The Wisdom of the US Challenge to the EU in the WTO

The Wisdom of the US Challenge to the EU in the WTO
Sarah Lieberman and Tim Gray

The World Trade Organization’s Report
on the EU’s Moratorium on Biotech
Products: The Wisdom of the US
Challenge to the EU in the WTO

•
Sarah Lieberman and Tim Gray

1. Introduction

On 26 September 2006, the World Trade Organization (WTO) released the Fi-
nal Reports of the Panel on cases WT/DS291, WT/DS292 and WT/DS293 regard-
ing the “European Communities—Measures Affecting the Approval and Mar-
keting of Biotech Products,” as requested by the USA, Canada and Argentina
respectively. As all three countries lodged largely equivalent complaints, differ-
ing only in certain speciªc clauses, a single Dispute Settlement Panel was estab-
lished, whose members were to write one report responding to all of the com-
plainants’ charges. The Panel’s report is currently one of only a few ofªcial
documents to address the European Union’s moratorium on genetically mod-
iªed organisms (GMOs) in detail, and it contains some very valuable insights
into the working of the international regulatory system on GMOs.

In this article, our aim is to explore the outcomes and implications of the
WTO’s report; it judged in favor of the complainants, but only on a relatively
narrow basis—that the EU had instigated an illegal delay in its sanitary and
phytosanitary (SPS) procedures when, in 1998, it introduced a moratorium on
genetically modiªed (GM) products. On substantive issues such as whether the
EU’s moratorium constituted a technical barrier to trade, or whether GM prod-
ucts are safe, the WTO declined to rule. We ask, does this result serve to justify
the decision by the USA (together with Canada and Argentina) to choose the
WTO as a forum for its challenge to the moratorium on GM products?

In section 2, we set out the framework through which we approach the
topic to gain a clearer understanding of the signiªcance of the WTO report. This
framework is the theory of “forum” or “venue” shopping, with which we ex-
amine the two most appropriate, and overlapping, forums for GMO dispute
settlement—the WTO and the Cartagena Protocol on Biosafety (CPB). In sec-
tion 3, we explain the decision of the USA to bring its complaint to the WTO,

Global Environmental Politics 8:1, February 2008
© 2008 by the Massachusetts Institute of Technology

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34 •

The Wisdom of the US Challenge to the EU in the WTO

and in section 4, we examine the basis of that complaint. In section 5, we ana-
lyze the ªndings of the WTO’s report, and in section 6, we discuss its implica-
tions for the complainant countries—in particular, whether or not it vindicates
their selection of the WTO as the most appropriate forum for adjudicating their
complaints against the EU moratorium. Our conclusion is that the WTO report
is a pyrrhic victory for the US and its co-complainants, and it raises the question
of whether the US should have made a bolder decision to confront the EU in an
environmental forum like the CPB, rather than a trade forum, or not to mount a
challenge at all.

2. Theoretical Framework

“Venue” or “forum” shopping are terms used by theorists to signify the practice
of states shopping around for the most appropriate regime to consider their
cases in international law against other states. As Raustiala and Victor point out,
since 1945 there has been a “proliferation” and “growing density” of interna-
tional institutions, regimes and treaties, and this has led to a complex of over-
lapping and sometimes competing jurisdictions:1 “Regimes and rules are devel-
oped in one forum that frequently implicate and even challenge regimes and
rules developed in other forums.”2 Indeed, the rapid development of interna-
tional agreements has led some analysts to speak of “‘treaty congestion’ and
insufªcient coordination among agreements,”3 because, where two regimes
clash, there is often no legal hierarchy to determine which regime takes prece-
dence. Although some attempts have been made to deal with potential conºicts
between regimes, such as “savings clauses,” by which one regime explicitly de-
fers to another regime on a particular issue, or trade-offs, by which mutual deals
are negotiated to divide jurisdictions between regimes, on other issues, the per-
spectives of the different regimes are so far apart that no reconciliation or com-
promise is possible, and they simply have to ªght it out politically.

Because of the rise in the number of international regimes, states now of-
ten have a choice over where to raise their disputes; for example, the WTO and
the Cartagena Protocol on Biosafety (CPB), are both closely associated with the
trade in GMOs. Interplay between these two regimes is interesting, and al-
though, as Safrin notes, “the terms of the Biosafety Protocol do not appear . . .
incompatible with those of the WTO Agreements,”4 differences in regime struc-
ture and principle attract nations to one or other. Damro5 identiªes several fac-
tors which inºuence choice of regime, including membership size (the larger
the membership set, the wider the impact of the regime’s decisions); the status
of the regime’s decisions (the WTO’s decisions are legally enforceable; the CPB’s

1. Raustiala and Victor 2004, 277.
2. Raustiala and Victor 2004, 295.
3. Victor et al. 1998, 1.
4. Safrin 2002, 610.
5. Damro 2006.

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Sarah Lieberman and Tim Gray

• 35

decisions are not); and the mandate of the regime (the WTO’s mandate is trade;
the mandate of the CPB is biosafety). Busch argues that the crucial shopping
factor is “precedent setting”: “The complainant’s choice of forum is not simply a
function of which institution is likely to come the closest to its ideal ruling
against the defendants, but where the resulting precedent will be more useful,
facilitating litigation against other members, as opposed to inviting litigation
against itself.”6 In section 3, we examine the factors that inºuenced the US in its
choice of the WTO. But in order to understand those factors, we must ªrst exam-
ine the contrast between the WTO and the CPB.

