How Europe employs disguised regulatory protectionism to weaken American free enterprise

International Journal of Economic Development, April-July, 2005 by Lawrence A. Kogan

Hence, the EU has endeavored to convince other WTO members of the political expediency of incorporating their own societal and environmental values/ preferences within national and regional regulations and standards even if they may have the effect of restricting international trade. Thus far, this has permitted the EU to justify its imposition of precaution-based regulations and standards upon EU trading partners. In doing so, it has relied on the position articulated last year by former EU Trade Commissioner (now WTO Director General) Pascal Lamy. He argued that mutual respect for national cultural preferences falls within the notion of 'mutually balanced concessions' that underlies the quid pro quo achieved long ago under the General Agreement on Tariffs and Trade (GATT). (23)

D. Using EHS Policy as a Disguised Trade Barrier

It has become increasingly clear, however, that Europe's strict EHS policies based on the precautionary principle have an added economic dimension. (24) Ailing, lagging or underdeveloped European industries, overwhelmed by significantly higher regional regulatory, standardization, labor and energy costs and starved from a steady reduction in regional research and development investment, are no longer globally competitive. Because European industry has been unable to prevent the proposal and adoption of precaution-based regulations, it has chosen instead to appease and collaborate with their regulatory-minded and risk averse national and regional governments and the politically active European social and environmental movement. To this end, they have agreed also to assist these protagonists in establishing the precautionary principle, which implicitly rejects U.S. scientific and technical innovations, economic efficiencies, intellectual property and free markets, as an absolute global legal standard by exporting it around the world, (25) especially to the United States. Coincidentally, this effort has also served to 'protect' European industry's global economic interests by generating high business and legal costs, which all industry supply chains throughout the world must bear.

IV. EXAMPLES OF EUROPEAN PRECAUTION-BASED EHS REGULATIONS

There are numerous examples of European precaution-based regulations that reflect the use of an administrative presumption of hazard to ban or severely restrict the manufacture and use of certain products, substances and activities. As previously noted, this presumption arises even without scientific evidence showing actual harm or an ascertainable risk of harm posed by a specific product, substance or activity.

A. Biotech Products

The recently lifted EU seven-year moratorium against genetically modified ('GM') food, feed and seed (which has blocked approximately $300 million per year of U.S. agricultural exports since 1998 (26)) is one such law. Also included are the GM pre-market authorization directive and the farm-to-table traceability and labeling regulations recently enacted to replace it. (27) These rules, in part, implement the political treaty obligations assumed by EU Member States under the Biosafety Protocol, a multilateral environmental agreement ('MEA') governing the transfer, handling and use of certain GM products. The EU interprets that treaty as requiring the application of the precautionary principle. (28) These rules effectively discriminate between otherwise identical products solely on the basis of their process or production methods (PPMs), even though how they were made has not been shown to have any negative impact on the safety or performance of the final product or on the condition of the environment. (29) In fact, the EU has even admitted that, "GM foods do not cause any harm to consumers. There is no evidence that this food is any more unsafe than conventional foods." (30)