Risk Regulation, Science, and Interests in Transatlantic Trade Conflicts

D. Hornsby

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137034175
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

When regions like Canada, the US and the EU have disagreed over the legitimacy of risk perceptions they have placed science at the centre of international trade conflict. By looking across cases disputed and informally resolved, David Hornsby offers to deepen understanding of factors involved in risk based trade conflict.

1

Introduction: The Intersection of Risk and Trade

The intersection between risk and trade continues to be one of the most challenging issues facing the international trading system and its keeper, the World Trade Organization (WTO). The idea that regulating threats to human, animal, and plant life or health can have trade implications is anathema to many, as the connection between them is not universally understood.

However, the regulation of risk has shown itself to offer the opportunity for disguised trade restrictions that lack legitimate purpose. In other words, states can impose regulations in the name of risk as a means of protecting their markets from competition by outside goods. Such policies, developed to safeguard the food we eat or the air we breathe, can also be disguised non-tariff barriers to trade. In this context, the use of risk as a means to reinforce a state’s economic interests has nefarious implications for the pursuit of a liberal economic order that privileges ideas of free trade and market liberalisation. Thus, in an attempt to prevent such behaviour, the Sanitary and Phytosanitary (SPS) Agreement lays out a clear set of principles to try and find a balance between allowing risk regulations with legitimate purpose and free trade.

The challenge that emerges in doing this is to institute the correct way of deciphering what can be considered appropriate thresholds for acting in light of a risk, and in a way that still enables the free flow of goods between states. Essentially, what can help demarcate between a regulation that has legitimate purpose and one that does not? For the crafters of the WTO’s SPS Agreement the answer was straightforward – science.

Science and the availability of sufficient scientific evidence are considered the gold standard in the WTO for establishing a trade-restricting risk regulation. The SPS Agreement places an enormous amount of weight on the notion of sufficient scientific evidence (Art. 2) and requires states to produce internationally acceptable risk assessments to support any offending regulation (Art. 2.2). In addition, the SPS Agreement requires that states notify any risk regulation that may have a trade implication (Art. 7) and that these regulations be consistent with international standards, where they exist (Art. 3).

Indeed, at first glance such provisions seem straightforward and logical. It is only fair that states base risk regulations on science, which is generally believed to be a method of discovery that crosses cultures and politics, and usually is not open to explicit political manipulation. However, in the history of the WTO some of the most acrimonious and contentious trade disputes have emerged around the SPS Agreement and, in particular, the science underpinning a risk regulation. Whilst the SPS Agreement has seen relatively fewer disputes than other WTO areas, none have garnered quite as much public attention, been as debated, or threatened the legitimacy of multilateral trade as much as risk-based disputes like EC-Hormones or EC-Biotech.

Such moments have placed science, scientific experts, and scientific evidence at the centre of international trade debates, suggesting that this method for identifying a legitimate risk is a contested one.

But science and its role in the trade conflict literature have been little considered; instead, emphasis has been placed on the relevant interests at play, or on differences between the involved parties’ regulatory institutions and culture, at the time of WTO disputes (Echols, 1998; Sunstein, 2002; Bernauer, 2003; Ansell and Vogel, 2006; Pollack and Shaffer, 2009). These analyses are important contributions and help to peel back the layers of politics that surround particular risk-based trade disputes. They help paint a picture of trade conflict and its underlying causes. But they have not given space to delving into the issue at hand – the contestation of the underpinning science, how this is manifested, and its role in understanding the politics of trade conflict.

Indeed, these contributions have not considered trade conflict outside formal WTO disputes. I consider disputes to really only represent a particular moment in a larger process whereby trade conflict between states has become intractable. By focusing only on issue areas that went to a formal dispute, a particular type of trade conflict is analysed. In framing trade conflict as a larger process and looking to cases informally resolved as well as disputed, I proffer a broad analysis of the politics of risk-based trade conflict, considering the interplay of interests, institutions and ideas. Such an approach builds on the trade conflict literature and considers science in the risk–trade dynamic.

By looking to the role of science as an element in the risk–trade intersection, insight is gained into how trade principles and preferences are reconciled with efforts to prevent harm to human, animal, and plant life and health. Simply put, how does the pursuit of international trade influence a state actor’s ability to regulate risks posed to the environment and food systems? Such an analysis contributes to debates over how trade rules or principles influence and constrain the regulation of risk through defining what constitutes sufficient scientific evidence (Hornsby et al., 2007). Science, as one of the main ways to define and characterise risk, and what constitutes sufficient science in the regulation of risk, has implications for understanding efforts to achieve agreements on multilateral negotiations over such things as climate change, or why there appears to be persistent disagreement between North America and the European Union (EU) over such issues as hormone-fed beef or genetically modified foods. In essence, understanding differences in how science is treated between sovereign jurisdictions can build understanding of why efforts towards achieving sustainable development appear so contentious and fraught.

