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TITLE:  Trade in Biotechnology Food Products
SOURCE: Washington File, USA, by James Stamps
        http://usinfo.state.gov/cgi-bin/washfile/display.pl?p=/products/
        washfile/latest&f=03011512.clt&t=/products/washfile/newsitem.shtml
DATE:   Jan 15, 2003

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


Trade in Biotechnology Food Products

The following article about agricultural biotechnology was published by
the U.S. International Trade Commission (USITC) in the December 2002
International Economic Review.

(begin byliner)

Trade in Biotechnology Food Products

By James Stamps, International Economist

The United States is the world's largest producer and exporter of modern
biotechnology food products. Without generally accepted standards for
evaluating the safely of biotechnology food products, sharply different
views have emerged -- as between the United States and the European Union
-- on the need to trace biotechnology components used in the food
production chain as well as on the need for mandatory labels designating
biotechnology food products. Many countries are aligning their
biotechnology policies either with those of the United States or the
European Union. This article highlights key recent developments in global
trade in biotechnology food products, and discusses trade-related
biotechnology policy developments in a number of key trading countries,
as the Codex Alimentarius, the United Nations-based, food standards
setting body, is set to consider in June 2003 the first global guidelines
for biotechnology food products.

Biotechnology refers to a collection of scientific techniques used to
create, improve, or modify plants, animals, and microorganisms for the
development of products such as foods, enzymes, drugs, and vaccines. This
article focuses on international trade in food products developed through
modern agricultural biotechnology -- i.e., through the use of genetic
engineering -- because the principal biotechnology products marketed to
date have been genetically engineered field crops such as corn, cotton,
and soybeans.

Conventional agricultural biotechnology techniques, such as selective
breeding and crossbreeding of related species, have been used for
hundreds of years to produce crops with specific traits; however, such
techniques can be time-consuming because they may require breeding
several generations to obtain a desired trait and breed out unwanted
characteristics. Modern biotechnology uses various scientific techniques,
most notably genetic engineering, to modify plants, animals, or
microorganisms by introducing into their genetic makeup genes for
specific desired traits (the biotechnology component), including genes
from unrelated species. Genetic engineering allows faster development of
new food products and increases the range of traits available for
developing new crop varieties. Biotechnology crops have been developed to
resist insect damage, resist viral infections, tolerate certain
herbicides, and provide enhanced nutritional content.

Global Biotechnology Crop Production

The United States is the world's largest producer of biotechnology crops.
More than 88 million acres of U.S. farmland were planted with
biotechnology crops in 2001, accounting for 68 percent of total 2001
global acreage planted in biotechnology crops. Argentina ranks as the
second largest producer, accounting for 22 percent of 2001 global
biotechnology crop acreage, followed by Canada (6 percent) and China (3
percent). South Africa, Australia, Mexico, Bulgaria, Uruguay, Romania,
Spain, Indonesia, Germany, and France, among others, each accounted for
less than 1 percent of global biotechnology crop acreage in 2001.

Current trends indicate that the use of biotechnology crops in the United
States continues to increase. When surveyed about their prospective crop
planting for the upcoming crop growing season, farmers reported their
intentions to plant 26 percent of total U.S. corn acreage with
biotechnology varieties in 2001, rising to 32 percent in 2002; 69 percent
of cotton acreage to be planted with biotechnology varieties in 2001,
rising to 71 percent in 2002; and 68 percent of soybean acreage to be
planted with biotechnology varieties in 2001, rising to 74 percent in 2002.

U.S. Biotechnology Policies

Biotechnology products approved for human and animal consumption have
been commercially available in tile United States since 1995. Genes
derived from a soilborne bacterium, Bacillus thuringiensis (Bt), were
introduced into certain crops to develop Bt corn, Bt cotton, Bt potato,
Bt rice, and Bt tomato, conferring to the crops resistance to certain
insects. Glyphosate-tolerant (known commercially as "Round-Up Ready(r)")
soybeans contain a gene that protect soybeans from the herbicide
glyphosate, thereby allowing the soybeans and any weeds to be sprayed
with the herbicide to kill the weeds but leave the soybeans unaffected.
There are also approved herbicide-resistant varieties of canola, cotton,
corn, radicchio, rice, and sugar beet. There are virus-resistant
varieties of papaya, potato, and squash. Biotechnology varieties of
tomato and cantaloupe contain a gene that slows the ripening process to
allow fruit to ripen longer on the vine.

