MEMORANDUM SUBMITTED BY THE ROYAL SOCIETY
FOR THE PREVENTION OF CRUELTY TO ANIMALS (S6)
The RSPCA is pleased to submit the following
evidence to the Agriculture Committee, focusing on the effects
of the WTO Round on animal welfare in UK agriculture.
INTRODUCTION
1. The relationship between measures to
raise standards on the protection and welfare of animals and the
multilateral trading system is becoming increasingly important.
Measures taken to protect animals from cruelty and extinction
have been at the forefront of national legislation whose legitimacy
has been questioned in the context of the rules of the World Trade
Organisation (WTO)[1].
As a result, both new and existing measures to protect animals
are being adversely affected, even when it is recognised that
such measures are genuinely motivated and not taken to obtain
a domestic trade advantage.
2. The WTO will therefore either be faced
with dealing with an increase in animal welfare disputes or will
be castigated as the reason why standards do not continue to rise.
In situations where additional costs resulting from the increase
in standards can be distributed equitably throughout the market
place, then the policy goal of improved animal welfare or conservation
can be achieved. However, if undue emphasis is given to the benefits
of trade liberalisation, then the non-trade benefits of such policies
may become difficult or impossible to realise. This is the conundrum
facing the members of the WTO.
3. An increase in standards and legislation
has ensured that the EU has some of the highest welfare standards
globally. Although it has been consistently stated that nothing
in the WTO rules prevents a country from raising its own welfare
standards, there are two important consequences that can occur
if standards are raised:
— the cost of the product increases,
leaving the country and its producers who use the higher standard
at a price disadvantage compared to imports produced by crueller
methods;
— the goal of raising animal welfare
standards is closely linked with non-product related process and
production methods (PPMs); making distinctions between products
based upon methods of production is currently highly constrained
under the WTO.
4. In addition, the changes that were introduced
under the Uruguay Round, whereby decisions from dispute mechanisms
are mandatory and require the offending government to amend its
national legislation or pay compensation or risk retaliatory actions,
have sharpened the potential impact of the trade rules on animal
welfare legislation.
5. Thus the dispute mechanism has assumed
greater importance than prior to the Uruguay Round Agreement.
Recent panel deicisions, by interpreting the exemptions to free
trade rules narrowly, have applied WTO rules in a manner that
has started to undermine measures taken to protect high welfare
standards.
PROCESS AND
PRODUCTION METHODS
6. In almost every animal welfare case likely
to be of relevance to the WTO, the measures concerned will deal
with aspects of the production process eg the method by which
an animal is reared, transported or slaughtered. Typically, there
is no observable trace of these producton processes in the final
product to be traded (a non-product PPM). An egg produced by intensive
farming systems will look the same as one that is produced free-range.
A potential conflict occurs where a WTO member wants to prohibit
or regulate agricultural imports on the basis of a production
method considered to encourage poor animal welfare, particularly
if those methods are already prohibited domestically.
7. Although such production processes are
of increasing importance to consumers and policy makers in many
countries, current WTO practice limits distinctions between products
based upon the methods by which they are produced, unless such
methods change the character of the product in a way which is
detectable compared to other similar products. It is generally
presumed that product distinctions based on such PPMs conflict
with Article III of GATT 1994, although there is less agreement
with regard to measures, such as labelling, covered by the Agreement
on Technical Barriers to Trade (TBT). So at present, WTO rules
will typically require products such as eggs to be treated as
"like products", irrespective of how they were produced.
Laws based on PPMs are likely to have to rely on the Article XX
exceptions if they are able to comply with WTO rules.
8. Therefore, trade-related animal welfare
measures will probably need to be justified under the Article
XX exceptions of GATT 1994, specifically clause (a)—protection
of public morals, or (b)—protection of human, animal or
plant life or health. There are numerous uncertainties regarding
the scope of these clauses, the application of the headnote, and
the basis on which a measure is likely to be considered as "necessary".
These uncertainties could be clarified through
a formal interpretation or in a relevant dispute panel. Looking
ahead, PPM distinctions are becoming increasingly important to
consumers and policy makers—the scope for making legitimate
non-discriminatory distinctions under WTO rules needs to be improved.
The general exceptions provided for in Article
XX of the GATT 1994 have been interpreted narrowly by WTO disputes
panels with the result that although such trade-related measures
remain acceptable in theory, they are typically found to conflict
with WTO rules in practice. The recent Shrimp-Turtle dispute continued
the practice of narrowing the application of the Article XX exceptions[2].
