Memorandum by the Department of Trade
and Industry (DTI)
The Committee has asked the DTI for information
on the following areas:
1. During the course of the inquiry
so far, the Committee has heard of possible health risks from
imported foodstuffs. In particular one of the issues that has
arisen is how far a public health perspective is incorporated
into negotiations about trade agreements (such as for the Sanitary
and Phytosanitary agreement of GATT).
The Committee would be very grateful
if DTI could provide some information as to what structures are
in place to ensure that DTI incorporates the views of other government
departments (especially DoH and DEFRA) and the public health perspective,
with respect to health risks, when considering such negotiations.
2. A further area of interest that has
come to the attention of the Committee is that of Government support
for biomedical ventures. In particular, does the DTI support scientific
entrepreneurship in the UK particularly in the arena of biomedics;
does the DTI operate a system of loans or funding to enable development
of products that may not necessarily have a large and secure market,
such as vaccines, diagnostic tests for infectious diseases?
Please see attached (Annex A) a note providing
information addressing these questions. I hope this information
proves helpful, but should you feel you require any further clarifications
or data, please contact the undersigned who will attempt to ascertain
this for you.
WTO SPS AGREEMENT
The GATT (General Agreement on Tariffs and Trade)
has been applied to national food safety, animal and plant health
measures which affect trade since 1948. The key relevant GATT
provisions are the "most favoured nation clause" which
requires WTO members to treat equally imports of goods from all
third countries and national treatment which requires a WTO member
to treat imported goods in an identical manner to like domestic
goods. Therefore if a country applies certain food safety standards
eg maximum residue levels of a certain substance, identical standards
would have to be applied to all goods whether imported or produced
domestically. The GATT also contains an exemption under Article
XX(b) which allows WTO members to take measures "necessary
to protect human, animal or plant life or health" providing
that these would not constitute a means of arbitrary or unjustifiable
discrimination between countries and were not simply a disguised
restriction on trade. This demonstrates that even at this early
stage, trade rules took account of the special nature of goods
which could pose a risk to human, animal and plant health.
However, with increasing concern about food
standards globally and the growing risk that sanitary and phytosanitary
standards might be used as a disguised restriction on trade particularly
as trade barriers were reduced, it was felt that a more comprehensive
set of rules was needed to augment the "public health"
exception in Article XX(b) of GATT. The Sanitary and Phytosanitary
Agreement (SPS) was signed in Marrakesh on 15 April 1994. The
Agreement formed part of the Final Act of the Uruguay Round of
Multilateral Trade Negotiations, which also established the World
Trade Organisation (WTO). It came into force on 1 January 1995.
The Sanitary and Phytosanitary Agreement covers the rights and
obligations of WTO members when setting and enforcing national
food safety, animal and plant health measures as far as these
relate to trade. The SPS Agreement covers all measures, which
aim to protect:
Human or animal health from food;
Human health from diseases transmitted
by animals or plants;
Animals and plants from pests or
To prevent or limit other damage
to a country from the entry, establishment or spread of pests
THE SPS AGREEMENT
The SPS Agreement provides national Governments
with the autonomy to set standards according to the level of protection
they deem appropriate to protect human, animal or plant life in
line with their policy goals. The WTO in no way decides what level
of protection is appropriate or how that level of protection should
be achieved. The purpose of the SPS is simply to prevent such
SPS measures from being used as disguised protectionism. The SPS
provides that SPS measure should not be arbitrary, they should
be proportional to the risk identified, not more trade restrictive
than necessary, consistent and should not discriminate between
imports from countries where similar conditions prevail. SPS measures
should be based on sound science and proper risk assessment and
can be challenged under the WTO dispute settlement system by other
WTO members to the extent they are not.
Article 5.7 of the SPS agreement does, however,
recognise that it will not be possible in all circumstances to
provide solid scientific evidence to justify taking a measure.
