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Brexit: regulatory philosophy

2017-07-27 07:35:11

We've written a great deal on the general issue of non-tariff barriers, most often in the context of regulatory barriers. In so doing, I've given considerably less space to what might actually be the most serious barrier of them all, and the most difficult to surmount – regulatory philosophy.

Although some of the issues involved may be complex, this relatively easy to define. What it amounts to is different ways of doing things: individual governments have different ways of achieving the same regulatory outcomes.

In trade deals, the big problem arises when the parties seek regulatory harmonisation – not just the same outcomes, but the same way achieving those outcomes. This can be for wholly selfish reasons, on the basis that compliance costs must be equalised so that no single party gains a trading advantage through less rigorous regulation – the so-called "level playing field" doctrine.

There can, however, be perfectly legitimate reasons for regulatory harmonisation – not least of which is transparency. The outcomes of regulation are not always obvious or easy to measure (or measured in the same way), so it is easier to monitor a trade deal, to see if the parties are playing fair, if everybody is working to the same rule book.

Where one has developed nations, though, each party to an agreement may already have their own systems in place – many of them with historical antecedents, underpinned by powerful cultural determinants.

At its most simplest, a difference might be that, in one country, a particular issue might be regulated at local authority level while, in another, a central body might be responsible. In other areas, one authority might rely on a prior approval model as against a system which relies more on post-release legal sanctions – either criminal or civil.

And, as we have seen with the "chlorine chickens", the differences might be between technical control systems – farm-to-fork versus chemical intervention, with no obvious or clear advantage to either. How typical it is, though, for George Monbiot to get hold of the wrong end of the stick. He argues that this is an example of the UK being forced to accept lower food standards, that being "only a small part of the harm done by globalisation".

As an example of the impoverished level of debate, though, Monbiot seeks to determine whether using chlorination in the processing of poultry actually works. Here, relative to the two main types of food-borne diseases related to poultry - Salmonelloses and Campylobacteria enteritis – we found that contamination levels in US and EU produce were difficult to evaluate.

In short, there is no correlation between the changes in the prevalence of the causal organisms in poultry and the incidence of disease, or good evidence of a relationship with different control systems. Salmonelloses in the EU, for instance, can be very low or high in the EU, dependent on country, where chlorination is prohibited, with US incidence higher than the lowest and lower than the highest.

Monbiot, however, chooses a different tack. He cites the Adam Smith Institute (ASI) report on the issue, and a claim that if chlorine immersion wasn't effective, "one would expect foodborne illnesses carried by chicken to be much more prevalent" in North America. But it claims that figures from the World Health Organisation reveal that salmonella and campylobacter infections there are "not out of line" with rates in the European Union.

The man checks the WHO study and finds the incidence of campylobacter similar as between the EU and the US but then, staggeringly, misreads the report and goes not to food-related Salmonellas but to the separate diseases of typhoid and paratyphoid, known respectively by their biological labels: Salmonella typhi and Salmonella paratyphi.

The statistics, for these, he says, show that the burdens of infection per head of population from these two species are, respectively, four times and five times higher in North America than in Europe. He is unable to state that this is caused by chlorinated chicken, "as the WHO doesn't provide such detail". But, on the basis of these figures, he "can state that the Adam Smith Institute's claim is false".

For the specialist, this is laughable. Monbiot has confused food poisoning salmonellosis such as Salmonella typhimurium and enteritidis - referred to in the report as non-typhoidal Salmonellas (NTS) - with their more serious cousins.

The typhoid group comprises diseases which can be passed from person to person or, in roughly equal measure, by foods and water. And yes, the US figure is more than four times the EU figure. But, in the US, up to 75 percent of cases are attributable to international travel (mainly to developing countries) while in the EU, 85 percent of cases were associated with foreign travel, mostly to the Indian subcontinent.

In other words, typhoid and paratyphoid are primarily diseases of less-developed countries. They can be associated with virtually any food, and especially uncooked fruits and vegetables, but are not generally or specifically associated with poultry, even in less-developed countries. Processing plant isolates in either the EU or the US are very rare indeed. Finding either type would be regarded as a major incident.

What we are left with, therefore, is not only a laughably worthless evaluation from Monbiot, but the central question of his thesis left open.