It is with this in mind that the present book seeks to uncover the role of science in risk-based trade conflict, whilst simultaneously reframing trade conflict as a larger process that involves informal and formal stages. Given the place of privilege science maintains when considering trade-restricting risk regulations, it seems only logical to explore to what extent this element matters in trade conflict. Looking to both informal and formal stages gives greater insight into when and how trade conflict resolution might occur and the role played by science in this context.

The transatlantic dimension

To date, much of the trade conflict literature has paid particular attention to the transatlantic experience. This is because of the sheer size of the North American and European economies, which continue to be dominant (albeit this appears to the changing), and the important role that these state actors have played in constructing and shaping the multilateral trading system. Indeed, much of the risk-based trade conflict experienced at the WTO has seen the US, Canada, and/or the EU involved, and, in the most important moments, against each other.¹ In fact, North America and the EU have been engaged in 27 formal disputes challenging the science behind a measure; of these, eight have been against each other. This is impressive, given that there have only been 40-plus formal disputes pertaining to the SPS Agreement. However, these two regions have been engaged in further informal trade conflict over risk regulations and have successfully found resolutions. By looking to Specific Trade Concerns (STC) raised at the SPS Committee, it is possible to examine a broader set of trade conflict cases.

The areas of hormone-fed beef, bovine spongiform encephalopathy (BSE), raw milk cheese, genetically modified organisms, chlorine-washed chicken, and wood-packing materials have been particular areas of contention and are unpacked in this volume. These cases imply that there exists a transatlantic divide over what constitutes a legitimate risk regulation.

The trade implications of the transatlantic differences over risk have been a topic of scholarly attention. Bernauer (2003) argues that regulatory polarisation is at the heart of differences between the US and the EU, which has seen acrimonious and contentious formal trade disputes emerge at the WTO. Canada has been largely excluded from these analyses, but the role of the ‘other’ North American developed country in transatlantic trade conflict has been consistent with the US through the formal and informal risk-based issues. This sets the regulatory polarisation argument in a new light, suggesting that a regional dimension is much more appropriate when considering transatlantic conflict over risk.

Some have considered that the EU is inherently more political about risk regulation, as personified through the adoption of the precautionary principle and the legitimate use of ‘other factors’ in developing regulations under the law, whilst the US regulatory system is considered to be rooted in a ‘sound science’ approach that is free from political influence (Isaac et al., 2002). Precaution refers to acting in light of scientific uncertainty, ‘other factors’ means non-scientific considerations, whilst sound science is meant to imply utilising only scientific information in regulation. Vogel (2003) argues that this was not always the case and that the US used to be more precautionary than the EU. Using the metaphor of two ‘ships passing in the night,’ Vogel (2003) claims that the change occurred as a result of pressure within the US to constrain the calculation of risk in public policy, whilst in the EU regulatory failures during food safety crises weakened public trust in EU institutions. This resulted in increased support and demand for the use of the precautionary principle in EU regulatory frameworks (Neyer, 2000; Vos, 2000; Joerges, 2001; Chalmers, 2003; Majone, 2003).

The transatlantic divide has been argued to be a result of differences in regulatory culture. Douglas and Wildavsky (1982) argue that cultural predispositions can influence perceptions of risk and suggest that the US tends to be more individualistic and dismissive of claims of risk, relying on market-based approaches, whilst the EU tends to be more concerned with risk, especially to the extent that it affects social inequity.

Jasanoff (2005), in analysing the roots of the genetically modified (GM) food conflict between North America and the EU from a socio-political perspective, suggests that differences in political culture determine approaches to regulation and the source of conflict. In particular, differences in how citizens in the US and the EU trust government scientists to impart sound advice, and in how the issue of GM was framed, have affected approaches to regulation. Framing is how an issue is presented and considered by decision-makers (Tversky and Kahneman, 1986). In the US, GM food was framed as another industrial process, whilst in Germany the issue was politicised and the social, physical, and political risk was considered (Jasanoff, 2005). Ultimately, Jasanoff (2005) considers the conflict over the regulation of GM food at the WTO to be a result of an emphasis within the US on uncertainty in outcomes, as opposed to the EU, which focuses on uncertainty in the process of GM food production.

It is essential to appreciate the role of economic interests in the regulation of risk between North America and the EU. Bernauer (2003: 69) argues that the structure of interests and interest group pressures have varied between the US and the EU. In the case of GM food, by the late 1980s US biotech firms, farmers, and food distributors had acquired an advantage over environmental interest groups in the adoption of new technology and pressed for an accommodating regulatory structure. By contrast, EU private interests had been weaker due to a less cohesive and smaller biotech industry. This enabled public interest groups opposed to GM food commercialisation to rally mass public outrage over this issue.