In the United States, regulation of biotechnology food products does not
differ fundamentally from regulation of conventional food products. The
United States applies existing food safety and environmental protection
laws and regulations to biotechnology products, and approves their use
for consumption based on the characteristics of the products rather than
whether the products are derived from genetic engineering. Among the
factors considered in decisions to approve a biotechnology food product
for human consumption are: its expected nutritional value; its ability to
be rapidly digested to minimize the likelihood that it will become
allergenic; and the extent to which the biotechnology component is
substantially the same as other proteins commonly present in food.

The United States does not require biotechnology food products to be so
labeled (although voluntary labeling as to biotechnology content is
permitted), largely because these products are seen as substantially
equivalent to conventional food products and because there is no
scientific basis to presuppose that biotechnology food products are more
risky or substantially different from other food products. Nevertheless,
concern about biotechnology food products appears to be increasing.
Frito-Lay, McDonald's, and Proctor & Gamble have stated that they will
not accept biotechnology corn and potatoes from U.S. growers for their
french fries and corn/potato chip products. A number of U.S. states and
cities have had legislative activity to label biotechnology food
products. Most recently, Oregon voters rejected a November 2002 ballot
initiative that would have required labeling of biotechnology food
products. At the federal level, in May 2002, Rep. Dennis J. Kucinich (D-
OH) introduced H.R. 4814, "The Genetically Engineered Food Right to Know
Act" (H.R. 4814), which would require biotechnology food products to be
so labeled.

One key trade concern for U.S. producers is the fact that U.S. farm,
grain storage, and transportation systems are not designated to segregate
bulk, untagged, biotechnology agricultural products, on a large scale and
with precision, from conventional varieties. Such segregation, which
would require duplication in storage and transportation infrastructure,
would impose added costs to the U.S. farm sector. There are also the
concerns of unintended cross-contamination -- that biotechnology crops
will crossbreed with other plants resulting in unintended harmful breeds,
and that a small number of biotechnology crops will undermine biological
diversity. Moreover, the U.S. Government "does not have the authority to
force farmers to market their crop in one channel or another. Therefore,
the U.S. Government can not certify that certain varieties are completely
absent from export channels."

International Harmonization

There are currently no globally accepted standards for evaluating the
safety of biotechnology food products. Some question whether separate
regulations for trade in biotechnology products are needed at all, and
"trade lawyers differ over the need for sui generis rules and disciplines
for bioengineered products in international trade versus other approaches
such as interpreting or clarifying existing agreements to take them into
account." Efforts to develop generally accepted standards for
biotechnology products are being conducted by United Nations (UN)
agencies and by the Organization for Economic Cooperation and Development
(OECD). Biotechnology also has been addressed in other trade-related fora
not reviewed in this article, such as the Asia Pacific Economic
Cooperation (APEC) forum.

Codex Alimentarius Commission

The Codex Alimentarius Commission (Codex) is an international standard
setting body for food safety jointly administered by two UN agencies --
the Food Agriculture Organization (FAO) and the World Health Organization
(WHO) -- to develop food standards, guidelines and related texts such as
codes of practice under the Joint FAO/WHO Food Standards Program. The
purposes of this program are to protect consumer health, to ensure fair
food trade practices, and to promote coordination of all food standards
work undertaken by international governmental and nongovernmental
organizations. The United States has participated in Codex since it was
formed in 1962.

