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EU: Europe's Biotech-Seed Rules Ruled Illegal by WTO, U.S. Says

by Warren Giles and Mark DrajemBloomberg
February 8th, 2006

The World Trade Organization ruled that the European Union unfairly blocked imports of genetically engineered crops, U.S. trade officials said, setting a precedent that may force other nations to drop their restrictions.

In the first of decision its kind, the WTO sided with the U.S., Canada and Argentina, saying the EU discriminated against imports of biotech seeds from companies such as Monsanto Co. without adequate scientific evidence of their harm, according to people familiar with the case. The ruling is still confidential.

``Agricultural biotechnology products should be provided a timely, transparent and scientific review'' by the EU, U.S. Trade Representative Rob Portman said in a statement late yesterday.

European governments such as Germany and France, as well as activists such as Greenpeace International, have sought to curb the use of seeds genetically altered to resist pests, disease and drought, claiming that the modified crops threaten human health and the environment. The U.S. insists that biotech seeds are safe and shouldn't be distinguished from conventional seeds.

The WTO ruling sets a precedent for other nations ranging from India to Japan to Russia that have regulations stipulating the labeling and tracing of goods containing biotech ingredients.

``One of the main reasons to bring the case was to prevent the loss of other important markets'' for U.S. agriculture exports, said Michelle Gorman, director of regulatory relations at the American Farm Bureau Federation in Washington.

The planting of altered seeds rose to 90 million hectares in 2005 from 1.7 million worldwide since initial commercialization in 1996, industry groups estimate, as farmers seek more reliable harvests. The U.S. accounts for about 55 percent of that total.

The U.S. argued in its case that the EU violated WTO rules because its approval process for imports of biotech foods had ``unnecessary delays.'' The EU said popular opposition meant consumers were already buying less of those types of products.

`We're Good Now'

The 1,047-page WTO decision also condemns bans on marketing and releasing genetically modified organisms into the environment such as those rules imposed by Germany, France, Austria and Greece, said the people, who declined to be identified before the EU and U.S. comment publicly on the trade body's decision.

The refusal of those governments to approve new seeds prompted the EU's governing body to begin a moratorium in 1998 on imports of genetically modified food. The EU in 2004 adopted new procedures that now allow some gene-altered food imports.

Since the WTO report only considered rules up until 2003, the EU ``may essentially say, `We were bad, but we're good now,''' said Kyd Brenner, a partner at the agriculture research firm DTB Associates in Washington. ``But that will take a while to play out.''

Lost Sales


Still, U.S. farm groups say that since imports of those products resumed in 2004, the European Commission has approved just three varieties, including Monsanto's MON863 corn, which means a de facto ban is still in effect.

The U.S. industry says the EU ban has cost exporters $300 million a year in lost corn sales alone to the EU. It's also meant lost revenue for seed companies such as St. Louis-based Monsanto and Midland, Michigan-based Dow Chemical Co. Spokesmen for those companies referred calls to the Biotechnology Industry Organization in Washington.

U.S. biotech seed companies ``will continue to work diligently with EU officials to establish a scientific, timely, rules-based review and approval system for agricultural biotechnology products,'' Sean Darragh, an executive vice- president at the organization, said in a statement.

The total value of the worldwide biotech crop market is estimated to be more than $5 billion, according to the International Service for the Acquisition of Agri-biotech Applications, a nonprofit organization funded by governments, foundations and companies including Monsanto.

New Legislation

The European Commission says new laws since 2004 allow biotech seeds to be planted, traced and labeled, and points to more than 30 gene-altered products approved for marketing in the bloc. The EU's executive blames national governments including France and Austria for continuing to obstruct new approvals.

More than half of the region's 450 million consumers consider gene-engineered foods to be dangerous, according to an EU poll in June.

``U.S. agro-chemical giants will not sell a bushel more of their GM grain as a result of the WTO ruling,'' Daniel Mittler, a trade adviser at environmental group Greenpeace International said in a statement. Opposition to the crops by consumers, farmers and governments ``will not change, in Europe or globally,'' he said.

Test Case


The WTO decision will now be reviewed by the parties of the case, and then formally issued by the WTO panel. Either side then can appeal. Only after the appeal is completed would the U.S. be able to petition to get the EU to either change its procedures or to impose trade sanctions.

The report is designed to remain confidential in an effort to give the governments involved a chance to make any amendments or to negotiate a last-minute solution.

``We're not going to say anything tonight, under no circumstances,'' Peter Power, a European Commission spokesman, said by telephone from Brussels.

The case is a test for the EU's ``better-safe-than-sorry'' food policy, known as the precautionary principle, which has kept hormone-treated beef from the U.S. and Canada out of the EU even though the WTO ruled in 1998 that the EU hadn't scientifically proven a cancer risk to consumers from the treatments.

The EU has been paying $126 million a year in sanctions as a result and is working to get the retaliatory duties lifted on the grounds that it now has enough evidence.

U.S. officials say popular concerns shouldn't sway the EU's actions.

``Public opinion isn't the standard. The standard is a rules-based system in the WTO. That's why we're in the WTO, and as the world's largest trading partner I'm sure they would act responsibly,'' Portman said yesterday.

To contact the reporter on this story:
Warren Giles in Geneva at wgiles@bloomberg.net;
Mark Drajem in Washington at mdrajem@bloomberg.net






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