The structure of regulatory politics in North America and the EU is also a factor in explaining the transatlantic dimension. The degree to which regulatory decision-making is centralised impacts how politics influences decision-making. Sunstein (2002) argues that the central nature of the US regulatory structure is a key factor in the approval of GM food, whereas in the EU the regulatory structure is decentralised and gives member states a veto-power-type role in regulatory decision-making. Ansell and Vogel (2006) term the EU food regulatory environment ‘contested governance’ and argue that this sets the context for international trade disputes to occur.

Pollack and Shaffer (2009: 68–9) argue that the regulatory polarisation on GM food maintains a multi-causal explanation that looks at cultural predispositions and institutional choices in terms of the opportunities and tools that they provide to different interest groups in their political struggles over the framing of the risk-based issue. They argue that politicians and interest groups are active in framing risks and that this is the root of US and EU differences towards GM products. Pollack and Shaffer’s (2009: 68–9) work represents the most comprehensive consideration of the factors that feed into transatlantic trade conflict and, quite rightly, suggests that no single variable can explain the apparent divide that exists between North America and the EU over the regulation of risk and how trade conflict emerges.

This illuminating scholarship builds important understanding of transatlantic trade disputes over risk, looking to the structure and influence of interests, regulatory institutions, and cultures as causal factors in trade dispute emergence. These contributions are not contested; rather, I seek to build upon them and characterise how an integral element of risk-based trade conflict, science, also factors into the apparent transatlantic divide.

Through applying a broader lens and looking to instances when conflict over trade-restricting risk regulations have been resolved, a larger story can be told about transatlantic trade conflict over risk and the role of science. Indeed, when juxtaposing resolved moments of transatlantic trade conflict against those disputed, it is possible to see how resolutions to trade conflict are possible outside the formal WTO processes. Looking to the informally resolved cases is important, as a key lesson from Pollack and Shaffer’s (2009: 289) work is that ‘[t]he World Trade Organisation and its Dispute Settlement Body cannot definitively solve regulatory disputes such as those over GMOs …’ So, the present study considers the context leading up to the launch of a WTO dispute, in order to understand the factors involved in policy-maker decision-making over the legitimacy of a risk perception and whether or not to pursue a formal dispute. Given the central role of science as laid out by the SPS Agreement, consideration is given to what role it plays in this process.

In focusing on science, I draw on my background in the biomedical sciences to explore how perceptions of science, notions of legitimacy, and established factors like interest groups and regulatory structures matter in trade conflict. I also include Canada as a country of interest, as it has been equally active, along with the US, in challenging EU risk regulations, which suggests a regional dynamic to the transatlantic difference.

Contribution

The following book contributes to the literature by broadening the analysis of transatlantic trade conflict and by focusing attention on science as espoused by epistemic communities and through the use of scientific evidence in these contexts. Analysing the role of science and perceptions of sufficient science to warrant a risk regulation in North American and European decision-making over trade disputes has not previously been attempted.

Understanding the role of science in trade conflict matters because of the weight it holds in determining a legitimate risk, and also because it has been highly contested to date. But the present study differs from Science and Technology Studies treatments of science. Typically, these have emphasised the ‘social’ and ‘political’ aspects of the scientific process as opposed to the social or political effect of scientific outcomes. Science is, indeed, a social pursuit in which subjective human beings take subjective decisions and make subjective conclusions. Science, like any human act, is imbued with subjective action and uncertainty. Scholars like Jasanoff (1990) have made important contributions by critiquing the process of peer review and decisions to fund certain types of research over others, and even through highlighting the errors in judgement made in the past (DDT, dioxins, thalidomide, etc.).

Such scholarship emphasises the inherent uncertainties that exist within the scientific method and amongst scientific experts. These studies are interesting and insightful but have been used to suggest that science as a process for building knowledge should not be privileged in public policy-making (Funtowicz and Ravetz, 1993) or in legal settings (Walker, 1991), as if it were odd or unique in its fallibility as a social institution. This view neglects a fundamental point of the scientific pursuit, namely, its overarching success in improving and building understanding of the human condition and the environment.

Science is by far the most successful method applied for delving into understanding the nature of things. It has provided explanations and a systematic framework for inquiry where other methods have be...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Tables and Figures
• Acknowledgements
• List of Abbreviations
• 1. Introduction: The Intersection of Risk and Trade
• 2. Science in the Regulation of Risk: A Transatlantic Divide?
• Part I: Informal Trade Conflict
• Part II: Formal Trade Conflict
• Part III: The Relevance of Science
• Notes
• Bibliography
• Index