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International food markets and the slow global uptake of GM seeds

by Prof. Robert Paarlberg, , Department of Political Science, Wellesley College, Wellesley, Massachusetts, USA http://www.cid.harvard.edu/cidbiotech/comments/comments160.htm Via http://www.agbioworld.org

(Tuesday, Aug. 27, 2002 -- CropChoice news) --Genetically modified (GM) foods are widely produced in the United States and in two other Western Hemisphere countries (Argentina and Canada) but almost nowhere else. In most other wealthy industrial countries, including Europe and Japan, it is legal for farmers to plant these crops, but they voluntarily refrain from doing so because consumers are averse to eating GM. In most developing countries it is not yet legal for farmers to grow GM foods, nominally on biological safety grounds. Yet biosafety is not the real issue. Poor countries are now trying to stay "GM-free" so as to retain the option of exporting food to Europe and Japan.

New regulations now coming into force in the EU, regulations on the labeling and traceability of imported GM foods and feeds, will only increase the potential cost to exporters of planting GM seeds. When these regulations come into effect some time in 2003, all foods in the EU or entering the EU from abroad will have to be labeled "GM." This new labeling rule will apply to processed as well as unprocessed foods, and to animal feeds as well as foods for direct human consumption. In order to avoid a "GM" label, products will have to be 99.5% free of any GM ingredients, even if those GM ingredients have been approved as safe for human consumption by European regulators. Moreover, for foods that are labeled GM, each separate GMO in those foods will now have to be "traced" through the market chain with documentary records, a regulation which could require for exporting countries that plant GM seeds costly new investments in the physical segregation and identity preservation of GM versus non-GM foods, all the way from "farm to fork."

European farmers will have little trouble conforming to these new regulations because they do not plant GM seeds Farmers and government officials in countries that export to the EU will face problems, however, if they are planting GM seeds or were intending to begin planting GM seeds. In countries that are currently GM-free, these new regulations are a commercial reason to remain GM-free. In the United States, where GM seeds are widely in use, these new EU regulations are a major commercial threat; they place an estimated $4 billion worth of U.S. farm exports to Europe at risk. EU officials have admitted there is no scientific evidence of greater risks to human health or the environment associated with any of the GM foods currently approved for the European market, so trade policy officials in the United States could credibly challenge these new EU regulations as violations of the SPS and TBT agreements of the WTO. Yet this course of action is unlikely to succeed, for two reasons. First, the WTO is no longer the sole international agreement governing trade in GMOs. Trade in living GMOs (LMOs) is also governed now by the new Cartagena Biosafety Protocol, an agreement which gives importers greater freedom to restrict trade, even without a scientific demonstration of risk. Second, the new EU regulations on labeling and traceability will be regulations of the EU Parliament as well as the EU Council, under the new "co-decision" procedure in place under the 1993 Treaty of the EU. Once a food safety policy has been endorsed by the EU Parliament, it is unlikely to be altered by outside pressures from the United States or the WTO. The United States learned this lesson when it recently tried to use the WTO to challenge an EU ban (which had been endorsed by the EU Parliament) on hormone treated beef. The United States won this case in a WTO dispute settlement body, but the EU refused to lift the ban, opting instead to meet its WTO obligations by accept trade retaliation against an equivalent value of its own agricultural exports to the Untied States.

In a world without agreed or enforceable rules to govern trade in GM products, it will be the big importers (such as the EU and Japan) that will, by default, set the trade standards that exporters will have to follow. In commodity markets the customer is always right, and Europe and Japan are the biggest customers. The EU and Japan together purchase more than $90 billion worth of agricultural products from the rest of the world every year. If customers in the EU and Japan say they do not want GM, and if governments in the EU and Japan then use their sovereign power to impose restrictions or onerous labeling and traceability requirements on GM imports, it will be the exporters if they want access to these lucrative markets who will have to adjust. For exporting countries that are currently GM-free, particularly in the developing world, the easiest adjustment to make will be to remain GM-free.

We thus see that international markets are not always a force favoring the rapid spread of powerful new technologies.

References Commission of the European Communities. (2001). 'Proposal for a Regulation of the European Parliament and of the Council Concerning Traceability and Labeling of Genetically Modified Organisms and Traceability of Food and Feed Products Produced from Genetically Modified Organisms and Amending Directive 2001/18/EC'. COM(2001) 182 final, Brussels, Belgium.

Paarlberg, R. (2001). The Politics of Precaution: Genetically Modified Crops in Developing Countries. Baltimore, Maryland, USA: Johns Hopkins University Press.

David Vogel. (2001). 'Ships Passing in the Night: The Changing Politics of Risk Regulation in Europe and the United States'. EUI Working Papers RSC No.2001/16. Dan Domenico, Italy: European University Institute.