Where this is the case, the SPS Agreement allows WTO members to
provisionally adopt SPS measures on the basis of available relevant
information. This information can include information from the
relevant international organizations as well as from SPS measures
applied by other Members. The SPS Agreement puts the onus on the
member taking the measure to seek the additional information necessary
for a more objective assessment of risk and to review the sanitary
or phytosanitary measure accordingly within a reasonable period
of time. The responsibility for providing the necessary evidence
and the need for review is placed on the member taking the measure
to prevent members using this provision to apply an SPS measure
ad infinitum with no clear justification.
The European Commission published a Communication
on the precautionary principle in February 2000 (Com (2000) 1Final
dated 2 February 2000) which:
outlines the Commission's approach
to using the precautionary principle within the European Union;
establishes Commission guidelines
for applying it;
seeks to build a common understanding
of how to assess, appraise, manage and communicate risks that
science is not yet able to evaluate fully; and
seeks to avoid unwarranted recourse
to the precautionary principle as a disguised form of protectionism.
This Commission Communication therefore sets
out the approach that Member States should take in applying the
As stated above, the SPS allows countries to
establish standards according to the level of protection they
deem appropriate. However, the Agreement does encourage Governments
to adopt relevant international standards where these exist. International
standard setting bodies recognised by the WTO in this context
include the Codex Alimentarius Commission, the World Organisation
for Animal Health (also known as the International Office of Epizootics),
and for plant health, the international and regional organizations
operating within the framework of the International Plant Protection
Convention. The UK is a member of Codex Alimentarius Commission
and the World Organization for Animal Health. In each case the
standards are set by leading international scientists and Government
experts and are subject to international scrutiny and review.
It is often the case that international standards
are higher than national standards, but where the reverse is true
and a WTO member wishes to set national standards above the agreed
international standard, they may be required to provide scientific
evidence to justify this decision.
If another country Government can demonstrate
that the SPS measures it imposes achieve the same level of protection
as an importing Government, these should be accepted as equivalent.
The exporting Member is required to give the importing member
reasonable access, upon request, for inspections to ascertain
whether this is the case. The SPS agreement encourages members
to conclude bilateral and multilateral agreements on mutual recognition
of the equivalence of SPS measures.
If a WTO member introduces new SPS measures,
or alters its existing SPS measures then it is required to notify
the WTO SPS Secretariat who will in turn notify all WTO members.
Governments are also required to publish all SPS measures and
to provide an explanation of the reasons for taking a measure
at the request of any other WTO member Government. Each WTO member
is required to have a national contact point to deal with all
SPS queries. DEFRA fulfil this role in the UK.
[The SPS is a complex agreement and the above
is in no way intended to be an exhaustive description, but simply
an explanation of the main provisions as they relate to the Committee's
What role does the DTI have within the UK in
enforcement of the SPS Agreement?
The application of the SPS Agreement is closely
integrated into all relevant processes within the EU.
The SPS Agreement set up an SPS Committee within
the WTO which meets three to four times a year. As the European
Community has competence on trade matters, the European Commission
takes part in negotiations in that committee on behalf of all
15 EU Member States. The Commission holds coordination meetings
where EU positions are agreed in Brussels before each SPS Committee
and during the SPS Committees in Geneva. DEFRA represents the
UK at these meetings, with occasional attendance from the Food
Standards Agency (FSA) if appropriate. Other Government departments
(primarily FSA, DTI) DfiD are consulted on the issues beforehand
Within the EU the setting and enforcement of
SPS measures is decided at the EU level and discussed in various
bodies including the Agriculture Council, the Standing Committee
on Plant Health and various veterinary committees. DEFRA/FSA represent
the UK at these meetings and consult others in Government as appropriate.
The DTI will comment if it believes there is
a risk that a measure might contravene the provisions in the SPS
Agreement, for instance if the level of SPS protection suggested
by the Commission does not seem proportionate to the problem or
if the scientific justification seems questionable. We will also
comment on cases where SPS measures proposed or adopted by third
countries affect UK trade interests and we believe the measure
cannot be justified under the SPS Agreement. If either an EU or
third country measure is believed to contravene the SPS Agreement,
it is usually discussed and a common position agreed in the EU
trade Committee, the Article 133 Committee. The Commission will
then act accordingly.
