USCIB Statement

Science, Risk, Precaution and Business:

USCIB Recommendations for International Policymakers

November 6, 2000

Summary and Recommendations:

This paper provides U.S. industry recommendations to international policymakers regarding instances when scientific information is insufficient for a thorough risk assessment of environmental or health issues, and therefore cannot provide complete guidance regarding appropriate risk management. It recommends that cooperative measures and practices to apply precaution should be instituted and strengthened while avoiding trade or other frictions.

International policymakers should manage environmental impacts and protect the public’s health through cost-effective policies and measures based on well-defined, scientifically-based risk assessment principles.  Such policies should be proportional to the risks in question. Situations of broadly recognized and meaningful uncertainty, in which science reliably demonstrates the potential for serious or irreversible damage, are most effectively addressed through cooperative, proportional, non-trade-restrictive actions, which maintain integrity of scientific assessment and risk management.

Precaution is integral to responsible business practices, a foundation of most contemporary health and environmental regulation, and a longstanding concept in many areas of international policy.  Risk assessment and risk management practices are inherently precautionary in character.  While precaution is thus a foundation of risk management in the public and private sectors, from time to time exceptional circumstances are encountered.  In situations where science cannot yet provide a full or appropriate response to concerns about the significant or irreversible impacts of a certain activity, technology or product, precautionary action is still appropriate. However, misuse, over-emphasis and misinterpretation of precaution in such circumstances can adversely impact all sectors of society by depriving them of meaningful benefits to human health, environmental quality, and improvements in the quality of life. 

When faced with such exceptional situations in which precaution is called for, governments should apply limited, cost-effective temporary measures to manage the potential risk, while pursuing the following additional steps to provide a more complete foundation for longer-term risk management decisions: 

·         Use scientific and environmental channels and institutions to address instances of uncertainty, rather than relying on trade-related measures;

·         Promote international research to gather, interpret and share scientific data and promote technology innovation that could offer environmental and other benefits;

·         Strengthen regional and international cooperation to ensure that scientific and technological information and capacity building are available to all countries, particularly developing countries;

·         Consult with affected parties to study various management options and credibly inform stakeholders about risks, costs and benefits;

The misapplication of precaution arising from misinterpretation, over-emphasis or inappropriate use of what some call the “precautionary principle” should be avoided.  Risk management measures justified on the basis of precaution should not be applied for trade protectionist purposes, contravene the obligations of WTO members, or undermine other trade disciplines

Background:

Precaution underlies the risk assessment and risk management practices routinely exercised by industry and is integral to environmental and health regulation.  It is also clearly needed in instances where significant scientific uncertainty exists and where there is the potential for serious or irreversible damage to the environment.  However, some countries and groups have asserted that:

·         Precaution isn’t adequately provided for or permitted in international policymaking;

·         Precaution should act as a significant or absolute standard to warrant extreme risk management options, including severe restrictions and moratoria, overriding trade and other international disciplines.

These perspectives frequently underlay more extreme interpretations of the general concept of the so-called “precautionary principle.”

Business is deeply concerned that some private groups and countries appear to favor employing extreme interpretations of the “precautionary principle” as an absolute standard overriding all others, and in some cases, taking precedence over domestic and international regulatory frameworks.  This unbalanced interpretation of precaution has been used to justify restricting, or even eliminating, a product based merely on assertion of harm or hazard – even though the risk may be remote or manageable and the evidence unsupported or unverified.  Concern persists that governments will use this ill-defined concept to justify trade barriers instead of, or in direct contradiction to, proper and credible national and international regulatory frameworks and cooperative efforts to address the risk in question.

Despite numerous proposals and invocations of the “precautionary principle” as a fundamental theme of national and international environmental rules, no consensus formulation of such a concept exists. The 1992 Rio Declaration seems to best describe the intended balance: “In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”  The Rio Declaration also stressed the need to pursue international consensus approaches and avoid unilateral trade measures.

As another example of existing international consensus in the area of precaution and risk, the WTO Agreement on Sanitary and Phyto-Sanitary Standards (SPS) Agreement provides that:

  “         2. Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal and plant life…[if they are] based on scientific principles and not maintained without sufficient scientific evidence.