2.1 The WTO

The WTO, which came into existence in 1995, has 149 members, including the
EU and its 27 Member States, the USA, Canada and Argentina. According to the
WTO, its role is to ensure “the stability of the global economy;” in doing so, it
“underscores the rule of law, and it makes the trading system more secure and
predictable.” Disputes relating to trade are settled within the WTO, where
“members have agreed that if they believe fellow-members are violating trade
rules, they will use the multilateral system of settling disputes instead of taking
action unilaterally. That means abiding by the agreed procedures and respecting
judgements.”7 WTO membership allows states to launch a dispute settlement
process, and as Winham notes, “the conclusion of that process is nearly auto-
matically ‘adopted’ (i.e. rendered legally binding) under Article 16, and the re-
sult can be enforced under articles 21–22 by sanctions authorised by the WTO.”8
Trade in the products of agricultural biotechnology falls under the SPS
agreement. Designed to regulate “measures taken by member states to protect
human and animal health (sanitary measures) and those taken to protect plant
life or health (phytosanitary measures),” the aim of the SPS Agreement is to en-
sure that measures taken by member states to protect food safety are not “dis-
guised restrictions on international trade.”9 This preambular clause and Article
2.2—which includes a speciªcation that SPS measures be based on “sufªcient
scientiªc evidence”—require that objections to the trade in GM products dem-
onstrate a difference between GM and non-GM products, not just between their
respective processes of production, or their country of origin.

With regard to its relationship with other international regimes, Winham
notes that the WTO’s “Appellate Body has made use of the Vienna Convention
in its decisions, especially in relation to the obligation to give precedence to
treaties that are more recent, and it has stated that the GATT ought not to be in-
terpreted in ‘clinical isolation’ from public international law.”10 Regarding GM

6. Busch 2005, 2.
7. WTO 2006b.
8. Winham 2003, 148.
9. WTO 1995, preamble.
10. Winham 2003, 148.

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36 •

The Wisdom of the US Challenge to the EU in the WTO

trade, as Winham reports, “it has been argued in the WTO Secretariat that the
provisions of the Biosafety Protocol should be taken into account in interpret-
ing the provisions of WTO Agreements, especially given that there is a presump-
tion in international law toward the removal rather than the perpetuation of le-
gal conºict.”11 However, it is doubtful whether the WTO would ever allow
considerations of the precautionary principle (which is at the root of the CPB)
to overrule a WTO Agreement. Tellingly, Winham reports that in the beef hor-
mones case in 1998, the WTO’s Appellate Body “found that the precautionary
principle, raised as a ‘customary rule of international law’ by the EC, did not
override the requirements of the SPS Agreement for scientiªc risk assessment,”12
while Safrin states that in 1998, both the hormones case and the Japanese fruit
import case were rejected on the grounds that “‘precaution’ could not excuse
SPS measures that otherwise violated the requirements of the SPS Agreement,
such as the obligations of members to base their SPS measures on a scientiªc
risk assessment and not to maintain such measures without sufªcient scientiªc
evidence.”13

Although the SPS Agreement does include “precautionary language,”14
during the Uruguay Round negotiations which established the WTO, while the
EU pushed for a fuller incorporation of the precautionary principle, pressure
from the US ensured that it was subordinate to the principle of scientiªc risk as-
sessment.15 The EU had also argued that “exporting countries should carry the
burden of proof to demonstrate the safety of a product that an importing coun-
try had found to be unsafe,” and supported “the use of criteria other than sci-
ence to justify SPS measures,” but the USA’s rejection of both these proposals
prevailed.16

2.2 The CPB

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The Cartagena Protocol on Biosafety (CPB) was created because of growing
public fears during the 1990s about the potential threat to human health and
the environment posed by the trade in GMOs. Negotiated under the aegis of the
Rio 1992 UN Convention on Bio-Diversity (CBD) to provide for the “safe trans-
fer, handling and use of living modiªed organisms resulting from modern bio-
technology” (Article 1), the Protocol came into force in September 2003 follow-
ing its 50th ratiªcation. Currently, 137 states are party to the Protocol,17
including the EU and all its 27 Member States, but not Canada or Argentina,
which have signed but not ratiªed it, nor the USA, which has neither signed nor
ratiªed it.

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11. Winham 2003, 148.
12. Winham 2003, 132 footnote.
13. Safrin 2002, 611–612.
14. Safrin 2002, 610.
15. Winham 2003, 134–5.
16. Winham 2003, 137.
17. CPB 2007.

Sarah Lieberman and Tim Gray

• 37

At the root of the Protocol is the precautionary principle, deªned as entail-
ing that “lack of scientiªc certainty . . . shall not prevent a Party of import from
taking a decision, as appropriate, with regard to the import of the LMO [living
modiªed organisms] in question, in order to avoid or minimize such potential
adverse effects.”18 Under the CPB, responsibility for risk assessment and label-
ing of GM products lies with the exporter. Furthermore, the CPB allows for re-
strictions on trade in GM products based on objections to processing and pro-
duction techniques, not just differences in the ªnal product.

With regard to the CPB’s relations with other international regimes, there
is considerable ambiguity. Raustiala and Victor explain how “a massive bargain-
ing effort focused on a ‘savings clause’: a legal provision inserted into the
Biosafety Protocol that purported to immunize the WTO provisions from any
inconsistency with the Biosafety Protocol.”19 On the one hand, its Preamble
states that the CPB should not be interpreted as displacing the rights and obliga-
tions of the parties under other international regimes. On the other hand, it also
states that “the above recital is not intended to subordinate this Protocol to
other international agreements.”20 Although this apparent contradiction is the
subject of controversy, Safrin notes that “International tribunals . . . are loath to
interpret treaty provisions in such a way that they extinguish each other, let
alone produce the opposite result of what the treaty plainly states,” and she sug-
gests that the Preamble should be taken to mean that although “the inclusion of
the savings clause does not mean that the Protocol is of a lower rank, class or
signiªcance than other agreements,”21 it will not be used to intentionally bypass
trade regulations.