The standard-setting role of Codex is explicitly recognized in the World
Trade Organization (WTO) Agreement on Sanitary and Phytosanitary Measures
(SPS Agreement). The SPS Agreement refers WTO members to the standards,
guidelines, and recommendations established by Codex. Other international
trade agreements also reference Codex. For example, the North American
Free Trade Agreement cites Codex standards as basic requirements to be
met by the United Slates, Canada, and Mexico in terms of the health and
safety aspects of food products. APEC and the European Union (EU) also
refer to Codex as the basis for their requirements.

Codex is currently developing draft principles for human health risk
analysis of biotechnology food products, and plans to consider formally
adopting these principles in July 2003. These principles are to be based
on pre-market assessment, performed on a case-by-case basis including an
evaluation of both direct effects from the biotechnology component and
any unintended effects. Although these Codex principles would not have a
binding effect on national legislation, they could "be used as a
reference in case of trade disputes."

UN Convention on Biological Diversity and Biosafety Protocol

The UN Convention on Biological Diversity (CBD) was adopted at the 1992
so-called Earth Summit in Rio de Janeiro. The pact sets out broad
commitments for conservation and sustainable use of the world's
biodiversity, and for sharing the benefits arising from the commercial
and other utilization of genetic resources in a fair and equitable way.
The United States, one of 168 signatories of the CBD, signed the
agreement in 1993 but has not ratified it.

Parties to the CBD completed a supplementary agreement, known as the
Cartagena Protocol on Biosafety (Biosafety Protocol), in January 2000.
Because it had not ratified the CBD, the United States participated in
the Biosafety Protocol negotiations only as an observer. If it enters
into force, the Biosafety Protocol would be a legally binding
environmental treaty that seeks to protect biological diversity from the
potential risks posed by crossborder movements of certain biotechnology
food products that are capable of transferring or replicating their
genetic material.

The cornerstone of the Biosafety Protocol is a mandatory requirement that
exporters seek consent from the competent national authority in importing
countries before shipping certain biotechnology products intended for
release into the environment. Such advanced notification and consent
would not apply to shipments of biotechnology food products intended for
direct use as food, feed, or processing (although additional restrictions
and mandatory requirements could be added later), but would apply to
shipments of such products as seeds for planting and fish for field
release. Although excluded from the mandatory advanced reporting
requirement, shipments of biotechnology food products intended for food,
feed, or processing would be required to be accompanied by documentation
stating that such shipments "may contain" biotechnology components and
that the products are "not intended for intentional introduction into the
environment."

Although it was not drafted to be subordinate to any other international
agreement, the Biosafety Protocol preserves countries' rights under other
international agreements, including the WTO. The Protocol recognizes that
trade and environment agreements should be mutually supportive. However,
according to its framers, the Biosafety Protocol would offer benefits
beyond those afforded by the WTO because, "the WTO is ... less inclined
to take into account socio-economic concerns, such as the risk that
exports of genetically engineered crops may replace traditional ones and
undermine local cultures and traditions in importing countries; however,
under the Protocol these socio-economic considerations may be taken into
account."

The Biosafety Protocol would require that regulatory decisions under the
Protocol be based on risk assessments "carried out in a scientifically
sound manner" and "taking into account recognized risk assessment
techniques." However, the Protocol reaffirms the use of the so-called
precautionary principle advocated by the EU, which is also a key element
of the CBD. The precautionary principle authorizes countries to deny
entry to undesired biotechnology imports -- even in cases of insufficient
scientific data, analysis, or information to support the denial. This
differs from the provisions of the WTO SPS Agreement and the Technical
Barriers to Trade (TBT) Agreement. Although the SPS Agreement authorizes
WTO members to "provisionally adopt sanitary or phytosanitary measures on
the basis of available pertinent information," the SPS Agreement provides
that members adopting such measures to "seek to obtain the additional
information necessary for a more objective assessment of risk and review
the sanitary or phytosanitary measure accordingly within a reasonable
period of time," and sets forth a mechanism for WTO members whose exports
are constrained by such provisional measures to seek an explanation for
them. The TBT Agreement requires WTO members to avoid technical
regulations that create obstacles to trade.