In relying on WTO work, however, he might have referred to its definitive study on (NTS) Salmonella and Campylobacter in chicken meat – as indeed might have ASI. Crucially, amongst the experts compiling the report, there was no agreement on the necessity for what were termed "processing aids" in the control of these pathogens.

The importance of this is that if a global assembly of experts cannot reach a conclusion on such an issue, it is hardly for either the ASI or Monbiot to pronounce on the issue, the latter using it as an example of a globalisation gone wrong.

Had he been more astute, unlikely though that might be, Monbiot might have realised that he was looking at an unresolved example of differences in regulatory philosophy – a type of problem which appears to be growing in scale and significance, even though it is barely recognised for what it is.

Nevertheless, there is a sense that he does vaguely understand that there are unresolved issues. He talks of European Union rules, which currently prevail in the UK, taking a "precautionary approach to food regulation", permitting only products and processes proved to be safe. In contrast, he says, the US government uses a providential approach, permitting anything not yet proved to be dangerous. By limiting the budgets and powers of its regulators, says Monbiot, it ensures that proof of danger is difficult to establish.

That is the essence of a difference in regulatory philosophy. It is an issue that, unless resolved, will prevent the advance of globalisation – which seems to be precisely what Mr Monbiot wants.

Even then, he gets it wrong. Helpfully, the Commission defines the precautionary principle and how it should be applied, telling us that it "presupposes that potentially dangerous effects deriving from a phenomenon, product or process have been identified, and that scientific evaluation does not allow the risk to be determined with sufficient certainty".

The Commission then argues that judging what is an "acceptable" level of risk for society is an eminently political responsibility and thereby offer a structured approach to decision-making, outlining the factors which should be taken into account.

This is very far from the pastiche that Monbiot offers and, in the round, is far more reasonable than he makes out. Uncertainty is something all regulators have to deal with, and this is one approach. Another might be to allow the risk-taker to judge for themselves, and then to penalise them if they get it wrong – elements of which might guide US authorities on some matters.

Either way, those who want to pursue global trade, and especially those who are dealing with the fallout of Brexit, need to be aware that serious barriers to trade can arise from differences in regulatory philosophy. They need to develop strategies for dealing with them.

The solution which Monbiot might rail against – and not be on his own – is absorption, where one or more parties to an agreement might absorb the system prevailing in the territory of another (usually dominant) party. Thus, in reaching an accommodation with the United States over chlorinated chicken, the answer might be for the UK to adopt what are called Pathogen Reduction Treatments (PRTs) into its own regulatory code.

A variation of this might be to merge systems, whereby a technical compromise might be found which all parties would adopt. Thus, in poultry processing, a modified (i.e., relaxed) farm-to-fork approach might be adopted, together with PRTs under carefully defined and monitored circumstances.

The next option is one of coexistence, where each party adopts the systems of the other parties, as well as their own, allowing the market (as in consumer choice) to decide which should prevail.

This might be preferred by the free trade zealots but, when dealing with infectious disease, public health will often trump consumer choice. In public health law, for instance, highly infective and potentially deadly smallpox sufferers were not allowed the choice of using public transport. They could be arrested and detained if they did.

That principle would apply to poultry producers, who would not be allowed to offer choice of levels of pathogenic contamination in their products. Basically, the prevention of foodborne disease is a public good which transcends consumer choice. The consumer is not allowed to buy unfit meat (for human consumption), and a supplier cannot offer it even if there is a market for it.

Similarly, if the government (after due process) decides that one particular method of securing reductions in pathogens is better than another, then this is a qualified judgement it is entitled to take. It is not for the market to decide.

Another way out of the quagmire is perhaps more acceptable and commonly used – the principle of mutual recognition. Each side continues to use their own systems, and each party accepts the products produced by other parties. The chlorinated chicken could be an application of this, and could be the eventual outcome if, for instance, the WTO eventually makes a ruling which favoured the US.

Finally, there is the option of deregulation, partially or fully. The state can walk away from the process completely, and leave the market to decide, possibly with a statutory requirement for labelling so that the consumer knows what they are buying. This is not usually appropriate for public health issues, but may be an option for GMOs.

Come what may, if we are going to make any progress with Brexit, and with our ambitions to expand global trading, regulatory philosophy needs to be placed firmly on the agenda and kept there. Resolving philosophy issues, where they arise, may be the key to our success as global traders.