Nevertheless, the WTO and the Protocol have fundamentally different per-
spectives on the issue of trade in GM products. The WTO is driven by a trade
perspective; a sound science approach to risk assessment; a legal proªle backed
by enforceable sanctions; a product-based assessment; and is largely inaccessi-
ble to NGOs: it is “identiªed more in formal terms with an emphasis on rules-
based behaviour.”22 By contrast, the CPB is driven by an environmental perspec-
tive; a precautionary approach to risk assessment; a legal proªle backed by nor-
mative sanctions; a process-based assessment; and welcomes participation by
NGOs: it is “identiªed more in cognitive terms that place an emphasis on prin-
ciples and shared understandings as well as communicative actions.”23 How-
ever, Safrin suggests this collision of regimes amounts “to somewhat less than
meets the eye. Customary rules of treaty interpretation, like rules of statutory in-

18. CBD 2000.
19. Raustiala and Victor 2004, 301.
20. CBD 2000.
21. Safrin 2002, 621, 620.
22. Winham 2003, 134.
23. Winham 2003, 134.

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38 •

The Wisdom of the US Challenge to the EU in the WTO

terpretation, seek to understand treaties as compatible with each other.”24
Winham states that the two regimes remain “in conºict with each other,” and
the result of this conºict could be “a growing paralysis in the implementation of
international environmental law, along with an increasing hostility in the eco-
nomic relations of the US and the EU.”25 This brings us to the question of the
strategy of the USA in its venue shopping decision.

3. The US Decision to Bring its Case Against the EU Moratorium to
the WTO

In our analysis, the main factors in the decision by the USA, Canada and Argen-
tina to choose the WTO are as follows. First, the USA is not a Party to either the
CBD or the CPB, while Canada and Argentina are Parties to the CBD but not to
the CPB. Regarding environmental agreements, WTO rules specify that: “If both
sides to the dispute have signed that agreement, then they should try to use [it]
to settle the dispute. But if one side in the dispute has not signed the environ-
mental agreement, then the WTO would provide the only possible forum for
settling the dispute.”26 The Biotech Products case thus fell to the WTO: “the
United States is not a party to the Convention on Biological Diversity, and so for
the United States the Convention is not in force. In other words, the Convention
on Biological Diversity is not ‘applicable’ in the relations between the United
States and all other WTO Members.”27 The decision to seek dispute settlement
through the WTO rather than the Protocol was thus precluded by the USA’s ear-
lier decision-taking: without ratifying the CBD it could not sign the Biosafety
Protocol, and relevant disputes are thus under the remit of the WTO.

Second, the legally binding nature of the WTO’s decisions enables the USA
to exact heavy sanctions on defeated parties who are recalcitrant. Third, the USA
sought to target developed countries rather than developing countries, at least
in the ªrst instance. Fourth, the WTO’s primary focus is not the environment,
but trade, which is the focus of the USA, Canada and Argentina on the GMO is-
sue. Fifth, the US wanted to create a legal precedent to face down future at-
tempts by states to ban its exports of GMOs. As Winham points out, the US was
motivated by both “a concern that the US biotech industry and its agricultural
products were becoming stigmatised in world markets,” and “a perceived need
to challenge the legitimacy of the EU regulatory system on agricultural biotech-
nology.”28 For the US, only the WTO had the legal authority to deal with these
concerns. Failure to address these issues at the highest level would mean lack of

24. Safrin 2002, 623.
25. Winham 2003, 132.
26. WTO 2006c.
27. WTO 2006a, 302.
28. Winham 2003, 45.

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Sarah Lieberman and Tim Gray

• 39

“legal precision in international economic relations”29 and continued trade
conºict, leading to possible unilateral protectionism on a wide scale.

However, the decision to launch a WTO complaint was risky and not with-
out drawbacks. The choice of venue attracted criticism as many observers felt
that this case should have been adjudicated by the CPB rather than by the WTO.
NGOs pointed to the undemocratic nature and trade focus of the WTO, assert-
ing that “it should not be allowed to rule on what we eat or what our farmers
grow,”30 while other observers noted that the case could have the opposite effect
from that intended; for example, Winham voices a concern that the case could
have “a negative impact on public opinion in Europe,” while “a victory in a dis-
pute case would be unlikely to alter European behaviour, thereby necessitating
another damaging round of retaliations.”31 When the WTO challenge was ªrst
launched, even those who were certain that the USA would win were not
conªdent that the EU would accept defeat. For instance, the Washington Post
wrote that

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The reason they [Europeans] reject sanity is that they are out to protect their
own producers against biotech-powered Americans . . . Faced with this out-
rageous policy, the United States has no good choices. It can bring a case
against Europe at the World Trade Organisation, which it would win; but
this might not change European policy given the vehemence of the Euro-
pean public’s suspicion of biotech.32

Moreover, this case had the potential to seriously weaken the WTO’s dispute set-
tlement mechanisms, and to “deepen conºict between the trade and develop-
ment regimes.”33 In 2003, Green MEP Caroline Lucas commented that “By try-
ing to use the WTO to force GM foods on European Consumers, the US is
launching the mother of all trade wars and could bring about the institution’s
collapse.”34 If the challenge failed, it could weaken the WTO as the world’s lead-
ing forum for international free trade; if the challenge succeeded, it could result
in the EU refusing to accept the ruling, which would be even more damaging to
the WTO’s authority.

