Inside US Trade | February 15, 2002
U.S. trade officials met yesterday with representatives of agriculture, food processing and biotechnology sectors in an effort to gauge support for a possible U.S. World Trade Organization challenge to the European Union's three-year hold on allowing new genetically modified organisms onto its market.
The meeting with the Ag-Biotech Planning Committee follows U.S. Trade Representative Robert Zoellick's statement last week that he is considering mounting a WTO challenge over the blocked approvals, which has halted some $200 million in U.S. corn exports and left some 13 products stuck in the EU's regulatory pipeline. It also comes in advance of a Feb. 28 meeting between Assistant USTR for Agricultural Affairs Jim Murphy and his EU counterpart Robert Madeleine.
At issue is a three-year moratorium on new approvals kept in place by a blocking minority of member states. The U.S. would likely challenge the moratorium as a violation of WTO requirements that health and environmental measures that restrict trade be based on science.
The Bush Administration has yet to make an interagency decision on whether to bring the case, and various segments of the industry are still weighing whether they back the move, sources said.
"I don't think anybody right now is pushing openly for a case or is ready to file a [Section] 301" petition, which would prompt an investigation and set a deadline for a decision on a case, one industry source said.
One source with U.S. food processors said a WTO case against the blocked approvals process was "long overdue" although others in the industry are said to still be mulling their support.
U.S. industry has had to reformulate products in order to avoid even minimal inclusion of unapproved varieties, and is worried that even stricter labeling rules pending in the EU would be more restrictive. Those rules, which will require any product derived from GMOs to be labeled as such even if the genetic alteration is not detectable in the final product, would not be the subject of a WTO case on approvals, since they are not yet in place. But a U.S. challenge on the moratorium could lead the EU to take greater heed to U.S. complaints over labeling and related traceability rules, one industry source argued.
The biotechnology industry itself is divided. Most European biotechnology firms are said to be opposed to a case, taking the view that a WTO challenge would inflame public opinion, which is already skeptical about GM foods. Most of these companies, however, are working in the pharmaceutical sector, which has not been hurt by the moratorium and will not be subject to the labeling and traceability rules. Even the U.S. industry is not presently firmly behind a WTO challenge, with Monsanto hesitant about a case, several sources said.
Part of the problem is that it remains unclear whether a WTO case would actually result in a restart of the EU's approval process. EU trade commissioner Pascal Lamy told Zoellick last month that a WTO challenge could lead some member states to continue their blockage of approvals pending the outcome of the case (Inside U.S. Trade, Feb. 1, p.1). The rough timeline for a WTO case -- two years -- is well beyond the October date that Lamy said could yield a Commission push to get member states to lift the moratorium. That date coincides with when new approvals legislation comes into force.
But U.S. industry sources are increasingly skeptical that the moratorium will be lifted, since previous scenarios for restarting approvals floated by the commission have not played out as promised. Most recently, the Commission decided not to force a decision on the agenda of the Barcelona heads of state summit next month (Inside U.S. Trade, Jan. 25, p. 9).
Frustration with the repeated delays has led some to argue that, even if a practical benefit to a case is doubtful, the U.S. cannot sit idly by while a major trade barrier remains in place. The EU's stance on biotechnology is undermining the U.S. effort to promote acceptance of these crops worldwide. The most egregious instance of this is China, where pending approval and labeling rules imperil U.S. soybean exports.
"In the long run, [a case] could help our interests not just in the EU but worldwide," one industry source said. "I do believe there's a very good chance we'll wind up in dispute settlement with the EU."
One source with the soybean growers echoed that sentiment, saying a WTO "indictment" of the EU's biotech regime would send a message to other governments and other international fora, such as the Biosafety Protocol and the Codex, that the EU's stance on biotechnology is untenable.
One of the potential drawbacks to a WTO challenge in the near future would be its impact on European elections in France this spring and in Germany in the fall. A WTO challenge would hand biotech opponents in the Green parties an election issue that could make it more likely that they remain in coalition governments, some sources argue. Others dispute that argument, saying there is always a pending election among EU member states and this should not be a factor in U.S. decision making.
Another consideration for the U.S. is how a potential case fits in to the FSC dispute, where the U.S. wants the EU to hold off on retaliation that could total in the billions. The U.S. could use a biotech case or the threat of such a case in trying to ensure that a truce on retaliation holds.
Separately, the Chairman and Ranking Member of the House Agriculture Committee wrote Zoellick last week asking what action the U.S. was taking in response to the continued moratorium.
"The United States, as well as other countries, has a science-based procedure in place to evaluate agricultural biotechnology products and is in accord with international agreements relating to this area. However, the European Union has failed to comply with these standards and it seems that compliance may not occur any time soon," Chairman Larry Combest (D-TX) and Rep. Charles Stenholm (D-TX) wrote February 6. "Will you kindly advise us the actions that your office intends to take to ensure compliance by the European Union?"Inside US Trade:
