CASE MNEMONIC: XHLTH23
CASE NAME: Health and Trade
RESERACH PAPER MNEMONIC: XHEALTH
RESEARCH PAPER NAME: Health Regulations, Trade, and the Environment
I. Abstract
The relationship between health and phytosanitary standards, as applied to international trade and the environment, is a sensitive one deserving attention. Throughout history people have modified products to fit their particular needs, either by altering production methods or product ingredients, while wary neighboring nations observed the results of these experiments from afar. Successful transformations often formed a basis for international trade, as one group had developed a unique product that was not obtainable elsewhere. Although those wary of these new products protests out against the dangers of such "newfangled" products, and the environment often suffered from the alterations, these considerations were not always given sufficient attention -- this is still the situation today. Today most governments stive to protect their citizens from detrimental external influences, a policy which often results in the adoption of phytosanitary laws restricting the of importation of goods perceived to introduce harmful diseases or insects into the country.
Sanitary and phytosanitary measures are measures (laws, regulations, or procedures) adopted by governments in an effort to protect animal, plant, or human health. These health-related laws and regulations take many forms and vary depending upon the risks being protected against. The five TED cases examined in this analysis involve international trade of foodstuffs, both between developed countries and with developing countries. After examining the phytosanitary regulation concerns in more depth, the research will then explore what options are available to counties confronted with extensive environmental degradation stemming from the production of important exports.
II. Issue Background
Since early human history, people have always been looking to improve things through the addition of technology and human ingenuity. Manufacturers strive to increase the amount of output, and inventors work to improve the quality of goods. Researchers work to increase the amount of goods that can be produced for consumption, and even for natural products. Encouraging breakthrough innovations, researchers endeavor to improve the production process for commonly used goods. The developer country then shares the results of its efforts with trading partners, in an effort to develop large markets for the new-and-improved products. Such practices have been particularly true in recent times, particularly with the coming of the technological revolution. However, these product improvements many times come with significant health drawbacks, both real and perceived.
Very often technological inputs, insects and disease are the elements feared by governments. Much international trade is regulated by phytosanitary measures designed to reduce the potential for introducing pests and diseases. In this context, phytosanitary measures have the potential to influence how users define key product characteristics or quality for that product. In turn, producers, exporters or importers, can be forced to respond to phytosanitary measures by changing their product or production process. The General Agreement on Tariffs and Trade (GATT) states that "no Member should be prevented from adopting or enforcing measures necessary to protect human, animal or plant life or health, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between Members where the same conditions prevail or a disguised restriction on international trade." GATT members have approved the Sanitary and Phytosanitary Agreement (SPS), which establishes a multilateral mechanism to prevent and protect exporters from health-related measures disguising trade barriers.
Barriers to trade are often erected on the basis of inadequate research concerning the long-term effects of a given improvement, or a difference between national production processes. In products produced for trade around the world, changes can be particularly noteworthy. Fearing these altered products, many countries have attempted to ban their importation in an effort to "protect" citizens from their harmful effects. This analysis will examine five of such changes, and both the domestic reactions and those among trading partners. Trade between developed countries as well as trade between developing and developed countries will be examined. All of these cases involve potentially negative environmental impacts upon consumers or the environment, issues which have been raised by the developed importer country.
III. Relevant TED Case Listings and Brief Descriptions
The following TED cases each examine the various health restraints that exporters encounter when preparing to sell their goods on the international market. These cases were each selected for the unique problems presented in the case, as well as for their geographic diversity. The impact of Asian, North American, and African import barriers are each examined for similarities and differences. Many of the examined import restrictions are quite controversial, with the importing country citing health fears as the reason for an import ban, while the exporter country claims to have significant amounts of research disproving these fears.
1. Hormone Ban in EU Meat Case (EUMEAT
CASE)
Since the 1970s, US meat industries have been using hormones to
improve the growth rate of animals. These hormones have greatly
increased the growth rates of livestock, thereby saving farmers
both times and money through the shortened lifespans of these
animals. The shorter lifecycle results in lower costs for both
feeding and boarding livestock, making the business more profitable
for breeders. However, on January 1, 1989, the EU placed an import
ban on meat from animals treated with growth hormones because of
fears that the hormones are dangerous and may cause health problems
to consumers. Significant scientific research discounting these
fears, however, have made the ban extremely controversial.
2. Japan Apple Case (APPLE
Case)
Japan officially first opened its markets to American apple
imports in 1971, but during the next 22 years, despite US apple
growers' efforts to enter the Japanese market, not a single US
apple was imported. While growers have jumped each regulation
hurdle against pest infestation, the Japanese erected new hurdles
almost as quickly. Many of these have been health regulation
barriers, particularly aimed to prevent the inadvertent importation
of foreign insects and pests. Finally in 1993 the growers filed a
formal complaint with the USTR, who then sent a letter to Japan's
Minister of Agriculture. The Japanese promised to open their
markets to US grown apples in 1994, but the first apples did not
enter Japan until 1995. Even now US growers are faced with
declining sales in a small Japanese market, because of cultural
preferences for sweeter, prettier apples.
3. Botswana Cattle Ranches & Trade (BOTSWANA
Case)
Botswana is populated by twice as many
cattle as people, most of which are raised as an export commodity.
Exports to Europe alone are worth more than $100 million a year to
Botswana, making the industry extremely sensitive to external
pressures. Recently Europeans have begun to object to Botswanian
meat on the basis that the animals might have contracted hoof and
mouth disease from the migratory herds that roam throughout the
country. In order to meet these import regulations, the government
has erected enormous fences in order to keep market cattle
separated from buffalo and other wild fauna, thus preventing the
animals from contracting these diseases. These fences have
disrupted migratory patterns and reduced the plentiful wildlife of
the country's plains, prompting environmentalists to protest the
destruction of one of the continent's last great wild areas. The
government is now faced with environmental pressures to tear down
these fences, as well as international trade pressures to maintain
these fences to ensure the production of "safe" meat.
4. Hoof and Mouth Ban by EU (HOOF
Case)
On April 8, 1994, the European Union banned
imports of livestock, meat, milk, and dairy products from 18
Central and Eastern European countries after imported cattle from
those states were found to suffer from hoof-and-mouth disease.
Under EU law, if proof exists that a country has livestock that is
afflicted by hoof-and-mouth disease, import barriers can be erected
in order to prevent these animals from spreading their disease
throughout the EU. In this case, it was not proven that the
disease was present in the imported livestock, but nevertheless,
the EU restricted animal imports from these 18 countries. Some
argue that the main reason for the ban is that the agriculture is
heavily protected and subsidized under the Common Agricultural
Policy (CAP). Perceived threats to price stability or wages as a
result of increased import competition incite the farm lobby to
insist on import bans, supposedly enforcing EU health regulations.
5. Ciba Geigy's Genetically Altered Maize Hybrid (MAIZE
Case)
Although "natural" varieties of basic
foodstuffs continue to dominate the global markets, genetically
engineered crops are becoming increasingly commonplace on both the
farm and the supermarket shelf, improving and replacing many of the
more traditional, "natural" varieties. The genetically engineered
European Corn Borer resistant maize hybrid was developed by the
Swiss-based chemical and pharmaceutical firm Ciba's Seeds Division.
Field reviews of the hybrids' reaction to conditions found in
countries such as France, Spain, Italy, Argentina, Canada, and the
US have been favorable since testing began in 1992. This
development has the potential to save millions of hectares of corn
each year. However, while Japan, Canada, and the US have approved
the hybrid for use on the market, the European Union has been more
hesitant to approve it for market use. Leery of consumer health
side effects that it feels have not been fully researched, the EU
has not yet made a decision whether or not to ban imports of the
genetically modified maize. Such a move could seriously jeopardize
EU/US trade relations. Althgouh the first-ever crop of Bt corn was
harvested in the fall of 1996, officials on both sides are giving
no ground on the issue.
The following analysis will examine the vaious similarities and differences between these cases in order to propose effective action that states might take to prevent the use of phytosanitary regulations as a barrier to trade. The following table has been constructed to facilitate this process.
| Case Name | Geographic Site | Product | Bio- geography | Degree of Impact | Environmental Problem Type | Direct/Indirect Impact |
|---|---|---|---|---|---|---|
| EUMEAT | N. America | Meat | Temperate | Low | Health | Direct |
| APPLE | N. America | Apple | Temperate | High | Habitat | Direct |
| BOSTWANA | Africa | Meat | Temperate | Medium | Habi tat Loss | Indirect |
| HOOF | N. America | Food | Temperate | Low | Health | Direct/Indirect |
| MAIZE | N. America | Food | Temperate | Low | Biodiversity | Direct |
All five of the TED cases analyzed deal with food products traded in the international marketplace that are perceived as potential sources for health problems. In these cases, importing countries erected trade barriers in reaction to the perceived phytosanitary threats of the "dangerous" products. However, the exporting countries reacted in several manners to such actions: some worked to meet the new trade criteria, while others continued their practices while charging the importer with unfair trade practices. The various reactions to trade barriers may in part be due to the amount of international trade the country regularly experiences. Countries that are more active in the international arena, such as the US, are likely to have more clout in the international arena, and are therefore more likely to successfully contest a trade barrier. Countries such as Botswana, that do not engage in large amounts of international trade, are likely to be subject to the whims of the powerful few.