OECD [Organization for Economic Cooperation and Development]

The OECD established the Internal Coordination Group on Biotechnology in
1993 to facilitate international coordination in the areas of
agriculture, technology, and trade. As a biotechnology clearinghouse for
its members, the OECD BioTrack provides information related to major
legislative developments in OECD member countries, and an online database
of biotechnology products and field trials. The main focus of the work is
on international harmonization of regulatory oversight in biotechnology
to ensure that the environmental health and safety aspects are properly
evaluated.

This OECD effort seeks to promote international harmonization in the
safety assessment and regulation of biotechnology food products, so as to
avoid divergent standards that could arise from different approaches to
risk management and possible measures taken to mitigate such risks. Under
active discussion, food labeling practices and requirements --
particularly concerning ingredients modified through biotechnology -- are
one such subject where different approaches have the potential to impede
international trade in food products and so become nontariff trade barriers.

The OECD maintains a collection of consensus documents on biotechnology
that are intended to establish a set of mutually acceptable standards and
practices member countries. One set of consensus documents comprises
technical information for use during the regulatory assessment of
biotechnology products. Consensus documents on food and feed safety are
being published concerning nutrients, toxicants, usage, and other
relevant information on biotechnology food products.

Global Biotechnology Policies in Practice

Biotechnology food products are being used for human consumption all over
the world. Most industrialized countries and many developing countries
have indigenous biotechnology crop research and development programs.
However, differences in consumer attitudes toward risk and government
approaches to food safety have slowed the acceptance of biotechnology
products in many countries. In the absence of broadly accepted standards,
many countries have adopted their own safety standards with respect to
biotechnology food products. While national standards and procedures can
help exporters, they also can reduce international competition, distort
markets, and prevent foreign firms from entering markets. Widely
different national standards and approval procedures increasingly have
resulted in international trade friction. Highlights of recent
biotechnology policy developments in selected U.S. export markets follow.

European Union [EU]

The EU is one of the most important trading partners and competitors of
the United States in world agricultural markets. Total U.S. farm product
exports to the EU were valued at $6.4 billion in 2001, making the EU the
fourth largest single market for U.S. farm products (behind Japan,
Canada, and Mexico). The EU ranked as the largest single market for U.S.
soybean exports, with U.S. exports valued at $1.1 billion in 2001, clown
from $2.3 billion in 1997.

EU policies with respect to biotechnology were long determined by
Directive 90/220/EEC, which entered into force in October 1991. That
directive applied to biotechnology food safety, animal feed, seeds, and
environmental safety. In May 1997, the EU adopted the Novel Foods
Regulation (Regulation 258/97) to specifically address biotechnology food
safety and labeling. Among other things, the regulation requires all food
products containing, consisting of, or produced from biotechnology
components to be so labeled. Other significant regulations include
Regulation 1139/98 concerning biotechnology corn and soybean approved
before the Novel Foods Regulations entered into force, Regulation 50/2000
concerning labeling of additives and flavorings containing biotechnology
components, and Regulation 49/2000 concerning labeling requirements in
cases of unintended contamination of biotechnology material in non-
biotechnology food. Currently under consideration are regulations to
specifically address biotechnology seeds and feed.

Based on the precautionary principle, the European Commission (EC) does
not approve new biotechnology products if there is insufficient,
inconclusive, or uncertain scientific data regarding potential risks. EU
consumer experiences vastly differ from those in the United States.
Recent food contamination events in the EU, including outbreaks of bovine
spongiform encephalopathy (commonly known as "mad cow disease") and its
human equivalent Creutzfeldt-Jacob disease that began in the late 1990s
as well as incidents of food contamination such as the 1999 contamination
of Coca-Cola products in Belgium and France "have undermined the
confidence of public opinion and consumers because of decisions or
absence of decisions were not supported by full scientific evidence." The
precautionary principle is viewed as providing a basis for action when
science is unable to give a clear basis.

