Select Committee on Science and Technology Written Evidence


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.

Annex A

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 disease; and

    —  To prevent or limit other damage to a country from the entry, establishment or spread of pests or disease.

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 precautionary principle.

INTERNATIONAL STANDARDS

  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.

EQUIVALENCY AND MUTUAL RECOGNITION

  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.

TRANSPARENCY

  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 inquiry.]

  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 as appropriate.

  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.]

GOVERNMENT SUPPORT FOR BIOMEDICAL VENTURES

  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.

FUNDING OF NEW TECHNOLOGIES/VACCINES

  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 targeted.

  The Government announced in its April 2002 Budget, tax credits for all pharmaceutical companies which spend money on research and development—orphan drugs included. Additional incentives are offered to companies which undertake research into vaccines and medicines for the treatment of TB, malaria and HIV/AIDS.

COLLABORATION WITH 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; and

    —  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 needs;

    —  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 biotech companies.

March 2003


 
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