{ibid, Art 5.7.} 91

Codex Alimentarius, Principles for the risk analysis of foods derived form modern biotechnology, CAC/GL44-2003

(29)

rapid and sophisticated advances in technology and food production methods have left the consumer not sufficiently informed, causing that “consumer food safety perceptions are characterized by much uncertainty and skepticism”.92 The lack of information translates into a greater perceived risk from the consumers’ point of view.93 However, information does not equal knowledge, and is also does not always equal scientific facts.

Consumer preferences are shaped by many factors. One of these factors includes media, “both traditional and social media that tend to play on fears to attract readership”.94 Media often takes an angle on issues, which is aimed at creating sensational segments, rather than providing information. Nonetheless, their reach is worldwide and their influence is undeniable. With regard to risk, it has been argued that media hype is likely to increase the perception of risk, as well as the consequent demand for mitigation thereof by the government.95 Responding to citizens’ demands, however, is often challenging for local governments, and regional, or in the case of WTO global, policy makers.

Consumers’ demands can be often driven by the fear of the unknown. This is problematic for policy makers, as policy cannot be based on the emotions of the citizens. There is a difference, however, between the uncertainly of a consumer, and the uncertainty of science. According to the research conducted by Chen, “biotechnological innovations such as the use of additives, coloring agents and pesticides and their residues in foods, along with the marketing of GM foods are perceived to be associated with long-term and unknown effects on health”.96 Furthermore, according to Yeung and Morris, “people tend to perceive that risks that are familiar to them are less than those that are unfamiliar”.97 This is especially the case if the consumers believe that the risks are also unknown to scientists or policy makers, or not shared with them.98

Consequently, the problem with relying entirely on a scientific and technical approach to risk is that for many hazardous situations “the identities and relative

92

Chen (n 86) 506

93

Ruth M.W. Yeung and Joe Morris, "Food Safety Risk" (2001) 103 British Food Journal.175

94

Stephen Goldson, Peter Gluckman and Kristiann Allen, "Getting Science Into Policy" (2014) 9 J. Verbr. Lebensm.7

95

Yeung and Morris (n.93) 177.

96_{Chen (n 86) 507.} 97

Yeung and Morris (n.93).176

(30)

probabilities of outcomes are not fully known, and therefore, by definition the context is one of ‘uncertainty’ rather than ‘risk’”.99 Individuals who have had an experience with a “hazard tend to focus on the severity of possible consequences more than the probability of occurrence when they assess the significance of exposure to risk or uncertainty”.100 In his research, Chen finds that “trust can be conceptualized as being a combination of rational thinking (cognitive process) and feelings, instinct and intuition (affective influences), and is often dependent on past experiences”.101 Thus, if the unknown that the consumers fear is a scientific uncertainly, the policy maker needs to consider potential adverse effects, as well as the results of the worst-case scenario. Should the worst-case scenario realize itself, the policy maker will be left with a distrustful citizenry.

Furthermore, the acceptance of risk has been observed as higher where the benefits of a new technology outweigh the possible hazardous consequences. Yeung and Morris provide a good illustration by comparing mobile phones and GM technology. While in both cases the long-term consequences are unknown, consumers believe that the benefits are rather small when it comes to GM, and quite large when it comes to mobile phones. Consequently, while GM is still struggling to be accepted as a novel method in the agri-food industry, mobile phones enjoyed a quick welcome and uptake worldwide.

Finally, according to research, consumers perceive a risk to be bigger in situations, which they perceive as outside of their control.102 The consumer allocates individual responsibility for situations, which can be controlled by the individual. This assumption is also supported by an outcome in the research conducted by Miles and Frewer, who found that “increased perception of perceived personal risk under conditions of uncertainty was associated with decreased perceptions of personal control over exposure, and reduced perceptions that current laws and regulations were adequate”.103

With regard to a negative consequence of a high-fat diet, for example, the consumer can make a purchasing choice, and commit to a more balanced and

99

ibid, 171.

100

Yeung and Morris (n.93)172.

101

Chen (n 86) 505.

102_{Yeung and Morris (n.93)} 103

Susan Miles and Lynn J. Frewer, "Public Perception Of Scientific Uncertainty In Relation To Food Hazards" (2003) 6 Journal of Risk Research.

(31)

nutritious diet. In the aforementioned research conducted by Miles and Frewer, regarding Salmonella the consumers made no difference between individual and societal responsibility to protect. This is understandable, as there are some ways in which the consumer can control the risk, yet not completely. The hazardous effect of the foodborne disease can be somewhat controlled by a purchasing choice, by not buying the susceptible product from a questionable source, or by a choice in the method of preparation - thermic processing of the raw product before consumption, and avoiding cross-contamination. Nonetheless, this would not guarantee full protection.