The EC approved the commercial release of 18 biotechnology food products
under Directive 90/220/EEC, including Round-Up Ready(r) soybeans and Bt
corn, into the European market. However, no further authorizations have
been granted, and a de facto moratorium on further approvals has been in
place since June 1999. There are currently 13 applications pending
approval. Moreover, some EU member states have invoked the safeguard
clause of Directive 90/220/EEC to temporarily ban the placing on the
market of biotechnology corn and canola products in their territories,
including Austria, Luxembourg, France, Greece, Germany, and the United
Kingdom. However, these safeguard cases have been examined by the EU
Scientific Committee on Plants, "which in all cases deemed that the
information submitted by Member States did not justify their bans."

Directive 2001/18/EC, which replaced Directive 90/220/EEC, entered into
force in October 2002. EU sources report that this new directive
strengthened the previous legislation by requiring more detailed pre-
market risk assessments, mandatory post-market monitoring and
surveillance, and mandatory labeling and traceability requirements. Thus,
"[t]he Commission considers that it has fulfilled its commitment to
create the conditions to re-start the authorization procedure" for
biotechnology products.

The EU approved enhanced labeling requirements for biotechnology food and
feed in November 2002. The new requirements add to existing EU rules by
requiring all biotechnology food products to be labeled irrespective of
whether the biotechnology component is present in the final product,
effectively extending labeling requirements to highly refined products
like corn and soybean oil produced from biotechnology crop varieties and
food ingredients made from biotechnology products, even though the
products may have no detectable traces of the biotechnology component.
For the first time, biotechnology feed products also must be labeled. For
non-biotechnology food products, the EU reduced the threshold of
allowable biotechnology material below which labeling is not required
from 1 percent to no higher than 0.9 percent. For products
unintentionally contaminated with biotechnology material, such as bulk
commodity shipments, the EU moved its allowable tolerance from zero to
0.5 percent. The United States Government had delivered a demarche to the
EU in September 2002 outlining U.S. concerns about the pending
traceability and labeling regulations and their likely adverse impact on
U.S. bulk shipments.

U.S. officials have stated that the United States continues to have
profound problems with EU biotechnology policy, and have expressed the
concern that the EU approach to biotechnology and antipathy to
biotechnology food products will spread to other countries. U.S. farm
groups have urged the United States to seek formal WTO dispute settlement
consultations on the EU moratorium on new biotechnology approvals.

Argentina

An estimated 90 percent of Argentina's soybean crop and 20 percent of its
corn crop is planted in biotechnology varieties. Argentina's high
adoption rates of biotechnology crops have been in large part due to the
cost savings these crops afford. Argentina, which lacks sufficient
storage and handling facilities to segregate bulk biotechnology
commodities, joined with the United States, Canada, and other countries
opposed to increasing traceability and labeling requirements for bulk
commodities in the Biosafety Protocol negotiations. Argentina has
participated as an observer in bilateral U.S.-Canadian discussions on
harmonization of the regulatory review process of biotechnology food products.

Argentina approved the use of 5 biotechnology crops during 1996-98, but
halted new commercial approvals in 1998 as a result of human health and
environmental concerns. Approvals resumed in April 2001 when Argentina
approved the commercial use of Round-Up Ready(r) cotton.

Argentina and its Southern Common Market (Mercosur) partners Brazil,
Paraguay, and Uruguay, have not agreed on common biotechnology
regulations. Mercosur's Food Commission has recommended a range of Codex
standards for adoption by member countries, and is using other Codex
standards as points of reference in continuing deliberations. Moreover,
the Mercosur partners have agreed to wait until international policies
are developed by Codex.

Brazil

Brazil is the world's second largest producer of soybeans and ranks as
one of the world's leading producers of biotechnology-free crops. As a
major producer of biotechnology-free crops. Brazil has become a leading
supplier to the EU market, which prefers non-biotechnology food products.
Commercial distribution and trade of biotechnology products in Brazil
officially remain prohibited pending a judicial resolution to a
longstanding court battle over a request to import Round-Up Ready(r)
soybeans into Brazil, as well as ongoing debate in the Brazilian Congress
and in civil society on biotechnology. However, U.S. industry sources
estimate that 60 percent or more of soybeans grown in Brazil are
biotechnology varieties. Reports are that growers, especially in southern
Brazil, are planting unregistered biotechnology crops from neighboring
Argentina.

