6-Regulation: China's GMO regulation threaten U.S. exports, Senators complain

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TITLE:  U.S.-China GMO Dispute Heats Up As Senators Urge President Bush's
        Involvement
SOURCE: WTO Reporter, USA, by Chris Rugaber
DATE:   July 1, 2002

------------------ archive: http://www.gene.ch/genet.html ------------------


U.S.-China GMO Dispute Heats Up As Senators Urge President Bush's 
Involvement

Four U.S. senators wrote President Bush June 27 to urge him to pressure 
China regarding its increasingly complex regulations on the import of 
genetically-modified agricultural commodities and the processed foods that 
include them.

The letter argues that new rules recently handed down and the way they were 
issued are not compatible with China's WTO obligations, and that they 
threaten to block U.S. access to China's lucrative agriculture market.

Two of the senators--Charles Grassley (R-Iowa) and Max Baucus (D-Mont.), 
the ranking member and chairman of the Senate Finance Committee, 
respectively--also sent a letter to China's ambassador to the United 
States, Yang Jiechi, raising similar issues.

"We are concerned that these new regulations ... will completely undermine 
the improved market access China granted to U.S. [agricultural] exports ... 
when China entered the World Trade Organization," the Grassley-Baucus 
letter to the Chinese ambassador said.

The four senators urged Bush to "bring this matter to the attention of the 
Chinese government as soon as possible and emphasize in the strongest 
possible terms how critically important it is that these new biotech 
regulations not unjustly impede U.S. agriculture exports." The letter was 
also signed by Sens. Richard Lugar (R-Ind.) and Tom Harkin (D-Iowa).


Roots of Dispute

China's rules and procedures for approving bioengineered agricultural 
imports such as genetically-altered soybeans, corn and wheat, have hampered 
U.S. agriculture exports since last summer. President Bush has already 
raised the issue twice in meetings with Chinese leaders: last October on 
the sidelines of an Asia Pacific Economic Cooperation (APEC) forum in 
Shanghai, and then in Beijing in February.

In both cases, Bush's efforts helped spur interim agreements intended to 
enable U.S. exports of soybeans to continue. The U.S. exported 
approximately $1 billion in soybeans to China in 2001, a substantial 
increase over export levels in the mid-1990s. Most U.S. soybeans and about 
25-30 percent of U.S. corn is genetically-modified, according to industry 
sources.

In March 2002, China agreed to accept temporary safety certificates from 
exporting countries, such as the United States, while it delayed the 
implementation of its GMO import regulations until Dec. 20. Nevertheless, 
U.S. soybean exports did not start getting unloaded in China again until 
mid-June.

In their letter to Bush, the four senators said that "U.S. soybean 
exporters have already lost an estimated $240 million worth of sales to 
China due to the uncertainy caused by the Chinese Ministry of Agriculture's 
(MOA) attempt to impose scientifically questionable regulations on U.S. ... 
exports earlier this year." The MOA issued regulations on GMOs in May 2001, 
and implementation guidelines followed in January.


New Rules

The senators' letters were spurred by more recent regulations from China's 
Ministry of Health (MOH) and other developments related to the MOA's rules.

In mid-May, the health ministry issued regulations requiring the approval 
and labeling of processed foods that include genetically-modified organisms 
(GMOs). The regulations are set to take effect July 1, yet a request for 
comments was only issued June 18 and the deadline for the comments was June 
24.

Such short deadlines do not provide the advance notice and comment time 
necessary to avoid disruptions in trade, as required by the WTO, an 
industry source said.

The regulations are also vague, and do not adequately define if every 
product from the same genetically-modified ingredient, such as corn oil, 
has to be separately approved, the source said.

The Grassley and Baucus letter to the Chinese ambassador also argued that 
the regulation should have been sent to the WTO, as part of the 
"notification" process. WTO rules require that drafts of sanitary and 
phytosanitary (SPS) measures be sent to the WTO in advance of 
implementation.

"Further, the new MOH regulations are being imposed in a manner that does 
not provide sufficient time for clarification of their numerous 
ambiguities," the letter said. "In fact, China has not even provided 
guidance on compliance with the MOH regulations," despite the July 1 
deadline.


Field Testing

Meanwhile, U.S. soybean exporters were also told in May that the ministry 
of agriculture would require field testing of GMO commodities, including 
soybeans, in order for the commodities to be approved for import. This 
would require the planting and harvesting of bioengineered seeds in China, 
industry sources said, and the field testing and subsequent analysis would 
have to be completed by Dec. 20, when China's permanent regime of GMO 
approvals is scheduled to begin. The sources added that such a deadline 
would be difficult to meet.

Adding to the confusion, in late May, U.S. soybean seeds were banned from 
China due to alleged phytosanitary concerns, an industry source said. This 
source said that seeds from South America may be allowed into China soon to 
begin the field testing process.

In their letter to the president, the senators wrote that "Chinese 
authorities are limiting the ability of U.S. exporters to import the seeds 
needed to complete the required field testing, clearly inhibiting their 
ability to complete the tests and gather the data needed to comply with the 
Dec. 20, 2002 deadline."

In addition, an industry source told BNA that the two sets of regulations 
are contradictory. For example, this source noted that processed foods with 
genetically-altered soy oil could theoretically be approved by the MOH 
after July 1, before bioengineered soybeans themselves are approved under 
the MOA's guidelines, set to be implemented Dec. 20.


Possible Delay

Perhaps for that reason, several sources told BNA June 28 that China had 
agreed to delay the July 1 deadline for the MOH's processed food rules 
until December.

These sources cautioned that they had not yet seen evidence of the delay in 
writing, and until then the July 1 deadline was in effect. One U.S. 
official told BNA that while the delay might be helpful, such an informal, 
last-minute change is not the way such bilateral trade concerns should be 
handled.


WTO Case Unlikely

Despite all the difficulties, several industry sources told BNA that they 
still vastly preferred to resolve the dispute through bilateral 
consultations, rather than initiate dispute settlement proceedings against 
China at the WTO. One source told BNA that such considerations were "far 
too premature."

Another argued that the Chinese soybean market was too large and the WTO 
dispute settlement process took too long to consider a WTO case at this 
point. This source also noted that even the winner of a WTO case may not 
get the market access they need, and cited the U.S. beef hormone case as an 
example. In that case, the United States won a WTO dispute against the 
European Union's ban on imports of beef with growth-enhancing hormones in 
1997, but the EU has still not accepted the imports and the United States 
has had to resort to retaliatory tariffs instead.

Affected agricultural groups will instead push for the United States to 
raise the issue in every meeting that takes place with Chinese officials, 
one industry source said.



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