Let us now turn to a detailed analysis of the course of the WTO challenge.

4. The Challenge Issued by the USA, Canada and Argentina to the
EU’s Moratorium

As the WTO is, in its own words, “a forum for governments to negotiate trade
agreements [and] to settle trade disputes,”35 not a court of law, the trade body

29. Winham 2003, 149 .
30. FoE 2006.
31. Winham 2003, 145.
32. Washington Post 2002.
33. Winham 2003, 145.
34. Quoted in Denny 2003.
35. WTO 2006c.

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40 •

The Wisdom of the US Challenge to the EU in the WTO

prefers “the countries concerned to discuss their problems and settle the dispute
by themselves. The ªrst stage is, therefore, consultations between the govern-
ments concerned.”36 Consultations were held between the USA and the EU on
19 June 2003; between Argentina and the EU on 19 June 2003; and between
Canada and the EU on 25 June 2003, in an attempt to resolve the Biotech Prod-
ucts dispute without needing to convene a Panel. However, each set of consulta-
tions “failed to reach a mutually satisfactory resolution of the matter,”37 and
consequentially each complainant, on 7 August 2003, “requested the establish-
ment of a panel to examine the matter.”38

The general de facto moratorium formed only one part of a “three by
three”-pronged complaint against the EU. Three countries; Argentina, Canada
and the US, lodged three complaints against the EU’s Biotech Product approval
system: the existence of a general de facto moratorium between October 1998
and August 2003; the national Member State safeguard measures imposed by
six EU member states; and the existence of product speciªc moratoria. An USDA
employee explained the terms of the USA’s complaint:

There are three levels of moratoria going on. First, there is a moratorium,
which is general policy despite not being published—nothing gets approved
and no decisions are made. Second, there is a moratorium going on at the
member state level, implemented through measures taken under the safe-
guard clause of 90/220 and 2001/18. These safeguard clauses are meant to
be temporary but some of them are still in place and were initiated in 1996
and 1997. Third, there was a moratorium at the product level. Although you
would see some movement on some products, they never got to a ªnal
stage—the approval was just in limbo.39

However, because the general de facto moratorium is the most important issue at
stake,40 it is this aspect of the WTO report that we will examine most fully.

The complaints are framed in terms of the Agreements that the EU has al-

legedly contravened. Suppan states that

Argentina, Canada and the United States charged the EC with violating its
WTO commitments under four agreements: the Agreement on Agriculture,
the General Agreement on Trade and Tariffs [GATT] 1994, the Agreement on
the Application of Sanitary and Phytosanitary Measures (SPS) and the
Agreement on Technical Barriers to Trade [TBT].41

However, although the Agreement on Agriculture (Article 4.2) was cited in the
initial complaint and consultation request, it was dropped before the submis-

36. WTO 2006b.
37. WTO 2006a, 1.
38. WTO 2006d, 1.3, 1.6, 1.9.
39. USDA 2005a.
40. Bobo implies that the product speciªc challenge was launched by the USA primarily to provide

evidence of the general de facto moratorium. Bobo 2005.

41. Suppan 2006.

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Sarah Lieberman and Tim Gray

• 41

sion stage. Moreover, only Canada argued that the EC had contravened the TBT
Agreement, and then only regarding the “product-speciªc and national mea-
sures,” not the general moratorium. Furthermore, as the SPS and TBT agree-
ments are “mutually exclusive,”42 citing both of them provides a possible alter-
native rather than a stronger case. Therefore, the Panel’s ruling addressed only
those claims under the SPS agreement, and its relevant GATT articles.

Before turning to a detailed examination of the WTO ªndings, it is impor-
tant to contextualize the report by looking at the issues the Panel did not ad-
dress. First, the WTO report did not address issues not raised by the parties, in-
cluding

whether the European Communities has a right to require the pre-market
approval of biotech products [and] whether the European Communities’ ap-
proval procedures as established by Directive 90/220, Directive 2001/18 and
Regulation 258/97, which provide for a product by product assessment re-
quiring scientiªc consideration of various potential risks, are consistent with
the European Communities’ obligations under the WTO agreements.43

The Complaints charged only that the EU was failing to implement its own pro-
cedures for the approval of GMOs. As explained by an employee of a lead
agency in the WTO dispute,

The reason we took the case was that we did not believe that the EU system
was working, it was not functioning, and we wanted them to create a system
that works. We want them to implement their own system, and that was still
not happening even after many years of bilateral discussions and prompt-
ing.44

Second, the Panel did not address certain issues raised by the complain-
ants. Most importantly, “the Panel did not examine whether biotech products in
general are safe or not [or] whether the biotech products at issue in this dispute
are ‘like’ their conventional counterparts.”45 The USA’s regulatory process for
GMOs is founded on the premise that the products of agri-biotechnology are
“like” conventional products. Indeed, their approval depends only on ascertain-
ing “substantial equivalence.” The WTO’s refusal to rule on “likeness,” thus sug-
gests that it does not necessarily adhere to US assumptions about transgenics.
Moreover, this decision means that the case could neither be judged under the
TBT, which identiªes protectionism between domestic and foreign “like” prod-
ucts, nor under certain procedural SPS clauses, such as that “procedures are un-
dertaken and completed . . . in no less favourable manner for imported products
than for like domestic products.”46

Let us now turn to analysis of the WTO ªndings.