Fortunately, the original panel ruling was overturned regarding
the application of the chapeau—a position which if upheld
would have reduced the protection offered by Article XX to almost
zero.
However, despite the fact that the Appellate
Body (AB) was far more reasonable in its interpretation of the
application of Article XX, it did not go so far as to say that
the US measure would have been acceptable if certain conditions
regarding periods of negotiation and technology transfer had been
met. Indeed, thepanel was silent on whether trade measures would
be justifiable following an (unsuccessful) period of negotiations.
Furthermore, the AB did not go on to consider
whether the measure was justifiable under Article XX(b) (animal
life or health) and it takes us no further forward in our understanding
of cases where the need for Multilateral Agreements is less obvious.
9. Thus it is doubtful whether a WTO member
can prevent imports produced by methods that are outlawed domestically,
unless these also pose a risk that can be justified scientifically.
Even labelling schemes, which are designed to provide consumers
with information on matters of concern to them, currently have
an uncertain status. If WTO members are prevented from making
any PPM distinctions, such measures will inevitably have to rely
on the Article XX exceptions.
10. As a multilateral institution, it is
understandable that the WTO prefers multilateral solutions. However,
in some cases, including animal welfare, this may be unrealistic
due to differences in culture and economic development. Fairly
accommodating such differences in national policy is a crucial
challenge for the WTO if trade liberalisation is not to undermine
legitimate domestic social, environmental and ethical policy concerns.
IMPACT ON
ANIMAL WELFARE
11. Animal welfare has been adversely affected
by the way that WTO rules have been applied and interpreted. The
development of new policy measures is now also increasingly subject
to WTO considerations, including the potential impact of future
liberalisation. This is particularly true in agriculture.
12. Until now, discussions about animal
welfare in the WTO have dealt mainly with generalities. This is
expected to change during the negotiations on agriculture where
animal welfare concerns are likely to be raised on a practical
level. EU Agriculture ministers have already stated that international
acknowledgement of animal welfare rules must be one of the key
points in the negotiating brief[3].
This evidence will look at these concerns in the wider context
of agriculture and trade policy.
13. It is important to assess how trade
liberalisation will affect the operation and extension of domestic
farm animal welfare policies.
Thus, if good animal welfare adds to the cost
of production, (see point 15), at what point will national welfare
standards be undermined by competitors who operate lower welfare
standards, with increased trade liberalisation?
Within the EU, this was not a serious consideration
prior to the establishment of the WTO. General agricultural import
restrictions and tariffs meant the amount of imported livestock
products was sufficiently small not to be a factor in influencing
domestic production or patterns of consumption. Similarly, export
subsidies cushioned the impact of higher domestic production costs.
Thus, although the EU's system of support has undoubtedly encouraged
intensification, its protected market has subsequently also facilitated
the improvement of animal welfare standards. Import restrictions,
in some cases, will also have prevented the flow of high-welfare
products into the EU market.
Although the animal welfare standards of the
EU are typcially higher than its competitors, they are still unsatisfactory
and in need of improvement[4].
The cost of improvements made so far in the EU have effectively
been born by producers and consumers, with almost no specific
EU payments to support animal welfare measures. This approach
may not be viable in a more liberalised market, and could cause
a downward pressure on farming standards or require the EU to
consider increasing financial support for welfare measures. Even
if the EU was willing to provide such support it is still unknown
if such measures could be jusitified under the Agreement on Agriculture.
Unqualified further reductions in tariffs, together
with improved market access, therefore pose a potential threat
to animal welfare policies within the EU. In the first instance
this is likely to slow down the pace of domestic reform, ultimately
leading to stagnation or even reversal. Livestock farming represents
approximately half the value of all EU agricultural production
and one third of the total economic support for agriculture[5].
Therefore animal welfare should be considered as a legitimate
non-trade concern, in accordance with Article XX of the Agreement
on Agriculture.
14. There will be circumstances in which
trade liberalisation in agriculture could also facilitate animal
welfare. These are considered below under point 23.
EU ANIMAL WELFARE
STANDARDS THAT
ARE CURRENTLY
UNDER THREAT
15. There are a number of areas where EU
legislation on farm animal welfare potentially conflicts with
WTO rules:
In June 1999 European Agriculture Ministers
agreed to improve the EU standards for laying hens[6].
Taking account of scientific advice, they decided to substantially
increase the minimum space and quality of environment available
to each hen, also phasing-out the use of battery cages by 2012.
However, it was acknowledged that these improvements would increase
costs for producers, making EU eggs less price competitive than
eggs produced in battery cages. Research by European scientists
in 1996 showed that costs of production are influenced by factors
such as the housing system, stocking density, food intake and
labour cost[7].
