ICTSD Bridges Weekly Trade News Digest
19 September 2000

WTO RULES IN FAVOUR OF FRENCH ASBESTOS BAN; NGOS REMAIN SCEPTICAL

A WTO dispute settlement panel report released on 18 September upheld a French ban on chrysotile "white" asbestos, rejecting a Canadian complaint. Canadian trade officials have indicated that they will appeal the ruling, arguing that the WTO's task was to determine whether the ban complied with multilateral trade agreements, not to rule on safety or on the principle of safe use of chrysotile asbestos. Nevertheless, the ruling is the first time a WTO panel has upheld arguments put forward by a defending party to safeguard public health: among its arguments for maintaining the ban, France (represented at the WTO by the EC) maintained that the measure was "necessary to protect human health, within the meaning of Article XX(b) of the GATT." The ruling, however, has garnered some criticism from concerned environmental groups.

At the request of Canada, the panel was set up on 25 November 1998 to examine the December 1996 French measure prohibiting imports of asbestos and products containing asbestos. In its communication to the panel, Canada claimed that the French ban was inconsistent with a number of articles in the WTO agreements on sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT) and Article III of the GATT (on nondiscrimination). Brazil, the US and Zimbabwe were third parties to the dispute. In an interim report to the parties released on 13 June 2000 and subsequently leaked to the public (see BRIDGES Weekly Trade News Digest Vol. 4, No. 24, 20 June 2000; http://www.ictsd.org/html/weekly/story1.20-06-00.htm), the panel rejected Canada's claim that the ban constitutes an unnecessary obstacle to trade under Article 2 of the TBT Agreement, arguing that the ban was not a technical regulation and therefore did not fall under the scope of the agreement.

While the WTO panel ultimately ruled that France was justified in maintaining the ban under article XX, it pointed out that France had violated WTO rules by discriminating against Canadian asbestos, which it deemed a "like" product to safer domestic substitutes. The "like product" aspect has spurred environmental groups to decry the WTO decision as 'doing the right thing for the wrong reasons' and setting a dangerous precedent for failing to distinguish between toxic and non- toxic products.

"The 'like product' portion of the ruling just doesn't make sense," said Steve Porter, senior attorney at the Center for International Environmental Law (CIEL). "How can they claim that a product that is dangerously toxic and one that is benign are the same? The WTO panel ruling defies common sense." Said Martin Wagner, Director of International Programs for Earthjustice Legal Defense Fund, "The asbestos ruling appears to represent general progress, but many major issues of concern regarding WTO rules and the WTO dispute settlement system remain unresolved."

CIEL, together with the World Wide Fund for Nature (WWF) and the Foundation for International Environmental Law and Development (FIELD), have released a comment on the report that can be accessed shortly on their websites at: http://www.ciel.org/; http://www.panda.org/; or http://www.field.org.uk/.

The dispute panel decision can be accessed on the WTO website at: http://www.wto.org/english/tratop_e/dispu_e/distab_e.htm#ds135.

Canada also loses Appellate Body decision on patent protection

On 18 September the WTO Appellate Body endorsed an earlier panel ruling against Canada and in favour of the US on the term of patent protection in Canada. The panel had found Canada's patent term for certain pre- 1989 patents to be inconsistent with obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

"We are disappointed by the Appellate Body report," said International Trade Minister Pierre Pettigrew. "We will review this ruling carefully and continue our consultations with stakeholders and provinces before making any decision on how to proceed with respect to implementation."

Canadian Industry Minister John Manley stated, "Because this ruling affects only patents filed prior to October 1, 1989, it does not compromise the underlying balance in Canada's patent regime".

Under Canada's Patent Act, the term of protection of patents based on applications filed before 1 October 1989 is 17 years from the date the patent is granted. The WTO panel concluded on 5 May 2000, and the Appellate Body concurred today, that under the TRIPs Agreement a minimum term of 20 years from the date the patent application is filed must be available. Generic drug manufacturers in Canada warned in May that extending the term on drug patents could cost Canadian consumers as much as $C200 million in higher prices for prescription drugs.

"Canada to appeal against WTO ruling on asbestos," FINANCIAL TIMES, 19 September 2000; "WTO Ruling on Asbestos Case Gets Mixed Reviews from Enviros: Groups Say Process is Flawed Despite Decision to Uphold Ban," EMS, 18 September 2000; "Canada disappointed with WTO Appellate Body Decision," DFAIT Press Release, 18 September 2000.