The prevention of hazardous outcomes in the case of pesticides, BSE and GM seems to be a less controllable by the individual consumer, and needs to be controlled at an earlier stage in the chain of production. The only measure the individual consumer can take in these cases is to completely abstain from buying a susceptible product. Yet, this extreme measure still does not guarantee a full protection. Thus, the government also needs to take measures, such as prescribing hygiene requirements for farms, or the education in basic hygiene for people working with animals and raw produce. Thus, in these situations of greater perceived risk, consumers demand a greater protection from the policy makers.

4. Regulation of the Modernizing Food Industry

Consumer concerns relating to food safety and health risks are part of modern industrial society. As Chen rightly points out, “safety of food is commonly recognized as a credence […], and a non-negotiable product attribute in the consumer’s daily food purchase decision-making process”. 104 Policy makers need to address consumers’ concerns, and translate them into governmental policies.

While there is an undeniable benefit to the harmonization of measures on the international level, the resulting harmonized measures are not always responsive to more local needs. This creates tension between a local, or regional, and WTO pursuit of objectives. Barling and Lang point out that the “tension between the global and the regional levels has become critical over the past year, with Europe taking an

(32)

increasingly cautious position, mindful of member states’ national public opinion, while world regulation passes into the World Trade Organization”.105 The issue stems form the fact that even on a more regional level, policies regarding the public health and safety are often inconsistent. Barling and Lang exemplify this inconsistency by referring to the EU policy on genetic modification, which was driven by “the EU wanting to back some of Europe’s largest companies’ diversification into biotechnology on one hand, while increasingly having to be responsive to calls to protect consumers and the environment on the other hand”.106 Accordingly it is safe to suggest that the disagreement is a consistent with the disagreements on a more regional level. Subsequently, it can also be suggested that regulation take place primarily on the individual state level.

Consequently, also taking into consideration Section 3 of the Chapter, there are compelling reasons as to why the government should be the primary agent dealing with safety measures. Firstly, top-down governmental regulation is more efficient on a large scale than individual consumer choices. Borrowing Keiser’s quote of a public health advocate: “Pasteurization is more simple than each person boiling his own milk”. 107 Ebasha and Riggs also point out that “government regulation, if implemented properly, could improve social welfare”. 108 On one hand, the government needs to consider the costs of a potential negative outcome. In simple terms - having sick people is expensive. This can be illustrated, for example, by the high financial strain of obesity on the healthcare system. On the other, the government is best fit to manage the consequence of realized health risks.

Secondly, the government can mitigate the information asymmetry between the producers and consumers. Dr. Elamin Elbasha and Dr. Lynn Riggs suggest that the producers’ motivation to provide the safety level required by consumers is diminished due to information asymmetry between the consumer and the producer.109 Therefore, the government can make a more informed and beneficial decisions for the consumers’ life and health. Moreover, in terms of implementation, an obligatory

105

D Barling, "Guest Editorial. European Public Policy On Genetic Modification Of Agricultural Products And Food. Lessons To Be Learned Over Balancing Public Health, Consumer Confidence And Commerce" (1999) 9 The European Journal of Public Health.164

106

ibid, 163.

107

K. Robert Keiser, "The New Regulation Of Health And Safety" (1980) 95 Political Science Quarterly.409

108_{Elamin H. Elbasha and T. Lynn Riggs, "The Effects Of Information On Producer And Consumer Incentives To}

Undertake Food Safety Efforts: A Theoretical Model And Policy Implications" (2003) 19 Agribusiness,30

(33)

measure implemented by the authorities on the producer for a benefit of the consumer is always more likely to be efficient than the execution of a voluntary measure by the producer for the benefit of the consumer.

Finally, as mentioned in the previous Section, depending on the level of control they can exercise, consumers make a distinction when allocating the responsibility to deal with different types of uncertain situations. Miles and Frewer conducted a research into public risk perceptions in response to uncertainty, and found that according to the participants in case of “genetic modification, pesticides and BSE society was perceived to have more responsibility than individuals themselves” to protect from resulting risks, as opposed to salmonella and high-fat diets.110 Moreover, according to Miles and Frewer, “people expect regulatory action to mitigate the risks of potential hazards even under conditions of uncertainty”.111 Thus, while consumers want to be informed in order to make informed individual choices, they do expect that certain hazardous situations would be handled on a bigger, society-wide level. Considering possible cultural differences between states, the most efficient regulation is that of a local government.

To close off the Chapter, it can be summed up that, when it comes to new food technologies, such as GM, consumer perceptions can be grounded on very subjective emotions such as fear and worries, or can be based on past experience. Consequently, the calculation should not involve the opposition of science on one hand, and consumer factor on the other. Since science by itself cannot be the sole determinant of policy, the correct method would involve opposing trade liberalization on one side, with factors such as science and consumer interest factor on the other. In other words, it should not be an appraisal of scientific evidence versus consumer preference, but rather balancing trade with non-trade factors. In the case of scientific uncertainty, the consumer interest / factor should be decisive.

110

Miles and Ferwer (n 103) 276.

Food for thought and thoughts on food : the consumer factor in a WTO world