The United States is about to lob its first salvo in a new trade war with the European Union (EU). Yesterday United States Trade Representative Robert Zoellick and U.S. Agriculture Secretary Ann Veneman announced that the U.S. is filing a case at the World Trade Organization (WTO) against the EU's five-year moratorium on importing foods made from genetically modified (GM) crops. The U.S. is joined in the suit by Canada, Argentina, and Egypt, who also want to export products made from plant biotechnology into Europe. The Bush administration has been under increasingly heavy pressure from members of Congress to file a WTO case against the EU, since the moratorium is costing U.S. farmers $300 million in export business each year.
The WTO will surely side with the United States against the EU moratorium, since it is supposed to make its decisions under the Sanitary and Phytosanitary Agreement about the appropriateness of health and environmental regulations "based on scientific principles." Such regulations should not be, the rules say, "maintained without sufficient scientific evidence." The EU's moratorium is not based on any scientific evidence that GM crops cause health or environmental problems.
"The EU, for political reasons, has steadfastly refused to follow the advice of their own scientific review committees that have always found that the genetically modified crops are safe and do not pose significant environmental risks," says Val Giddings, vice president for food and agriculture of the Biotechnology Industry Organization (BIO). "That is impermissible under the rules of the WTO."
Giddings is right. Even EU scientific societies like the French Academy of Sciences say that the current criticisms against plant biotechnology are scientifically "unfounded." Last week, Britain's Royal Society reiterated this point and declared "the potential for GM ingredients to reduce the nutritional quality of foods or to cause allergic reactions is in principle no different to that for non-GM ingredients. Furthermore, there is no credible evidence that human health can be damaged by eating DNA sequences created by the genetic modification of foodstuff ingredients."
The Royal Society's vice president and biological secretary, Professor Patrick Bateson, also added, "It is disappointing to find a group like Greenpeace stating on its website that 'the risks are enormous and the consequences potentially catastrophic,' without offering any solid reasons to support such a claim." Disappointing perhaps, but Greenpeace does need a new scare campaign with which to raise money.
EU Health Commissioner David Byrne complained last week that filing a WTO case now would be "eccentric" since the EU is about to adopt regulations that would lift its GM moratorium. Why doesn't the U.S. just wait for the new regulations? But the new plant biotechnology regulations are merely a moratorium by other means. The new EU regulations would require labeling of all foods containing 1 percent or more ingredients from GM foods. The new regulations would also require "dirt to fork" traceability of foods incorporating ingredients made from GM crops.
For example, a cookie made with corn syrup from pest-resistant maize would have to be labeled as containing GM ingredients even though it contains no modified genes at all, just plain old sugars like glucose, dextrose, and maltose. Corn syrup may be bad for your waistline, but genetic engineering doesn't make it any worse or better. In the meantime, the entire supply chain would have to keep and maintain expensive records of exactly where each batch of glucose came from.
However, despite the good news that the U.S. is finally challenging the EU's crop biotech ban, the BIO's Giddings notes, "Leaving the directives on traceability and labeling as they are would make lifting the moratorium moot. In fact, implementing the traceability and labeling directives is an even more effective way of killing trade in biotech food and crops than the moratorium itself."
Even if the U.S. wins at the WTO, it could still lose. First, the WTO could merely authorize the United States to impose countervailing duties on various European products to punish the EU for violating WTO rules. This already happened in 1999 when the WTO ruled against an EU ban on the import of American beef that had been treated with growth hormone. The WTO allowed the U.S. to impose $116 million in countervailing duties as damages on various European products. The growth hormone case gives an indication of how the EU is likely to react to a WTO ruling against them on GM crops—the EU may just accept the countervailing duties and continue to block biotech crop products.
Second, European politicians and bureaucrats could whip up more anti-American fervor by telling their citizens that American corporations are trying to force GM crops down their throats and the throats of their children. European consumers might react by boycotting American imports. After all some in the U.S. boycotted French products to protest that country's stand on the Iraq War.
And third, a WTO ruling favorable to the U.S. could imperil the Doha Round of WTO trade negotiations in which the U.S. is trying to persuade the EU to lower absurdly high agricultural subsidies. These subsidies are more than just economically stupid; they are a moral offense. It's criminal that every cow in Europe gets a subsidy of $2.20 a day—more than the daily income of almost two billion of the world's citizens. The developed countries pay out over $300 billion in agricultural subsidies annually, undermining the ability of poor farmers in the developing countries to compete. The risk is that wily European politicians and bureaucrats will use a bio trade war with the U.S. as an excuse to derail the Doha Round.
Finally, the EU could claim that it has lifted its moratorium and will import biotech foods under its new regulations. As we've seen, those regulations amount to another moratorium that the U.S. will have to challenge before the WTO later.
But if the U.S. doesn't actually use the WTO trade adjudication mechanisms to prevent countries from erecting non-tariff trade barriers like the EU's biotech ban, then why have a WTO at all? The U.S. has been patient with the EU on this issue. It's time the agency filed the case.