42. WTO 2006d, 4.297.
43. WTO 2006d, 8.3.
44. USDA 2005b.
45. WTO 2006d, 8.3.
46. WTO 1995, emphasis added.

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The Wisdom of the US Challenge to the EU in the WTO

5. Analysis of the WTO Findings

5.1 The Existence, Scope and Duration of the Moratorium

The USA described the moratorium as “the suspension by the European Com-
munities of consideration of applications for, or granting of, approval of
biotech products.”47 In response, the European Communities asserted that,
since it had “never adopted any formal or informal act of any kind to impose a
moratorium on approvals . . . the measure described by the Complaining Parties
did not, and does not exist.”48 It is undeniable that, moratorium or not, approv-
als did not proceed to ªnal authorization, but although the EC “acknowl-
edge[d] that no applications were approved between October 1998 and August
2003,” it claimed this was “prudent and responsible” practice, not a morato-
rium.49 The Panel did not agree and concluded that, “Based on the evidence be-
fore it, the Panel has found that the European Communities applied a general
de facto moratorium on approvals of biotech products between June 1999 and
29 August 2003,”50 thus agreeing with the complainants that a de facto morato-
rium existed.

However, the moratorium is difªcult to deªne both in scope and in dura-
tion, a situation that added weight to the EU’s argument. With regard to scope,
because the WTO case relates to all “biotech products,” crops and foods, all ap-
provals were examined by the Panel, including those novel food approvals is-
sued during the moratorium. Although these approvals have been largely ig-
nored by the literature, certain GM-derived food products were authorized
under the simpliªed procedure of Novel Foods Regulation 258/97.51 Indeed, ac-
cording to the EU, “between October 1998 and 2004 seven biotech food prod-
ucts were approved.”52 However, due to procedural differences between stan-
dard authorization and the simpliªed procedure, the WTO Panel ruled that
these approvals do “not disprove the Complaining Parties’ claim that no ‘appli-
cations’ for the placing on the market of biotech products were ‘approved’ by
the European Communities in the relevant time-frame.”53 By doing this, the
Panel narrowed the scope of the moratorium—to cover only “whole” crop and
food products, not derivatives.

With regard to duration, both the start date and the end date of the mora-
torium are uncertain, and were open to debate until the Panel’s ruling. The ªnal
GMO approval granted to crops in the EU was in October 1998, which is viewed
by many, including the Complaining Parties, as the start of the EU’s GMO mora-
torium. However, as the Biotech Products case addresses only decisions made on

47. WTO 2006d, 7.439.
48. WTO 2006d, 7.458.
49. WTO 2006d, 7.457.
50. WTO 2006d: 8.6
51. Lieberman and Gray 2006.
52. WTO 2006d, 7.497.
53. WTO 2006d, 7.513.

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• 43

applications, and, as no decisions not to approve biotech products were made
before June 1999, the Panel ruled that no moratorium existed before the sig-
naled “intention on the part of the Governments of the Group of Five countries
to do what is within their power to prevent the approval of further applica-
tions.”54 In other words, so far as the WTO is concerned, the moratorium did
not commence until June 1999.

The end date has proved to be even more controversial than the start date.
The interim report outlined two opposing views: the EU argued that (if it had
ever existed) the moratorium ceased to exist “subsequent to the establishment
of the Panel;”55 while the Complaining Parties alleged that “the moratorium
was still in effect in February 2005, when the Panel’s second and last substantive
meeting with the Parties was held.”56 In settling the matter, the Panel’s interim
report was ambiguous. Conªrming that a moratorium did exist in August 2003,
the Panel at ªrst ruled that the moratorium “ceased to exist as a measure gener-
ally applicable to all biotech products with pending applications when the ap-
proval for Bt-11 sweet maize (food) was granted in 2004.”57 However, in the
same report, the Panel later stated, “we cannot, and do not, express a view on
whether, notwithstanding the approval of Bt-11 . . . an amended de facto morato-
rium on approvals continues to exist or whether a new general de facto morato-
rium was subsequently imposed.”58 Finally, in the interim report conclusions,
the Panel “refrain[ed] from making recommendations,”59 on the assumption
that the moratorium had already ended.

However, the Panel’s ªnal report responds to the complainants’ displea-
sure with the interim outcome. Additional comments made by Argentina, Can-
ada and the USA assert “that the Panel’s analysis of this issue did not take ac-
count of all relevant factors and that the general moratorium which the Panel
found to have existed in August 2003 did not cease to exist after August 2003.”60
The Panel’s conclusions were therefore amended to include a new clause, which
reads;

In the light of these conclusions, the Panel recommends that the Dispute
Settlement Body request the European Communities to bring the general de
facto moratorium on approvals into conformity with its obligations under
the SPS Agreement, if, and to the extent that, that measure has not already
ceased to exist.61

The amendments made between the interim and ªnal reports regarding
the current status of the moratorium are important; ªrst because they alter the

54. WTO 2006d, 7.478.
55. WTO 2006a, 581.
56. WTO 2006a, 393.
57. WTO 2006a, 587.
58. WTO 2006a, 588.
59. WTO 2006a, 1033.
60. WTO 2006d, 6.74.
61. WTO 2006d, 8.16.

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44 •

The Wisdom of the US Challenge to the EU in the WTO

possibility of recommendations and sanctions; and second, because they illus-
trate the compromises made by the Dispute Settlement Panel.

