Exporting Europe's Protectionism

Exporting Europe's Protectionism

Mini Teaser: Europe is busy making protectionism a cultural value. And you thought Doha was messy.

by Author(s): Lawrence A. Kogan

The basic rules of international trade are simple. The United States and the European Union, the two major trading blocs, have each sought to curb serious health and environmental risks before they cause substantial harm. Both have promoted industrial policies to enhance the competitiveness of their industries and the global economy along with them. The institutional framework of the GATT and the WTO that evolved alongside the United Nations Charter has kept these competing aims in reasonable balance. It has also reflected the main global priorities of later eras: preserving peace and stability through international commerce and the rule of law.

Liberalizing international trade has thus remained one of the primary tenets of international relations. Trade restrictions have not generally been tolerated unless clearly legitimate objectives--such as human, animal and plant health, environmental protection, or national security--were seriously threatened and no alternative means of protecting them were available. Where countries have needed to enact apparently arbitrary regulations to preserve national interests--that is, in the absence of relevant international standards or substantially equivalent national standards--they have been required to justify their imposition: A legislating WTO party must prove through an empirical science-based risk assessment that the health or environmental hazard identified is "real" and poses significant harm to society.

One WTO provision, Article 5.7 of the SPS Agreement, however, entitles member states to employ precautionary measures to protect human, animal or plant health even when they do not possess sufficient scientific evidence of a product's safety or harmfulness.. Quite stringent tests must be satisfied before this provisional safeguard can be invoked.. For instance, there must be insufficient relevant scientific evidence concerning the particular health or safety risk that a proposed measure is intended to address, and that measure must be adopted on the basis of available pertinent information. In addition, the government must demonstrate that it has sought actively to obtain the additional information necessary to conduct a more objective risk assessment, and also that it has made the measure subject to review within a reasonable period of time. Embedded within this balanced framework is a pragmatic acknowledgement among WTO members that a certain amount of risk is unavoidable in everyday life and that international trade and global stability are good things in themselves.

During the past decade, however, the European Union, with assistance from "international civil society" (a euphemism for non-governmental pressure groups), has sought to alter this equilibrium by enacting regional regulations and promoting process-based industry standards that both depart from this practice and have an extraterritorial impact. These proposals reflect what the EU sees as a more pressing global priority than freer trade--namely, achieving sustainable development.

Sustainable development, as the EU sees it, is rooted in the belief that industrialization, globalization and technological advancement pose potentially terrible but unknown threats to human health and the earth's ecosystem. National governments should accordingly engage in proactive environmental risk management to extinguish such threats. Central to this notion of stewardship is acceptance of the precautionary principle, described by environmentalists as "a radical new approach to science and technology" that presages a "great shift from [the current] risk-taking age to a [new] risk-prevention era."

To this end, the precautionary principle imposes on policymakers and on industry a moral and legal "duty of care", intended "to anticipate problems before they arise or before scientific proof of harm is established", without regard to the social and economic costs such precaution would engender. It therefore shifts the regulatory burden of proof, consisting of both the burden of producing evidence and the burden of persuasion, from the government (concerned about the possible occurrence of a serious harm) to the manufacturer or operator (whose activity may give rise to this harm). Indeed, its enforcement subjects industry to a standard of proof that requires them to "demonstrate safety adequately or sufficiently", comparable to the "beyond a reasonable doubt" standard in U.S. criminal law. It assumes, in effect, that whoever tampers with the environment is guilty until proven innocent.

It therefore neither requires nor even allows the use of economic cost-benefit analysis--the equity-balancing test generally used in the United States to "maximize net benefits, including potential economic, environmental, public health and safety and other advantages." That is because--according to the Commission's legal adviser--"cost benefit analysis and other influences can lead to undue delays in precautionary action and further losses."

Institutionalizing the precautionary principle would be a major transformation of the current international trade rules. It would replace the prevailing U.S. and GATT/WTO paradigm, which focuses on empirical science (the "knowables") in analyzing and managing risks. It would impose instead a new model of risk evaluation that dismisses the need to identify ascertainable and measurable risks or the need to establish specific causal links between suspect products or processes and the harm they may cause.