            3. In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information, including that from the relevant international organizations as well as from sanitary or phytosanitary measures applied by other Members.  In such circumstances, Members shall seek to obtain the additional information necessary for a more objective assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time.”

What is Precaution?

Balancing uncertainty and risk is part of decisionmaking.  The exercise of precaution in the face of uncertainty is a common practice and fact of life at all levels of society.  As a consequence, precaution is an important factor in domestic and international institutions, research, rulemaking, and liability laws.  Business has consistently supported use of precaution and sound science as the basis for cost-effective, risk-based precautionary measures that protect health and the environment.

As all human activities have an environmental impact, it is not feasible to guarantee zero-risk to the environment. A precautionary approach must not be understood to call for proof of zero risk to the receiving environment, or 100 % certainty of a particular outcome.

The use of due precaution and risk assessment are already critical and widely employed elements of risk management.  In particular, precautionary considerations, processes and measures are already recognized in international environmental agreements, have been established in domestic laws and are an inherent element of environmental management systems, product development and testing procedures applied by industry.

Since 1992, multilateral agreements like the Convention on Prior Informed Consent (PIC) and the WTO Agreements on Sanitary and Phyto-Sanitary Standards (SPS) and Technical Barriers to Trade (TBT) include precautionary concepts that reflect an international consensus and establish systematic processes to factor precaution into decisionmaking.  As a domestic example, the risk assessment principles and risk management approaches that U.S. government authorities apply to food, finished products, and other goods are extensive, science- and risk-based, and include many types of precaution.

Precaution, Science and Risk

Risk assessment is the bridge between basic science and decision making. The application of sound scientific principles during risk assessment already takes scientific uncertainty into account.  This inclusion of precaution can take the form of conservative assumptions and rigor, and be accompanied by consideration of regulatory impact and cost benefit assessment.  Precaution is also inherent in many risk management authorities and institutions.

However, there are a number of additional well-recognized principles and factors that should be considered in uncertain situations when credible scientific evidence shows a risk of serious or irreversible damages.  These include consideration of the degree of uncertainty, the magnitude and possible consequences of risk, the ability to manage the risk, potential product and technology benefits, and analysis of whether proposed precautionary responses are effective, feasible, cost-effective, and fair.

All risk management decisions involve trade-offs and costs, such as the costs of banning or unnecessarily restricting a new technology or practice.  These trade-offs are typically not factored into more extreme interpretations of the “precautionary principle.” Extreme caution may appear to be a prudent alternative at first blush, yet a conscientious and complete analysis may reveal that such action has serious disadvantages for society that outweigh the benefits.  A classic example of this is the threat of environmental degradation from use of DDT that seems to argue for its elimination, which must be weighed against the serious increase in health risk to large populations in the developing world that is invited if it is, in fact, prohibited globally. 

The application of precaution should occur on the basis of existing science and scientific consensus in a way that acknowledges significant uncertainties, rather than unsubstantiated concerns. The application of precaution should take an approach that prioritizes concerns and develops cost-effective actions that are proportionally responsive to those concerns.  Precautionary measures should be understood to be provisional, and respond to new scientific findings. Precaution should not be applied in a manner that unreasonably delays efforts to prioritize future regulatory actions or to implement appropriate risk management decisions.

Invoking the “precautionary principle” in the absence of meaningful scientific information, or with selective avoidance of scientific data, invites conflict between and among countries.  Misuse of the “precautionary principle” adds to public fears about product safety, misleads consumers, misallocates or wastes public resources, increases trade tensions and actually undermines the ability of officials and the public to make informed risk-management choices. 

Managing risk depends on established practices and disciplines that are well known internationally, including the following elements:

·         Risk Assessment

      Risk assessment should:

-                      be separate from risk management to avoid the politicization of science;

-                      include an independent, balanced and transparent peer review process.

·         Risk Management

       Risk management decisions should be:

-          informed at every level by science and risk assessment;

-          targeted as precisely as possible at the specific issue of concern, and be proportionate to the risk to be addressed.

·         Risk Communication

Decisions regarding risk communication should:

-     seek to provide the public with information that is credible, non-misleading, meaningful, relevant, and complete.

·         Risk Tolerance and Choice

      Decisions regarding risk tolerance and choice should:

-                      recognize the importance of ethical and value-based issues.