5.2 Whether the Moratorium Breached the EU’s WTO Commitments

In addition to the decisions regarding its existence, scope and timeframe, the
Panel’s remit required a decision be made on whether the moratorium breached
the EU’s WTO commitments, and, if so, which obligations it contravened. The
EU argued that the moratorium could not be challenged under the WTO agree-
ment because it was a practice—not an SPS measure. However, the Panel de-
cided that “the moratorium is a measure which is the result of other measures
(decisions) applied separately by the Group of Five countries and the Commis-
sion.”62 Consequently, the Panel ruled that, “the general de facto moratorium on
approvals constitutes a challengeable EC measure.”63

As noted above, the Biotech Products case was examined only under the
terms of the SPS agreement and its relevant GATT dispute settlement articles; the
ªnal report discusses each SPS Article on which challenges were made, to deter-
mine whether the moratorium is inconsistent with its provisions. The ªrst Arti-
cle treated by the Panel is 5.1, which states that “Members shall ensure that their
sanitary or phytosanitary measures are based on an assessment, as appropriate
to their circumstances, of the risks to humans, animals or plant life or health,
taking into account risk assessment techniques developed by the relevant inter-
national organizations.”64

However, fundamental to the issue of whether SPS Article 5.1 (or any
other SPS article) has been contravened, is the question of whether the general
moratorium is, or is not, an SPS measure; the Complaining parties claim it is, as
“it is applied . . . to protect against certain of the risks identiªed in Annex A;”65
the EU claims it is not, rather the complainants have merely identiªed a

delay in the completion of approval procedure [and] delay of this kind can-
not constitute an SPS measure within the meaning of Annex A(1). Delay is a
failure to act in a timely manner. A failure to act in a timely manner can be
reviewed under the procedural obligations set out in Article 8 and Annex
C(1) . . . as an issue of the application of an SPS measure (in this case, the EC
approval system).66

The Panel then embark on a lengthy analysis and discussion of whether the
moratorium constitutes an SPS measure, establishing that “the decision to delay
ªnal approval decisions did not itself establish a procedure for approving
biotech products, or . . . preventing the ªnal approval.”67 Nor did this decision

62. WTO 2006d, 7.1292.
63. WTO 2006d, 7.1295.
64. WTO 1995.
65. WTO 2006d, 7.1328.
66. WTO 2006d, 7.1329.
67. WTO 2006d, 7.1371.

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Sarah Lieberman and Tim Gray

• 45

result “in the EC applying a different type of approval procedure between June
1999 and August 2003.”68 Noting that, for it to be an SPS measure, the general
moratorium would have to be a substantive “requirement, a procedure or a
measure of a different nature,”69 the Panel ruled that “the European Commu-
nities’ decision to apply a general moratorium on approvals was not an SPS
measure.”70 This is reiterated in the Conclusions, where we are instructed that

The Panel determined that the moratorium was not itself an SPS measure
within the meaning of the SPS Agreement, but rather affected the operation
and application of the EU approval procedures which are set out in the rele-
vant EC approval legislation and which we had found to be SPS measures.71

This decision is of great importance to the case, as it renders the complaint
pursuant to Article 5.1 obsolete; the EU cannot have acted inconsistently with
the SPS’s provisions if the general moratorium is not an SPS measure. The same
analysis applies to Article 5.6 of the SPS, Article 5.5 of the SPS, and therefore Ar-
ticles 2.2 and 2.3 of the SPS, which were consequential complaints. A similar
conclusion is applicable to Article 7 and Annex B(1) regarding the prompt pub-
lication of all sanitary and phytosanitary regulations. The Panel decided that
since this Article and Annex do not require documentary publication of all gen-
erally applicable measures “concerning the administration, or operation, of an
SPS measure,”72 the EU had not acted inconsistently with these obligations. The
USA charged the European Communities with inconsistencies relating to Annex
A(1)(b) regarding the communication, examination, transmission and process-
ing of approval applications, and Argentina claimed that the European Com-
munities had failed to take into account the needs of developing countries, pur-
suant to Article 10.1 of the SPS Agreement. But both of these claims failed due
to a lack of presented information.

However, with respect to Directives 90/220 and 2001/18, the Panel con-
cluded that the general de facto moratorium resulted in a “failure to complete
individual approval procedures without undue delay, and hence gave rise to an
inconsistency with Article 8 and Annex C of the SPS Agreement.”73 More spe-
ciªcally, the moratorium was judged to contravene one clause of one section of
one Annex. The conclusion reads; “The European Communities has acted in-
consistently with its obligations under Annex C(1)(a), ªrst clause, of the SPS
Agreement and, consequently, with its obligations under Article 8 of the SPS
Agreement by applying a general de facto moratorium on approvals between
June 1999 and August 2003.”74 Annex C(1)(a) reads “Members shall ensure,
with respect to any procedure, to check and ensure the fulªlment of sanitary or

68. WTO 2006d, 7.1373.
69. WTO 2006d, 7.1338.
70. WTO 2006d, 7.1393.
71. WTO 2006d, 8.6.
72. WTO 2006d, 7.1458.
73. WTO 2006d, 8.6.
74. WTO 2006d, 8.14(a).

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46 •

The Wisdom of the US Challenge to the EU in the WTO

phytosanitary measures that: (a) such procedures are undertaken and com-
pleted without undue delay and in no less favourable manner for imported
products than for like domestic products.”75 As the Panel did not examine
whether “the biotech products at issue in this dispute are ‘like’ their conven-
tional counterparts,”76 the report could not pass judgment on the second clause
of Annex C(1)(a)—that procedures are undertaken “in no less favourable man-
ner for imported products than for like domestic products.”77 Only the require-
ment regarding “undue delay” was judged to contravene WTO obligations.

