The International Consortium on Agricultural Biotechnology Research (ICABR)
AN ECONOMIC AND TRADE EVALUATION OF RISK ANALYSIS AS APPLIED TO
Julie A. Caswell
Professor, Department of Resource Economics, University of Massachusetts
Governments have several policy instruments available for influencing the penetration of agricultural biotechnology into their food systems. These include research, intellectual property rights, regulatory approval, and labeling policies. Regulatory approval for use is a critical factor and supply chain or consumer-level labeling may be an important factor in the ultimate market share of products produced with the use of agricultural biotechnology. Under the Sanitary and Phytosanitary (SPS) Agreement of the World Trade Organization, the acceptability of a government s regulatory choices in the SPS area, which includes many biotechnology-related issues, is judged based on, among other things, whether a valid risk assessment was conducted and a determination was made regarding the appropriate level of protection. Trade impact is also an element in the evaluation of regulations as potential nontariff trade barriers under the SPS Agreement. Under the Technical Barriers to Trade (TBT) Agreement, standards and labeling policies may be judged based on the level and pattern of their trade impacts relative to their effectiveness in achieving the regulatory program s stated objective (e.g., satisfying consumers right to know).
This paper will contain a survey of the impacts, from an economic and trade analysis perspective, of governments use of risk analysis in making decisions about their regulatory approval and labeling policies for food products produced with the use of agricultural biotechnology. This will include an evaluation of the steps involved in the risk analysis process (e.g., risk assessment, risk management, and risk communication) and the range of factors considered by different countries in making regulatory decisions regarding use of agricultural biotechnology. The evaluation will focus on the economic and trade impacts of the approval process and labeling policies on the timing of introduction and the adoption rate (market share) of new agricultural biotechnologies.
The paper will first present an overview of the risk analysis process for regulatory purposes, the regulatory approval process followed by countries for agricultural biotechnology, and the impact of recent trade agreements on these processes. It will then compare the rigor and scope of the regulatory process across the European Union, the United States, Canada, Brazil, Australia/New Zealand, and selected developing countries and assess how they affect the economics of biotechnology through market access, timing, and market share. The paper will conclude with case study comparisons of these impacts across countries for recombinant bovine somatotropin (rbST) used in milk production, Bacillus thuringiensis (Bt) seed varieties, and Roundup-Ready soybeans.