Precaution and Public Information

Risk communication is one important means of risk management.  To understand the impacts and tradeoffs involved with a new product or policy, the public requires credible, non-misleading, meaningful, relevant, and complete information. When this is absent, the usefulness of labeling and other information sharing methods is severely compromised, eroding public trust.

Government policymakers should inform the public of science and risk issues in a credible and neutral way.  In the absence of balanced and meaningful information, bans and environmental labels do not protect the public interest, and can waste public resources, mislead or limit consumer choice and stifle innovation.

When considering how to employ risk communication, it is important to recognize that risk tolerance may vary from country to country and individual to individual. Decisions to harmonize governmental and private sector efforts to inform the public about risks may encounter and should recognize cultural, religious, socio-economic and other values and preferences.  Though important considerations, they should not be combined with scientific and risk management factors.  Such factors cannot be associated with the so-called “precautionary principle” since they relate to concerns and impacts that are unrelated to scientific uncertainty.  Government, acting in the public interest, has a particular responsibility to discriminate between objective, science/risk-based concerns and those derived from other considerations.

Precaution and Trade

Recent highly publicized WTO panel decisions and media reports about alleged food safety and environmental problems have compounded trade tensions, with the potential for more contentious disputes ahead related to precaution.  Much of the regulatory activity to strictly control, and in some cases, ban chemicals or products has been based more on political expediency than on the best available scientific information about risks to human health and the environment.

Misapplication of precaution in an international trade setting will have troubling repercussions for small businesses, farmers, consumers and society.  It may reduce market access and slow economic development while increasing costs, undermining competitiveness and stifling innovation.  For example, the EU ban on U.S. and Canadian beef costs U.S. producers as much as $300 million a year in lost exports, and has resulted in significant costs to EU exporters as a result of authorized retaliatory measures, and higher prices for European consumers. 

Unilaterally-imposed trade barriers and bans justified by extreme interpretations of the “precautionary principle” but lacking scientific basis may also deprive society of benefits of goods and services, threaten economic interests, add significant transaction costs and distract resources from better understanding and resolving the environmental or human health issue in dispute.

Multilateral agreements, such as the Convention on Prior Informed Consent for chemicals and Codex Alimentarius and SPS Agreement for food, incorporate precaution and/or risk management aspects.  More importantly, they operate on the basis of international consensus with systematic, transparent processes so that measures taken under those agreements address the precise risk asserted.

Interpretation and implementation of the SPS, TBT, BSP, Codex and WTO should emphasize and strengthen the fundamental principles of sound scientific understanding and cooperation, risk assessment and management, and non-discrimination.

Precaution and Business

Businesses integrate human health and environmental considerations – including precautionary considerations -- into their commercial practices and product stewardship.  Business takes risk and uncertainty into account through organizational structures, management systems and operational procedures as necessary elements of any successful and sustainable business operation. For example, environmental impact assessment and measures to reduce and manage risks are fundamental to private sector decision-making and are a key component of environmental management systems, such as ISO 14001.

Moreover, the private sector assesses, manages and communicates risks through research, risk assessments, compilations of test data, voluntary initiatives, voluntary information for consumers and public/private sector partnerships.  Companies have considerable obligations and incentives, expressed in company moral and ethical codes of conduct and practices.  Companies also recognize the economic incentive to refrain from marketing a product that will later be shown to be unsafe.

Conclusion

Sustainable development concerns a process of continuous improvement of quality of life, and calls for an integrated approach to policy decisions with balance among environmental, social and economic factors.  An indiscriminate and unscientific interpretation of precaution undercuts this notion of progress and inhibits innovation.  It risks diversion of attention and resources away from more serious risks and their potential solution, and heightens political tensions.  None of these outcomes can be said to advance the goals of sustainable development.

Business supports the use of sound science as the basis for cost-effective, risk based precautionary measures that are protective of health and environmental standards.  Industry supports cooperative international efforts involving both public and private sectors to develop and share scientific data that would improve the accuracy and relevance of risk assessments and harmonize methodology and quality assurance.  Misuse, over-emphasis and misinterpretation of precaution can adversely impact all sectors of society by depriving them of meaningful benefits to human health, environmental quality, and improvements in quality of life.