SPS ISSUES IN THE NAFTA REGION

Paul Haddow

Executive Director, International Affairs

Canadian Food Inspection Agency

Policy Disputes Information Consortium Mexico, March 6, 2002

Organization

• International Regulatory Framework

• Experience to Date in Avoiding/Resolving Disputes

• Future Challenges

The International Framework

• Trade Rules: WTO, NAFTA

• International Standards: Codex, OIE, IPPC/NAPPO

• Environmental Agreements: Cartagena Protocol

Basic WTO Disciplines

• General obligations under the GATT– Don’t discriminate against imports (Art.III)– Don’t discriminate between exporting countries

(Art. I)– Tariffs only measure of protection (Art. II)

• not permitted in Free Trade Areas

Basic WTO Exception

• There are situations in which countries may discriminate against imports/between countries, under WTO rules– before 1994/5: GATT Art. XX, including XX(b) -

measures to protect human, animal and plant life or health

– after 1994/5: NAFTA & WTO SPS agreements as elaborations of Art. XX(b) exception

Scope of SPS Agreements - WTO & NAFTA

• Measures with objective of protecting human, animal or plant life or health– from food/feed-borne risks; pest or disease

related risks; and– where measure affects international trade

• Risk-based; not product-based

Essential SPS Rules

• Countries have the right– to regulate for food safety, animal & plant health

– chose own level of protection

• Countries have the obligation– be transparent

– be consistent in cases of similar risks

– base regulation on scientific risk assessment

– use least trade restrictive option

SPS Agreements - other aspects

• Temporary measures– insufficient scientific evidence– obligation to seek evidence required & review

measure

• Equivalence: other approaches to meet Appropriate Level of Protection

• Regionalize

International Standards• National measures conforming to relevant

international standards, guidelines or recommendations are deemed necessary and presumed to be consistent

• Relevant standards - a positive list– for food safety -- Codex Alimentarius

– for animal health -- International Office of Epizootics

– for plant health -- International Plant Protection Convention

Implications• 1995 marked the full intersection between

international trade rules and Codex/OIE/IPPC texts

– on the up side, new authority for international standard setting bodies

– on the down side, new vulnerabilities to being used as back door to obtain relief from WTO/NAFTA disciplines

What’s Special About NAFTA?

• Provisional measures

• Equivalence

• Scientific expert groups

• Respondent chooses forum -- WTO or NAFTA

• Positive list of environmental agreements

Cartagena Protocol

• Environmental agreement to regulate international movement of living genetically modified organisms - not yet in force

• U.S. & Canada: two of largest exporters– Canada signed April 2001– U.S. not party to underlying convention

• Mexico: center of diversity– Mexico signed May 2000

The Framework Summed Up

• Science-based, rules-based, transparent, mutually reinforcing elements

• Provides a sound framework within which three governments manage/resolve SPS issues

Experience to Date in Avoiding/Resolving Disputes

• In WTO– 3 panels

• EU Hormones: risk assessment

• Australia Salmon: risk assessment; consistency

• Japanese Varietals: risk assessment; least trade restrictive; transparency; provisional measures

– SPS Committee• Over 85 issues resolved

• transparency is key

NAFTA SPS• No dispute settlement panels yet

• Dispute provisions have been used though (Canada-USA potato wart issue)

• Committee on SPS Measures

• Technical Working Groups report to Committee - Food Packaging, Labelling and Food Standards TWG being created

NAFTA - Unique Features• Dispute Resolution Corporation

• Referral to group of experts possible at each stage: Committee, Trade Commission, formal consultations and legal panel

• NAFTA Free Trade Commission (Trade Ministers) is unique

NAFTA TWG’s• Pesticides; Animal Health; Plant Health

(NAPPO); Dairy, Fruit, Vegetable and Processed Food; Meat, Poultry and Egg Inspection; Food Additives and Contaminants; Fish and Fish Products; Veterinary Drugs and Feeds; Food Packaging, Labelling and Food Standards (new)

• Some very active, others less so

• TWG’s are engaged in cooperative initiatives, harmonization, information exchange

Day to Day Cooperation• Hundreds of issues handled routinely

between regulatory agencies

• Canada has always worked closely with U.S. - now even closer with U.S. and building with Mexico

• Tripartite preparedness exercises on FMD good example - also cooperation on BSE

• Use of formal dispute settlement therefore not good indicator of success in resolving disputes

Future Challenges• There will always be some disputes

• Multilaterally– Regulatory challenges from new diseases and

technologies

– Potential weakening of science-based regulatory system• animal welfare

• processed-based (not product-based) labelling

• precaution

– Capacity of developing countries to participate in developing and implementing obligations/rights

Challenges Continued….

• In the Hemisphere

• Revisit line-up of TWGs and SPS Committee priorities

• In FTAA, Canadian proposal for a SPS consultative mechanism pending end of negotiations in 2005