An interesting point to note is that for most of the cases examined, the controversial products are consumed in the states that produce them. This presents an intriguing situation, for although these products are banned on the basis of potentially harmful consumer health effects, large numbers of people are already utilizing these products without any apparent phytosanitary side effects. This tends to signficantly reduce the plausibility of a scientific basis Therefore exporters claim that the importing government is erecting unreasonable trade blocks on the basis of unsubstantiated claims, in an effort to protect their own local markets. Importers, on the other hand, would say that the exporting countries are placing their citizens at unnecessary risk in order to profit off their dangerous products. Such controversy is prevalent throughout the international marketplace; the Maize, EU Meat, Hoof and Mouth, and Bostwana Cases are all good examples of this.
There was a wide variance among the impact levels for the five cases analyzed. As shown in the table above, the cases examined for this analysis reflect three possible impact levels: high, medium, and low. These values represent evaluatively-coded measures of the impact of trade policies upon the amount of resource depletion or pollution. Of those examined here, the Japan Apple case is the only one with a high impact upon the environment, stemming from the Japanese fear that Japanese apple trees will become infested with American insects inadvertently shipped across the Pacific with American apple harvests. Apparently minor incidents such as the inadvertent importation of insects commonly found among food products can have a profound effect upon the national environment -- because of this danger, many governments are leery of admitting new foodstuffs into their domestic market. The importation of scientifically altered products such as beef or maize has a "low" impact level because these goods are not as directly threatening to national environments as foreign insects, for example, as they must be consciously added to the environment. However, this does not make them any less threatening to national governments who claim the health effects of these products have not yet been fully researched.
Although the problems in most of these cases have been well defined and documented, they have not been addressed with corrective measures intended to resolve the problems. In order to protect the environments and the health of populations of both exporting and importing countries, a harmony of interests needs to be achieved.
Perhaps the most neutral means of resolving technically related health concerns is to take them before an independent scientific body. After both parties to the dispute present their concerns, the scientific body would then perform a thorough research investigation to determine the extent and severity of health threats under contention. The results of this unbiased investigation would be honored by all parties involved in the dispute, and would likely become a basis for all international trade of the good. Currently the WTO regulates such matters, and has even enacted the SPS agreement mentioned earlier in this analysis. The SPS agreement recognizes the right of each state to set its own food safety, and animal and plant health standards. While countries are encouraged to utilize existing international standards, the SPS text clearly recognizes the right of countries to maintain standards which are stricter than international standards under certain circumstances. In addition, while all SPS measures must be based on risk assessment, a country has the right to decide the level of risk that it considers appropriate. Given this current level of international agreement, greateer enforcement and harmonized standards are the next steps that the WTO needs to take to prevent phytosanitary regulations becoming trade barriers.
As for import bans based upon phytosanitary concerns, exporting countries could create inspection sites within their borders to address this concern. These sites would check for signs of disease or insects before shipping goods, preventing companies from incurring expensive shipping charges only to find that their products are infected and therefore not acceptable to the importer. These sites would be manned by inspectors from numerous states, and scientific experts would also be present when needed, such as for the Maize Case, if the EU ban is inded put in place. This wide range of expertise would prevent countries from claiming the inspections were biased against them. However, to prevent a representative from blocking the export of these goods, instead of requiring a unanimous agreement that inspected goods are disease and insect free, a majority consensus opinion would instead be considered sufficient for export. Countries that routinely do not meet the approval of the inspecting body might then work with consultants to improve their conditions.
Livestock containment policies should also be practiced throughout the lifespan of the animals, in order to prevent their contracting diseases from wild animals roaming the plains. Policies such as that practiced by Botswana are not truly viable solutions, due to the extreme environmental damage that results from such practices. Such massive disruption of the environment will not be sustainable in the long run. Rather, farmers should adopt containment policies modeled after those of successful mid- western American farmers. These have controlled the movements of livestock while preserving the local ecosystems as much as possible.
Finally, any trade-restrictive measures taken by an importing country for the purpose of protecting human, animal or plant health should be based on science, including the use of risk assessment techniques
GATT. AGREEMENT ON THE APPLICATION OF SANITARY AND
PHYTOSANITARY MEASURES
Economist. Farming: A moral maize. p. 82, September 14, 1996.
< FAS Online. AGRICULTURAL OVERVIEW
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