The EU’s response was that the delay was not “undue,” but necessary, due
to the inadequacy of EU GMO policy during the transition between the imple-
mentation of Directives 90/220 and 2001/18. However, the Panel decided, on
this one clause, that “i) the perceived inadequacy of EC approval legislation and
ii) evolving science and the application of a prudent and precautionary ap-
proach would not provide a justiªcation for delays which might have occurred
as a result of the application of the general EC moratorium on ªnal approv-
als.”78

The Panel thus judged that a general de facto moratorium on new GMO
approvals did exist, and the fact that it caused undue delays in the approval pro-
cedure contravened WTO SPS obligations. However, even if the complainants
choose to view this narrow ruling as a “win,” the addition of a signiªcant para-
graph, specifying that under certain conditions a moratorium would not be con-
sidered an “undue delay,” undermines the victory. In what reads like a personal
note to the parties, the Panel emphasized that

we wish to note that our conclusion above should not be construed to mean
that it would under no circumstances be justiªable, in the light of the provi-
sions of Annex C(1)(a), ªrst clause, to delay the completion of approval pro-
cedures by imposing a general moratorium on ªnal approvals of biotech
products. We consider that there may conceivably be circumstances where
this could be justiªable. For instance, if new scientiªc evidence comes to
light which conºicts with available scientiªc evidence and which is directly
relevant to all biotech products subject to a pre-market approval require-
ment, we think that it might, depending on the circumstances, be justiªable
to suspend all ªnal approvals pending an appropriate assessment of the new
evidence. The resulting delay in the completion of approval procedures
might then be considered not ‘undue’.79

In our opinion, this paragraph is crucial. First, as Friends of the Earth (FoE
2006) note, although “the US tried to obtain a ruling which explicitly declared
the EU’s moratorium per se illegal” this statement sanctions the existence of
“speciªc and general moratoria on GMOs” under certain circumstances. Sec-

75. WTO 1995.
76. WTO 2006d, 8.3.
77. WTO 1995.
78. WTO 2006d, 7.1530.
79. WTO 2006d, 7.1532.

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• 47

ond, from the fact that the Panel consider that a GMO moratorium could be
justiªable, we can infer that they have taken into consideration the possibility
that the products of agri-biotechnology are not “like” their conventional coun-
terparts, contrary to the USA’s assertion. This is borne out by the Panel’s refusal
to comment on whether biotech products are safe or not, or whether biotech
products are “like” their conventional counterparts.80 Third, it makes the USA’s
“victory” seem even slimmer, because as WTO rulings set precedents, this state-
ment ensures that the conclusions of the Biotech Products case do not preclude a)
the future suspension of approval procedures in Europe, and b) the instigation
of moratoria on the approvals of GMOs in other countries. Therefore, although
the EU’s moratorium was found guilty under the GATT agreement of having
“nulliªed or impaired beneªts accruing to the United States, [Canada and Ar-
gentina],”81 the Panel’s ruling effectively means that the future ability of the USA
to prevent countries applying strict biotech legislation is compromised.

6. The Implications of the WTO Report for the US’s Choice of Venue

Returning to our theoretical framework, what does the analysis of the WTO case
teach us about the wisdom of the US, Canada and Argentina in choosing the
WTO as the forum for their challenge to the EU moratorium? On the plus side
(from the USA’s perspective), the initial press reaction to the WTO report was
very favorable. When the Panel’s interim report was ªrst released, many newspa-
pers, trade groups and commentators interpreted the ªndings as a clear win for
the USA and the producers of biotech products. For instance, Julian Borger of
the Guardian, reported that

The World Trade Organisation last night ruled that Europe had broken inter-
national trade rules by blocking the import of genetically modiªed food, in
a decision US trade ofªcials hailed as a victory . . . The US maintained the
ruling lent support to the Bush Administration’s efforts to force an accelera-
tion in EU approval procedures for GM food imports.82

Similarly, the Financial Times stated that “the WTO ruled . . . that European re-
strictions on the introduction of genetically-modiªed foods violated interna-
tional trade rules, ªnding there was no scientiªc justiªcation for Europe’s failure
to allow use of new varieties of corn, soybeans and cotton.”83 The Guardian
claimed that the EU was “fearing huge compensation claims from the American
biotech industry after a ruling suggesting member states had illegally banned
imports of GM food.”84

Moreover, the WTO endorsed the US view that the CPB could not be

80. WTO 2006d, 8.3.
81. WTO 2006d, 8.15.
82. Borger 2006.
83. Alden et al. 2006.
84. Gow 2006.

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The Wisdom of the US Challenge to the EU in the WTO

deemed relevant to the GM case. Although the EU referred to both the CBD and
the Biosafety Protocol as justiªcation for its precautionary decision-making and
GMO import restrictions, the WTO report states, in relation to the CBD, that

if a rule of international law is not applicable to one of the Parties to this dis-
pute, it is not applicable in the relations between all WTO members. There-
fore, in view of the fact that the United States is not a party to the Convention
on Biological Diversity, we do not agree with the European Communities that
we are required to take into account the Convention on Biodiversity in inter-
preting the multilateral WTO agreements at issue in this dispute.85

A similar WTO judgment was recorded regarding the Biosafety Protocol, in that
the Panel decided that, since Argentina and Canada had signed the Biosafety
Protocol but not ratiªed it, therefore are not Parties to it, and since the USA had
neither signed nor ratiªed it, “we do not agree with the European Communities
that we are required to take into account the Biosafety Protocol in interpreting
the multilateral WTO agreements at issue in this dispute.”86 The Panel added
that the Biosafety Protocol “entered into force only on 11 September 2003, i.e.
after this Panel was established by the DSB.”87

Furthermore, the legal authority of the WTO does not appear to have been
diminished by the case, though this is probably because its report was a judi-
cious balancing act between US and EU positions, rather than a wholehearted
endorsement of US demands. The fact that EU compliance with its ªndings will
not be particularly onerous means that the question of EU non-compliance
does not arise, and so any formal threat to the prestige of the WTO has been
averted.