Brazil's 1995 Biosafety Law, as updated, establishes rules and procedures
with respect to the development, import, use, and commercialization of
biotechnology food products. That law also created the Brazilian
Technical Commission on Biosafety (CTNBIO), the national regulatory
agency for biotechnology policy. Entry of biotechnology products into
Brazil is prohibited without CTNBIO prior approval. CTNBIO approved a
request to import Round-Up Ready(r) soybeans in 1998, but that approval
subsequently was withdrawn in response to an injunction issued by a
Brazilian federal judge in June 1999. The request for this injunction was
filed by a Brazilian consumer protection advocacy group, a Brazilian
government agency, and Greenpeace citing the need for local environmental
impact studies of the biotechnology soybeans. In June 2000, during an
appeal of the case, a federal judge ruled that CTNBIO did not have the
authority to waive the requirement for local environmental impact studies
and reports. In December 2000, the Brazilian President issued a
provisional measure to formally grant CTNBIO the authority to evaluate
and authorize the production and sale of biotechnology products in
Brazil; however, the provisional measure has not yet been approved by the
Brazilian Congress.

The lack of a policy resolution on biotechnology imports has led to a
number of policy contradictions in Brazil. In 2000, concern with the low
domestic supply of corn feed for the Brazilian poultry and pork industry
led CTNBIO to approve imports of Bt corn From Argentina, conflicting with
an earlier court decision prohibiting the imports. The presence of traces
of biotechnology ingredients in domestic and imported food products for
sale in 2000 led to certain food products being removed from grocery
shelves in major Brazilian cities because some provincial labeling
regulations are more restrictive than federal regulations. A July 2001
Presidential decree established a labeling requirement for packaged food
products containing more than 4 percent of detectable biotechnology
products, but the Brazilian Congress continues to debate the issue and
has not yet developed implementing regulation.

Canada

Total U.S. farm exports to Canada were valued at $8.1 billion in 2001,
making Canada the second leading destination of U.S. farm exports after
Japan. Canada ranked as the Will largest market for U.S. soybeans, with
U.S. exports valued at $130 million in 2001. U.S.-Canadian cooperation on
biotechnology dates to a July 1998 meeting between USDA APHIS [U.S.
Department of Agriculture Animal and Plant Health Inspection Service] and
the Canadian Food Inspection Agency and Health Canada to compare and
harmonize where possible the regulatory review process for biotechnology
food products. One result of this meeting was an agreement on harmonized
guidelines for the molecular genetic characterization of biotechnology
plants, with the goal of facilitating the safe commercialization of
biotechnology plants.

The Canadian government has approved a total of 51 novel foods for human
consumption, most of which are biotechnology food products, including
varieties of corn, canola, potato, tomato, squash, soybean, flax, and
sugar beet. Canada's Novel Foods Regulation requires that prior
notification be made before marketing or advertising a novel food in
Canada. In addition, the Canadian Government conducts a safety assessment
of all biotechnology-derived foods to demonstrate that the food is safe
before it is allowed into the Canadian market. Like the United States,
Canada does not have a mandatory labeling requirement for biotechnology
products, and supports labeling on a case-by-case basis consistent with
Canadian policy with respect to all foods. Canadian legislation currently
authorizes voluntary labeling of biotechnology food products. In late
2001, the Canadian legislature defeated a bill that would have required
mandatory labeling of biotechnology food products.

Mexico

Total U.S. farm exports to Mexico were valued at $7.4 billion in 2001,
making Mexico the third leading market for U.S. farm exports after Japan
and Canada. Mexico ranked as the second largest market for U.S. corn,
with U.S. exports valued at $567 million in 2001, and the second largest
market for U.S. soybeans, with U.S. exports valued at $770 million in 2001.