It is rare that the UK will introduce an SPS
measure (eg an import restriction) at a national level, given
its membership of the European Union. However, there have been
some instances where this has happened, but usually only as an
emergency measure, with subsequent debate and decisions on appropriate
action taken at the European Union level.
[Both DEFRA and the FSA have contributed to
the above assessment on the SPS Agreement. However, we would respectfully
recommend that the Committee seek further information from DEFRA
and the Food Standards Agency on how risk is assessed, the criteria
taken into account to do this and the standard setting process
within the EU.]
DTI offers grant support to assist companies,
in particular SMEs, in development of innovative products in biomedical
and other technology areas. DTI is also supporting the transfer
and exploitation of scientific knowledge through programmes such
as LINK, which supports pre-competitive research collaborations
between industry and the research base. In addition, the Harnessing
Genomics programme supports a range of activities to ensure that
scientific developments in genomics and output from projects such
as the Human Genome Project can be exploited by UK industry.
The DH takes the lead in this area and works
on a number of levels to encourage and support the development
of new technologies, both initiating primary research in the area
and working with the DTI to provide financial and technical support
for the biotechnology industry.
The DH and DTI work closely on an ongoing basis
to ensure systems are in place to support companies developing
diagnostics, therapeutics and prophylactics (such as vaccines).
In general these schemes are not directed at any specific treatment
area (ie not "infection" per se), but initiatives are
underway to ascertain whether funds should be more specifically
The Government announced in its April 2002 Budget,
tax credits for all pharmaceutical companies which spend money
on research and developmentorphan drugs included. Additional
incentives are offered to companies which undertake research into
vaccines and medicines for the treatment of TB, malaria and HIV/AIDS.
DTI AND INDUSTRY
The Bioscience Innovation and Growth Team (BIGT)
has been established by the DH, DTI and Biotechnology Industry
Association (BIA) to bring together UK biotech companies plus
relevant stakeholders under the chairmanship of Sir David Cooksey.
It is considering how Government policy and investment can encourage
innovation and growth amongst UK biosciences companies. Four Working
Groups are examining specific topics, with one considering NHS/Industry
Partnerships and how these can be constructed to enable expeditious
development of new technologies such as vaccines, diagnostics
and other medicines. The DH and DTI intend to present conclusions
and recommendations in July.
With regard to finance, small to medium biotechnology
companies are able to apply for both the standard DTI grants available
to all similarly sized businesses, plus a number targeted specifically
at biotech companies.
General grants that small and medium sized biotechnology
enterprises are eligible for are:
European Sixth Framework Programme (FP6) funding,
which is releasing
17.5 billion to fund biotech research;
the Small Firms Merit Award for Research
and Technology (SMART) scheme, which provides grants for development
and maximising use of technology;
the Shell Technology Enterprise Programme
(STEP) that enables affordable employment of undergraduate workers;
the TCS scheme [DN: TCS is its name,
not an abbreviation] that places graduates at companies' disposal.
University spin-offs may also benefit from the
University challenge fund, which provides early stage funds for
innovative, but risky ventures.
A number of biotechnology-specific funds, organised
by DTI, are also available including:
Manufacturing for Biotechnology,
which enables companies to identify and meet their manufacturing
Harnessing Genomics offers funds
to support genome-originated research; and
the LINK and Science Enterprise Challenge
initiative which provide funding for collaborations between biotechnology
companies and academia.
Other initiatives are underway to help support
biotechnology companies on a practical basis, such as Measurements
for Biotechnology and iBioUK.
The DH and DTI are helping to set up Measurements
for Biotechnology to enable the UK to develop world-leading measurement
technologies that will have direct benefit to diagnostics and
aid development of vaccines and medical treatments.
iBioUK is an ongoing initiative to provide practical
advice to biotech companies and its work has included the publication
of a regulatory atlas as a resource on all regulations that affect