On the minus side (from the USA’s perspective), by contrast to the initial
press analysis of the interim report suggesting a clear victory for the USA, Can-
ada and Argentina, when the report became more widely available, less favor-
able interpretations began to emerge. For instance, Phil Bereano of Geactivists
said,

The US claims of victory for the future of GM foods are bogus. The public,
consumers and a growing number of governments around the world remain
opposed to GMOs. There will continue to be no market in Europe for
GMOs. In addition, the WTO dismissed most of the US arguments in the
case. This was no victory for the biotech industry and countries can continue
to introduce strict rules and measures to regulate GMOs, to protect the pub-
lic and the environment.88

Similarly, the New York Times reported that the WTO’s conclusions were “largely
of historical interest [and] will not alter the system within which the European

85. WTO 2006d, 7.74.
86. WTO 2006d, 7.74.
87. WTO 2006d, 7.75.
88. Bereano 2006.

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Sarah Lieberman and Tim Gray

• 49

Union takes decisions on GMOs.”89 Likewise, a spokesman for Peter Mandelson
(EU Commissioner for Trade) claimed, in a letter to the Guardian, that

Nothing in the report can oblige the EU to modify its framework on GMO
approvals. Both the public submission by the US and the panel request ex-
plicitly do not challenge the EC’s regulatory framework, which is rooted in
science based risk assessment. Nothing in this report can compel us to
change that framework. Nor, to give due credit to the much-maligned WTO,
was the panel given a mandate to judge our standards; simply the applica-
tion of them between 1998 and 2003 . . . Whatever America’s master plan
for GMOs might be, the WTO case is largely about the past and will not
compel the EU to reassess its regulatory framework on GMOs.90

Moreover, the WTO Panel declined to rule on three substantive issues: 1)
whether or not GM products are safe; 2) whether sound science makes the pre-
cautionary principle irrelevant to GM safety issues; and 3) whether product-
based criteria (“substantial equivalence”) trump process-based criteria for eval-
uating the safety of GM products. As a result, there has been no narrowing of the
gulf between the WTO and the CPB, and the tension between them remains.
Furthermore, the moral authority of the CPB has not been undermined—envi-
ronmental NGOs continue to champion it as the proper forum for the resolu-
tion of issues of the safety of GM products.

As a result of the WTO ruling, the European Union is not required to
change any aspects of its general approval process; the fact that the moratorium
appears to have ended means no penalties have been issued; and the conclu-
sions of the case specify only that the EU’s policies be brought into line with
WTO obligations—i.e. that delayed biotech applications must be ªnalized.
Moreover, even if certain GM products do achieve “import and marketing” ap-
proval by EU regulators, no market in Europe is likely to appear for GM foods
and biotech derived products, and therefore there will be little demand for GM
crops and seeds, until or unless European consumers change their minds. The
WTO report may be interpreted by the complainants as a victory, but it will be a
hollow victory, if in Europe, GMOs are doomed to commercial failure for the
foreseeable future.

7. Conclusion

In this article, we have analyzed the WTO Panel’s 2006 report on the challenge
mounted by the USA, Canada and Argentina against the de facto moratorium
imposed by the EU on GM food and crops, with a view to evaluating what it
tells us of the wisdom of the US, Canada and Argentina in bringing the case to
the WTO. We have found that the report judges the EU guilty of violating WTO
agreements, but only in a narrow, technical way, and that it rejects the com-

89. Meller 2006.
90. Power 2006.

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50 •

The Wisdom of the US Challenge to the EU in the WTO

plainants’ challenges on more substantive issues. We conclude that the case is a
pyrrhic victory for the USA, which formally vindicates its challenge to the EU
moratorium, but in practice does little to settle the underlying issues at stake in
the conºict between the EU and the USA, such as whether the precautionary
principle is a legitimate justiªcation for indeªnite resistance to the import of
GM products, and whether the CPB rather than the WTO is the right place for
the resolution of the conºict. By its judicious and balanced report, the WTO has
maintained its own standing in the international community, but the outcome
does not appear to vindicate the complainants’ choice of forum. The Panel did
not give unequivocal support to the US’ demands, therefore choosing the WTO
did not produce an “ideal ruling.” Moreover, the insertion of a conditional
clause prevents the use of this case as a useful precedent in future cases. In terms
of “forum shopping” this case has thus not fulªlled the USA’s desired outcomes.
Furthermore, the popularity of GM products in Europe has not been enhanced
by the case. The question arises, therefore, whether the US decision to choose
the WTO as the forum in which to bring the case of the EU moratorium on
biotech products, was an own goal. Would it have been better advised either to
ratify the CBD and CPB and to ªght its case on enemy territory, or not to chal-
lenge the EU moratorium in any international forum?

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