Like the United States, Mexico applies its existing food safety laws and
regulations to biotechnology food products. However, the Mexican
government is considering a number of legislative initiatives that would
establish a separate biotechnology approval regime. Biotechnology
products intended for human consumption must receive prior approval
before the products can be introduced into the Mexican market.
Biotechnology varieties of canola, corn, cotton, potato, rice, and
soybeans have been approved for human consumption in Mexico. Mexico also
continues to engage in biotechnology research and development efforts,
and has conducted crop studies on biotechnology varieties of alfalfa,
cantaloupe, papaya, pineapple, tobacco, tomato, and wheat.

China

China currently ranks as the world's largest importer of soybeans and as
the second largest importer of soybeans from the United States after the
EU. China's imports of U.S. soybeans were valued at $1 billion in 2001,
almost one-fifth of total U.S. sales. China also is developing indigenous
biotechnology capabilities.

In June 2001, the Chinese government issued rules requiring safety
certification, registration, and labeling of biotechnology food and teed
products and some products derived from them -- essentially subjecting
U.S. soybean and other processed food and agricultural shipments to an
approval process that could take up to 270 days, and effectively halting
U.S. soybean exports to that country. U.S. officials expressed the
concerns that the Chinese government had not provided sufficient time for
compliance before the scheduled implementation date, and that China had
provided insufficient guidelines on the new approval and labeling
requirements. During that period, China replaced U.S. soybean imports
with imports from Argentina and Brazil -- the other two main global
soybean suppliers. The United States reached an initial agreement with
China on the matter in October 2001, allowing U.S. exports to resume in
large quantities, and a formal interim resolution was announced in
December 2001.

China issued implementing regulations for its new biotechnology
certification, registration, and labeling policy in January 2002. The
United States stated that these new regulations threatened U.S. soybeans,
corn, and cotton exports, and that China had not presented any science-
based evidence to support the regulations. The United States further
requested China to allow for procedures that would enable a smooth
transition during implementation of the regulations to avoid trade
disruptions. U.S. soybean exports to China were effectively blocked for
three months, from January to March 2002, while U.S. and Chinese
officials met to discuss these issues in an attempt to ensure that trade
would resume. After further bilateral consultations, China issued interim
provisions regulating biotechnology food imports and, in March 2002,
issued temporary certificates good through December 152002, thereby
allowing U.S. soybean exports to resume while China completed its safety
evaluation of biotech products. On October 18, 2002, China officially
published new measures providing an additional nine-month extension of
interim provisions regulating biotechnology agriculture imports.

India

Reversing a longstanding policy of prohibiting the commercial release of
biotechnology crops, the Indian government in March 2002 approved three
Bt cotton seed varieties resistant to insect damage for commercial use in
southern India (a biotechnology cotton variety adapted for northern India
was denied clearance because of inadequate test data). India's Genetic
Engineering Approval Committee (GEAC) reportedly approved the Bt cotton
following a year of unusually heavy infestation of boll worms and illegal
planting of unapproved Bt cotton varieties. India has a significant
biotechnology research and development program despite the country's
former policy prohibiting the commercial release of biotechnology crops.
Indian scientists are working on biotechnology varieties of rice,
mustard, tomato, potato, and other crops. GEAC has not yet established
labeling requirements for biotechnology cottonseed oil and other
biotechnology food products.

Japan

Total U.S. farm product exports to Japan were valued at nearly $8.9
billion in 2001, making Japan the top destination for U.S. farm exports.
In 2001, Japan ranked as the top country destination of U.S. corn, with
U.S. exports valued at $1.3 billion, and the third leading destination
(after China and Mexico) of U.S. soybeans, with U.S. exports valued at
$730 million.