By taking 100 as the baseline for laying cages giving 450 cm2
per bird (the minimum under the previous legislation, Directive
88/166/EEC), costs were shown to increase to 115 for laying cages
with a space of 750 cm2 per bird, 118 for deep litter systems
of 7-10 birds per m2 and 150 for free range systems keeping birds
at a density of 400 bird/ha. It was estimated that production
costs are about equal between birds in a high density perchery
system and birds in cages given 750-850 cm2.
RSPCA research on the costs of new systems confirmed
these calculations. Feed costs were found to be the most expensive
element of costs, making 55-60 per cent of total cost of egg production.
Free range feed costs per dozen were some 20 per cent higher than
those of cages birds, primarily as caged egg producer are able
to buy in bulk and the higher feed requirements of alternative
systems. Labour costs are lower in battery cage systems due to
the ease of inspection and egg collection. Labour figures are
the second most important cost element under a free range system,
but only the fourth under a battery farm system. Using NFU calculations,
the RSPCA found that labour cost in a free range system is 12.6p
per dozen (19 per cent of total egg production costs) compared
to 4p for caged eggs (8 per cent of total costs). Based on NFU
and other data, RSPCA found that the average total cost per dozen
of battery eggs was 49.9p over a 55 week laying period and 66.7p
for free range eggs.
16. Production costs will thus increase
from the improved welfare standards. But what effect does this
have on the domestic producer? It is instructive to look at the
situation in Switzerland. Domestic egg production from battery
cage systems has been banned. However 60-70 per cent of eggs consumed
domestically remain from caged systems, imported across the border.
The welfare problem was merely moved to another country and the
domestic producers were undercut. In an effort to change this,
in June 1999 the Swiss Government drafted a mandatory labelling
system for all eggs that are sold in Switzerland. This would come
into operation from 1st January 2000. It also proposed that eggs
and egg products that did not bear such labelling would only be
permitted to be sold until 1st July 2000. Food preparation in
places such as hospitals, restaurants and cafes would also have
to be prepared only from food which had labelling confirming that
the eggs were not from battery caged hens (eg produced in a battery
cage, which is banned in Switzerland). The proposal was combined
with a draft law to label all imported meat produced with antibiotics
or hormones with a similar declaration. This proposal was raised
at the WTO for further discussion, but it was not discussed in
any detail or agreed due to pressure from other countries.
17. Concerned that increased imports of
low-welfare eggs could undermine the goals of the new Directive,
Agriculture ministers agreed to press for WTO rules to enable
equivalent conditions of competition.
18. The EU is also considering the introduction
of mandatory egg labelling schemes to ensure that consumers have
adequate information. However a proposal to introduce a comprehensive
mandatory labelling for all eggs sold in the EU was not proposed,
due to WTO concerns. A proposal to introduce mandatory labelling
for all EU produced eggs has been delayed again partly due to
concerns at its applicability under the WTO.
19. Directive 95/29/EEC harmonises rules
on the live transport of animals. Under Article 11 Member States
have to ensure that all imports from third countries have been
transported in accordance with EU rules, in particular that the
animal being transported has not been caused injury or suffering
and that feeding and watering provisions have been undertaken.
Failure to show that these have occurred can result in the humane
slaughter of the animals or the animals to be returned to their
place of departure. It is uncertain whether these conditions imposed
on the import of animals in third countries is concordant with
the WTO rules and several EU countries do not apply this rule
due to these concerns. The extent to which the EU can regulate
the welfare of animals outside its territory is uncertain under
WTO rules.
20. Directive 93/119/EC harmonises the rules
on welfare of animals being slaughtered. Under Article 15 only
meat from EC approved slaughterhouses is able to be imported into
the EU. Although this is primarily a health and hygiene matter
the Directive explicitly refers to only allowing in meat from
animals that have been slaughtered under conditions that offer
guarantees of humane treatment at least as high as those in the
Directive. It thus ataches welfare conditions. A proposal to raise
these standards has been discussed in the Commission for over
a year but has not been issued due to the uncertainties as to
how it will be interpreted if challenged under WTO rules.
21. Directive 98/58/EC was agreed in 1998
to apply the Council of Europe Convention for animals kept for
farming purposes in EU law. This would effectively allow proposals
and harmonisation on welfare standards on the farming of all animals
in the EU[8].
