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TITLE:  World Food: Rhetoric Clouding GM Debate
SOURCE: Economist Intelligence Unit, The Economist
        Executive Briefing, posted  by AgBioView, USA
DATE:   May 30, 2003

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World Food: Rhetoric Clouding GM Debate

As the US and EU continue to trade blows over genetically modified (GM)
foods, their arguments move further and further away from the issues
governing the debate.

The US resumed the transatlantic dispute over GM crops on May 13th by
going straight for the jugular. A speech by the president, George Bush,
outlining the case for GM foods blamed the EU's resistance to such crops
for hampering efforts to end starvation in Africa. Robert Zoellick, the
US Trade representative, went further, referring to EU officials as
"Luddites" spreading "anti-scientific views".

The re-emergence of the GM debate, postponed in January while the US
sought support for military action in Iraq, has come at a time when
subsequent opposition to the war has further strained US-EU ties. After
five years, and with little to show for their efforts at overturning the
EU ban on GM foods, the US has joined by Canada, Argentina and Egypt in
referring the case to the World Trade Organisation (WTO), with the
backing of at least nine other countries.

Is the EU changing its stance? -- The aggressive and emotive tack taken
by the US is surprising if not wholly unexpected. The EU was already in
the process of introducing measures that would have eased GM restrictions
by the autumn. Taking the case before the WTO could delay such a move by
up to 18 months, a fact that EU representatives were swift to point out.

The EU has also been quick to poke holes in the US case. EU officials
have cited, for example, the US refusal to back the Cartagena Protocol on
Biosafety, designed to ensure that countries should "have the necessary
information to make informed choices about GMOs". EU sources have also
pointed to the controversial "Starlink" case in the US, in which GM corn
that had not been approved for human consumption found its way into the
food supply.

Unfortunately for both sides, the reasoning behind the GM ban and the
eagerness to overturn it are more complex than the moral and scientific
sound bites being exchanged. Washington's attempt, for example, to block
the movement of EU subsidised foods to Africa shows that the debate does
not really centre on poverty. At the same time, there is strong evidence
that, in principal, most EU countries would approve of overturning the
ban. The European Commission has already made inroads into investigating
the co-existence of GM and non GM crops, and has stated frequently that
it sees no harmful side-effects from importing or growing modified foods.

Public resistance remains strong. This has done little to convince a
European public still reeling from the high profile food scares of the
last decade. While little fuss was made in the US over the introduction
of GM foods, resistance from European consumers has been strong. The
decision to restrict GM foods in 1998 was largely due to the refusal by
major European retailers, responding to the public outcry, to stock GM
products rather than to EU policymaking.

While Brussels seems prepared to re-adopt GM foods, consumers are still
adamantly opposed. Even as EU authorities were processing applications
for importing and growing GM crops, a poll suggested that only 14% of UK
consumers, the first to object in 1998, were willing to accept GM foods.
Indeed, consumer awareness is where the real divide in policy becomes
apparent. The EU is willing to introduce GM foods on the condition that
labelling rules allow consumers to differentiate between GM and non-GM
products. The US objects, arguing that consumers, if allowed to choose
between the two, would simply avoid GM foods. It contends that there is
no inherent difference between GM and non-GM foods, so distinguishing
between the two is unfair. (In the US domestic market, consumers are not
told whether food products have been genetically modified or not.)

The economic issues. This divide highlights the economic motives on both
sides of the Atlantic. The US calls the ban a "non-tariff barrier" to
trade, claiming that an estimated US$300m a year is being lost in corn
and soybean exports. Meanwhile some European lobbyists and politicians
believe that GM imports would price conventional seed out of the market,
forcing European farmers to adopt GM measures or face insolvency. The
Canadian Wheat Board has recently raised doubts about its own commitment
to GM foods, with directors asking Monsanto to withdraw an application
for a safety assessment of one of its products. Adrian Measner, president
of the board, said "customers in over 80% of our markets have expressed
reservations about genetically modified wheat".

The price of GM foods in the market, and hence the cost of production for
farmers, is also a contentious issue. Extensive research into the cost
effectiveness of using GM seed has been inconclusive. While it is true
that GM production saves on labour costs and herbicides and pesticides
through their resistance to certain chemicals or insects, there is no
notable increase in crop yield. Savings for farmers are also offset by
the increased cost of GM seeds and restrictive contracts from biotech
companies, which can forbid seed-saving, a common agricultural practice.

In harvests where GM protection has provided an advantage over non-GM
crops (an infestation of "corn borers" for example, from which GM corn is
resistant), farmers still gain little because higher-than-expected yields
will drive down grain prices. But even if GM production is a factor in
lowering corn prices from the Americas, there is no doubt that the real
advantage over the EU is based more on economies of scale, with larger
land holdings benefiting from cheaper labour and fewer agricultural

Biotech companies are watching closely . In fact, the parties with the
most at stake in the GM debate are the biotech companies dedicated to
patenting and providing GM seed. Many see this as the main factor
underpinning the US stance, with firms such as Monsanto and Dow Chemical
watching from the sidelines. However, of the seven key players in the
agri-biotech sector, four are based in Europe. Economically, then, the EU
also has much to gain from overturning the consumer-led ban.

Key players in 1998
and the relative importance of agri-business in sales*

Name of company     Based in:       % of total sales
AgrEvo              Germany                 100%
Monsanto            United States            47%
Novartis            Switzerland              26%
Rhoune-Poulenc      France                   19%
Astra-Zeneca        United Kingdom           18%
DuPont              United States            13%
Dow Chemical        United States             9%

Source: European Commission;
* Includes agricultural applications of chemical and bio-technology
products Notes: AgrEvo and Rhoune-Poulenc have now merged, Dow
Agrosciences is the relevant subsidiary of Dow chemical

The international implications of the EU's GM ban are also a fundamental
factor in the referral to the WTO. While proponents have made starvation
in Africa central to their arguments, GM is only a side issue for
developing countries. Although the US-based Center for Global Food Issues
has accused Europe of "technological apartheid" for influencing Africa
not to accept GM foods, the United Nations Food Programme claims that
there is "more than enough food production in the world for those who can
afford to pay for it". Additionally African concerns centre more on the
viability of exports rather than answering domestic shortages, which
makes the issue one of money rather than food.

The aggressiveness of the US-led alliance is rooted more in the
potentially lucrative returns in other markets. Even if the EU remains
closed to GM crops, there are signs that the WTO case is sending a clear
signal to other markets, particularly China where GM is currently focused
on tobacco production. A similar stand-off over an EU ban on hormone
treated beef in the late 1990's discouraged other WTO members from
adopting such measures, even though the EU remained unmoved.

With the US, Argentina and Canada accounting for 93% of world-wide GM
crop production between them, the stakes are high, both for farmers and
for biotechnology companies. Although the WTO case will play an important
role in the outcome of the dispute, the reaction of consumers will be the
deciding factor in the acceptance of GM foods.


European NGO Network on Genetic Engineering

Hartmut MEYER (Mr)
Kleine Wiese 6
D - 38116 Braunschweig

phone:  +49-531-5168746
fax:    +49-531-5168747
mobile: +49-162-1054755
email:  genetnl(at)