The Japanese government has approved 37 biotechnology products for human
consumption. In April 2001, new legislation entered into force making it
illegal to import into Japan biotechnology food products which are not
yet approved in Japan. That legislation also requires labels for
biotechnology food products if biotechnology components are in the top 3
ingredients and account for 5 percent or more of the total weight;
exceptions from the labeling requirement include alcoholic beverages and
processed food products in which the biotechnology component has been
removed through processing. A total of 24 of the 37 approved
biotechnology products are subject to Mandatory labeling. The Japanese
government monitors and randomly tests imports of those 24 food products
(including soybeans, tofu, and corn grits), and requires that they
conform to a verifiable system for segregation of the biotechnology-
containing products.

In September 2000, a small amount of corn under the commercial name
StarLink(tm) was found in the U.S. food supply and, in October 2001, a
consumer group detected StarLink(tm) in certain Japanese snack foods and
in animal feed. Neither the United States nor Japan have approved
StarLink(tm) corn for human consumption. The Japanese Government
eventually developed an inspection plan to assure that no commingled corn
was shipped to Japan. In February 2001, the United States and Japan
agreed to strengthen testing of feed and food corn exports to Japan for
the presence of StarLink(tm), enhancing a November 2000 U.S.-Japan
protocol on feed and food corn to prevent StarLink(tm) corn exports to
Japan. The reported detection of StarLink(tm) in the U.S. corn crop has
continued to decline since mid-2001. As a result of the StarLink(tm)
exports, Japanese imports of U.S. corn declined by 1.3 million metric
tons (8 percent in volume terms) in 2001, although both countries pledged
to work to reverse that trend. The Japanese Government now requires that
unapproved biotechnology food and feed ingredients be segregated from the
export channel; however, Japan also has established a 1-percent tolerance
for the unintended presence of such unapproved products with the
condition that they are approved in other countries under consensus
standards set within the OECD.

South Africa and the Southern Africa Region

South Africa applies its existing agricultural and health safety laws and
regulations to biotechnology food products. Shipments of biotechnology
food products containing more than 1 percent of biotechnology components
must receive prior approval for import, distribution, use, and commercial
release within South Africa pursuant to the country's 1997 GMO Act. South
Africa currently does not require biotechnology food products to be
labeled, but in May 2001 proposed labeling requirements were published
for public comment. The proposed regulations are similar to those of the
United States, and would require labeling for biotechnology food products
if their composition or nutritional value differs significantly from non-
biotechnology food and if there is a potential for allergic reaction. The
South African regulations also would require labeling if human or animal
genes are used in plants. Four biotechnology crops have been approved for
commercial release in South Africa, including varieties of cotton, corn,
and soybeans. South Africa's longstanding biotechnology research and
development program has developed local biotechnology varieties of corn,
potatoes, sorghum, strawberries, and sugar cane.

South Africa remains one of the few African countries that has approved
the commercial release of biotechnology crops for human consumption,
although a number of African countries have field tested biotechnology
crops. Despite ongoing famine conditions, Zambia has refused U.S.
emergency food aid because of its biotechnology components. The Zambian
government reportedly seeks to prevent imported biotechnology food
products from contaminating the country's domestic crops and jeopardizing
its biotechnology-free food exports to the EU market (Zambia recently
agreed to accept U.S. corn for distribution only to foreign refugees in
that country). Zimbabwe, Mozambique, and Malawi also are concerned about
seeds from biotechnology-derived food aid contaminating domestic crops
and jeopardizing exports to the EU; however, those countries accept
biotechnology corn that is quarantined and milled before distribution.

The U.S. Agency for International Development (USAID) launched the
Southern African Regional Program on Biotechnology to promote awareness
and training programs on biotechnology among sub-Saharan southern African
countries. USAID has established a partnership with seven Southern
African Development Community (SADC) countries -- Malawi, Mauritius,
Mozambique, Namibia, South Africa, Zambia, and Zimbabwe -- to provide
technical training in biosafety regulatory implementation. This program
has as its goal to strengthen science-based regulation of biotechnology
in the SADC region, as well as to promote conformity with the science-
based standards set forth in the WTO.

(end byliner)

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