Brussels has, in short, proposed a new model to evaluate potentially serious but unknown risks that would essentially transform the area of risk regulation into a contentious political and legal minefield. And to make matters worse, it redefines both risk and risk regulation in terms not of science but of cultural values.

Perception and Averting Risk

One of the primary "breakthroughs" achieved by the precautionary principle, according to its advocates, is a better understanding of the relationship between the scientific uncertainties of risk and individual and collective perceptions of it. This relationship is explained in a recent April 2003 report adopted by the EU Commission's Scientific Steering Committee, which identifies a number of economic activities that the European public perceives as being too risky. They include:

"exposure to health hazards by chemical factors, safety of food and drinking water, natural and manmade poisons, infectious diseases, and new technologies, especially bio-technology. They include also the welfare of companion animals, wildlife and animals in general, as well as the environment as a whole."

The report calls upon the commission to enlarge the scope of the scientific risk assessment that must be performed to justify national regulations that depart from WTO rules. The risk assessment envisioned would go beyond the traditional use of "hard" analytical science (for example, statistical analyses of likelihood and severity of harm, actual exposure data, and the likely impact on affected exposure groups) to the use of "soft" social science principles to assess subjective notions of "quality of life" (based on the public's perceptions, fears and impressions of uncertain and hypothetical future risks). The report finds that such notions are often directly responsible for the tensions and psychosomatic ailments that reduce human "well-being" (as defined by the World Health Organization) and thereby the quality of life. It also finds that these fears are largely rooted in cultural and ethical values, "which can be different regionally and individually and even change in time." It then leaps from these considerations to the following conclusion: "[S]ince the final issue of any risk assessment is the impact on people's life as experienced by the people", such perceptions must be incorporated into risk assessment.

To buttress this conclusion, the report emphasizes the public anxieties associated with the application of modern technologies to everyday products and processes about which very little is generally known. It postulates that these anxieties stem not from a general and unavoidable fear of the unknown, but partly from the failures of the EU's risk communication and technology education, and partly from the "unnatural character of new technologies." These failings have allegedly had a profound impact on Europeans' perception of self-autonomy and have thus resulted in the public experiencing higher levels of stress and feelings of helplessness.

These higher levels of stress might, of course, be traceable in part to the false and exaggerated claims of technological harm put out time and again by environmentalist organizations and "green" publications. The report does not consider this possibility. What it concludes is that public risk perception and risk communication have a direct bearing on "quality of life" considerations and human "well-being", whether or not the risks are real. And since these fears have reduced public confidence in the ability of EU regulators to protect them from harm, there must be more, and more stringent, regulation. The report further recommends that "aspects of the quality of life beyond traditional risk assessment and risk management are to be included in the [risk evaluation] process via the precautionary principle."

These recommendations do not emerge from a philosophical or political vacuum. It is generally agreed that the precautionary principle is essentially a European ethos that advocates a better-safe-than-sorry approach to modern-day living. Rachel Thompson of APCO, a public relations firm, has noted that Europe's resort to the precautionary principle reflects a deeper aversion to risk that is likely attributable to "sharp demographic differences" with the United States. "European electorates are aging much faster than America's, making Europeans more risk averse."

Yet Europeans must realize that there are tradeoffs. The precautionary principle will slow down European economic growth, reduce European innovation and lessen the opportunities for future generations of their citizens (contrary to the vision underlying the Lisbon Strategy of neoliberal economic reform). Europeans could come to terms with their individual fears in practical ways that do not impose Luddite restrictions on scientific advances and economic growth--restrictions that would have prohibited the development of penicillin if they had been in force at the time. They could collectively challenge lawmakers to develop a more pragmatic and balanced approach to risk management. Instead, they have allowed the regulatory bureaucracy to proceed with precaution-based regulation--and the results are now beginning to be felt.

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