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International Marketing

Notes Under the SPS agreement, the WTO sets constraints on members’ policies relating to food safety
(bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health
(imported pests and diseases).
SPS & Genetically Modified Organisms (GMOs): In 2003, the United States challenged a number
of EU laws restricting the importation of Genetically Modified Organisms (GMOs), arguing
they are “unjustifiable” and illegal under SPS agreement. In May 2006, the WTO’s dispute resolution
panel issued a complex ruling which took issue with some aspects of the EU’s regulation of
GMOs, but dismissed many of the claims made by the U.S.
Criticism: Quarantine policies plays an important role in ensuring the protection of human,
animal and plant health. Yet under the SPS agreement, quarantine barriers can be a ‘technical
trade barrier’ used to keep out foreign competitors.

The SPS agreement gives the WTO the power to override a country’s use of the precautionary
principle – a principle which allows them to act on the side of caution if there is no scientific
certainty about potential threats to human health and the environment. In EC measures Concerning
Meat and Meat Products (Hormones) WT/DS/26/AB/R the Appellate Body of the WTO held that it
was “less than clear” whether the precautionary principle had crystallized into a principle of
customary international law, (EC-Hormones paragraph 123) and even if it had, it could not
override the provisions of Articles 5.1 and 5.2 of the Agreement on the Application of Sanitary
and Phytosanitary Measures (SPS Agreement) that require members to base their measures on
a risk assessment. (EC-Hormones paragraphs 123, 124 and 125.See discussion K Kennedy
“Resolving International Sanitary and Phytosanitary Disputes in the WTO: Lessons and Future
Directions” (2000) Volume 55 Food and Drug Law Journal 81 at 95) The Appellate Body also
pointed out that the principle had not been written into the SPS Agreement, although the
Appellate Body conceded that the principle was reflected in the sixth paragraph of the preamble
of the SPSA, as well as articles 3.3 and 5.7.(EC-Hormones paragraph 124) Article 3.3 allows
members to implement quarantine measures higher than those found in international standards,
as long as the measures otherwise comply with the SPS Agreement; while Article 5.7 allows
provisional measures where there is insufficient scientific evidence. Additionally, the Appellate
Body acknowledged that article 5.7 does not necessarily exhaust the relevance of the precautionary
principle and that, where there are risks of irreversible damage, governments often act from the
point of view of prudence. (EC-Hormones paragraph 124)
Under SPS rules, the burden of proof is on countries to demonstrate scientifically that something
is dangerous before it can be regulated, even though scientists agree that it is impossible to
predict all forms of damage posed by insects or pest plants.
Agreement on Trade-related Investments

The Agreement on Trade-related Investment Measures (the ‘TRIMs Agreement’) applies to
investment measures related to trade in goods only. The Agreement restrains members from
applying any investment measure that is inconsistent with the provisions of Article III (National
Treatment on Internal Taxation and Regulation) or Article XI (General Elimination of Quantitative
Restrictions) of the GATT 1994. The Agreement carries an illustrative list of trade related
investment measures that are inconsistent with the obligation of national treatment provided
for in Paragraph 4 of Article III and the obligation of general elimination of quantitative
restrictions provided for in Paragraph I of Article XI of GATT 1994.

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