It could, for instance, allow future EU laws on the farming of
broiler chickens, geese and foie gras. However to counteract concerns
that higher welfare standards could cause domestic producers to
become less competitive, farm ministers agreed that a report on
comparing welfare standards in the Community and third countries
would be submitted by the Commission. It would also examine the
extent to which Community objectives on animal welfare would be
undermined by competition from third countries. This report is
in the process of being prepared.
PROPOSED SOLUTIONS
The EU is presently considering the options
to solve some of the problems outlined above. The RSPCA considers
that the available options can be summarised into seven key areas:
22. Preferred market access: This would
enable WTO members to give preferential or conditional market
access on the basis of objective, non-discriminatory sustainable
production criteria, including animal welfare. The aim would be
to facilitate trade in agricultural products produced to high
environmental, animal welfare or social standards. Such preferred
market access could take the form of a specific quota, subject
to special rates of tariff, or be otherwise "front-loaded"
within a Member's trade liberalisation commitments. Such preferences
could be applied on the basis of the compliance of the exported
product rather than compliance of the exporting country. They
could equally be devised to promote equivalence with domestic
standards or to promote trade in high standard products, such
as free-range or organic. For example, if a nation has an import
quota for eggs, it should be able to choose to fulfil this with
eggs produced to welfare standards comparable to its own. Providing
this actually results in trade and is applied without discrimination,
it should not be of concern to the WTO that a particular nation
prefers to trade in eggs produced according to certain animal
welfare standards.
23. Domestic support. The extent to which
measures to promote animal welfare are covered by the existing
"blue" or "green" boxes is unclear. It is
therefore important to ensure that, in future, payments to support
animal welfare can be made and are exempted. One possibility would
be to include a new animal welfare clause in Annex 2 similarly
worded to clause 12, or alternatively, to amend clause 12(a) to
read ". . .environmental, animal welfare or conservation
programme. . .". In some cases, it will also be possible
to support animal welfare objectives under the existing deminimis
percentages. However, the right to provide exempted domestic support,
will not automatically mean that animal welfare will be assisted
in this way. For this reason, it is also vital that negotiators
consider the likely impact of further liberalisation and ensure
that appropriate mechanisms are available and deployed to rectify
any adverse non-trade effects likely to result from tariff reductions
or improved market access.
24. Counterbalancing measures. For specified
purposes, WTO members could also be given latitude to introduce
border measures to adjust for any extra costs imposed on domestic
producers such as to meet higher animal welfare standards. This
can perhaps be achieved most transparently in new cases, such
as where a member is raising its national animal welfare standard.
However, to be fair, any adjustment, most probably a tariff, would
need to fairly reflect the extra difference in cost compared to
principal competitors. It should also only be applied with justification,
so that if competitors already operate or subsequently adopt equivalent
standards, there would likely be no justification to introduce
or maintain such a measure. It should be noted that the purpose
of such measures would be to ensure that WTO members could continue
to raise domestic standards without suffering market disadvantages.
In the short term, it may be possible to achieve this within existing
tariff bindings for some products.
25. Labelling: Although the question of
labelling will not be part of the WTO negotiations on agriculture,
it is clear that the subject will be discussed. Furthermore, labelling
is of growing and special importance for agricultural products.
Consumers are increasingly interested to know about food ingredients
and production methods, including animal welfare, organic, fair
trade and sustainable production. As markets liberalise, the need
for better labelling is likely to increase as consumers will no
longer be able to assume that all or most of the products available
to them are produced in accordance with domestic standards. The
introduction of mandatory labelling for welfare products, is to
be supported provided that the schemes are transparent. Voluntary
labelling should not be made subject to WTO jurisdiction as it
is already allowed under WTO rules, although good practice guidance
for establishing such schemes may be useful.
26. Import Restrictions: It should be noted
that none of the above mentioned examples actually prohibit trade.
In different ways, they all seek to ensure that trade and animal
welfare can both be advanced without becoming an undue hindrance
to the other. There may however be a limited number of circumstances
when a complete import restriction may be justified. This may
be because this is the only effective way to achieve a legitimate
goal, or because public sensibilities demand a complete prohibition
on a product due to its "unacceptable" production methods.
If challenged, it is likely that Article XX of GATT 1994 would
have to be invoked. However it is important that import restrictions
should only be used in a limited manner. They should be transparent
and not disguised under other forms such as the SPS.
27. Institutional Reforms: At the heart
of animal welfare concerns is the question of non-product related
PPMs: Thus, any trade-related animal welfare measure will likely
be assessed in terms of whether WTO rules permit such distinctions.
If it is found to conflict, it will have to rely on the Article
XX exceptions, principally (a) and (b). In the forthcoming negotiations,
there is an urgent need to address both PPM issues and the application
of Article XX. These affect a wide range of non-trade concerns,
not just animal welfare. It is thus essential that the WTO address
the PPM issue and the application of Article XX.
28. Multilateral solutions: there are already
a number of international and bilateral agreements concerning
animal welfare, but none of these are global in character. Seeking
to establish such an agreement for farm animals has considerable
merit. If successful, this could do much to advance the cause
of animal welfare overall, but it would be unlikely to satisfactorily
address the trade concerns of those who already have, or wish
to adopt, higher standards. For this reason, the other options
outlined above all need to be thoroughly explored. In summary
the Parties to the WTO should not be discouraged from seeking
international agreement on animal welfare but this would not solve
all of the trade concerns that have been addressed in this report.
CONCLUSION
29. Developments in the EU relating to leghold
traps, cosmetics and farm animal welfare measures have all emphasised
the continuing relevance and impact of WTO to both maintaining
and improving animal welfare standards.
30. There are a number of pieces of current
EU legislation on farm animals which use measures that have an
uncertain status with regard to WTO rules. Attempts to improve
the welfare standards in certain areas, such as slaughter, have
already been put on hold pending further consideration of their
relationship with the WTO.
31. Research by European scientists showed
that costs of production of eggs are influenced by factors such
as the housing system, stocking density, food intake and labour
costs. Production costs of eggs will increase under the new legislation
to phase out battery cages.
32. EU farm ministers agreed when the new
rules on battery hens were adopted that discussion had to occur
in the WTO on measures to limit damage to prevent loss of competitiveness
for domestic producers compared to imports from third countries
which had lower welfare standards. Farm ministers have subsequently
agreed that a solution to this issue should form part of the EU
negotiating mandate in the WTO.
33. If animal welfare measures are to be
completely compatible with WTO rules, then new thinking will be
required to enable legitimate distinctions to be made on the basis
of non-product related PPMs. It is essential that the WTO address
the PPM issue and the application of Article XX.
34. Labelling schemes based on animal welfare
policy criteria could be effective policy instruments in some
cases. Experience with egg labelling demonstrates that voluntary
labelling is not always sufficient and that comprehensive, mandatory
schemes are also needed. Subject to these being operated in a
transparent and non-discriminatory manner, it is necessary to
ensure that WTO rules do not prevent the use of suchschemes.
35. As trade in agricultural products becomes
more liberalised it will be important to ensure that welfare standards
can continue to be improved within the EU without loss of competitiveness.
To achieve this it may be necessary to either make appropriate
border adjustments or to enable payments to be made to producers—both
options may require revisions to the existing WTO rules and will
need to be discussed in forthcoming agriculture negotiations.
36. Other forms of non-discriminatory measures
could help to facilitate trade in high-welfare products, eg through
preferred market access schemes, import quotas and preferential
tariffs. Thus, future liberalisation could be used to promote
trade and animal welfare—the so-called "win-win"
solutions. Phasing out export subsidies and re-directing these
to support animal welfare and other non-trade objectives could
yield similar benefits.
29 October 1999
1 Council Regulation 3254/91/EEC, Official Journal
of the European Communities L308/1-2 (1991) aimed at implementing
a prohibition on imports of furs caught in leghold traps to bring
imported furs in line with the standards operating in the EU,
which banned the leghold trap from 1995. However, following fears
of a WTO challenge, agreement was struck in 1997 with USA, Canada
and Russia, the main fur exporters to the EU, to allow them to
continue to use the leghold trap. Under Directive 93/35/EEC
on the approximation of the laws of the Member States relating
to cosmetics products (Official Journal of the European Communities
L151/32-36. 1993) a marketing ban on imports of cosmetics products
tested on animals where there are alternatives was approved to
be implemented from 1 January 1998; it has yet to be implemented,
again due to WTO fears. Back
2
Report of the panel: WT/DS58/R 1998. Back
3
Press release report of the 2,202nd Council meeting Brussels 27/9/99
1277/99. Back
4
Animal Welfare in Europe, Ed. Wilkins, D.B., Kluwer International
Law, London 1997. Back
5
Anon. 1997 Economic Activities Agriculture-Final animal output,
million ECU, Eurostat, European Commission, Brussels 1999. Back
6
Directive 1999/74/EC OJ L 203/53 3.8.99. Back
7
Report on the welfare of laying hens. Scientific Veterinary Committee
DGVI/BII.2 1996. Back
8
Currently there are only harmonised standards on the farming of
pigs (Directive 91/630/EEC), battery hens (Directive 1999/74/EC)
and calves (Directive 97/2/EC). Back
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