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6-Regulation: Is Brazil the next defendant in an U.S.-led WTO GMOcase?

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                                  PART I
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TITLE:  Monsanto to Make GMO/Brazil Announcement at Hearing Today
SOURCE: Sparks Companies/AGWeb, USA, by Jim Wiesemeyer
DATE:   May 20, 2003

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Monsanto to Make GMO/Brazil Announcement at Hearing Today
Sen. Coleman to chair hearing that will make news regarding Brazil's
illegal use of GMO soybeans

Monsanto has decided to take action in dealing with Brazil's illegal use
of Roundup Ready soybeans and to protect its intellectual property
rights, according to Carl Casale, Monsanto Vice President, North American
Agricultural Business. In an interview I had with Casale late Monday, he
said he would detail Monsanto's proposal at a hearing this afternoon
(beginning at 1:30 pm CT) before the Senate Foreign Relations
Subcommittee on Western Hemisphere, chaired by Sen. Norm Coleman (R-Minn.).

Asked to provide a "curtain raiser" for his testimony this afternoon,
Casale stressed his comments would involve both short-term and long-term
issues, but that the long-term issue of competitiveness for U.S.
agriculture is by far the most important.

Short-term issue. Beginning with this year's Brazilian harvest, Monsanto
will allow the export of Roundup Ready soybeans from Brazil by those who
agree to execute an agreement acknowledging Monsanto's intellectual
property rights.

Grain exporters/importers involved in trade transactions will secure a
fee-bearing license from Monsanto if the soybeans shipped from Brazil
include above-threshold quantities of Roundup Ready soybeans. Traders who
do not secure a license will be subject to unspecified enforcement actions.

Casale said the export license "should address some near-term issues such
as rewarding us (Monsanto) for being innovative" in turning science into
successful, high-value products that improve the efficiency of crop and
animal agriculture. Monsanto's technology is being used by growers in
some countries, such as Brazil, who are not paying for it. Casale said
this puts Monsanto's customers who pay for the technology, such as U.S.
farmers, at a disadvantage when they compete with Brazilian growers in
the export market.

Saying details of the export license concept are still being worked out,
Casale said the intellectual property rights fee would be obtained when
the soybeans leave Brazil. This system is needed, he said, because after
several false starts, Brazil still has not yet formally approved the use
of Roundup Ready soybeans.

The more longer-term issues. Casale said that the Brazilian growers that
have free use of Monsanto's technology may have a short-term advantage,
but in the long term, failure by Brazil's government to honor
intellectual property rights "will create a major disadvantage for them"
because Monsanto will not bring other, second-generation products to Brazil.

For example, Casale detailed that Monsanto is researching an oilseed crop
that could produce a vegetable oil enriched with Omega-3 fatty acids, a
product which could ultimately provide consumers with a new solution to
fight heart disease.

So a long-term issue, Casale said, is that Brazil would miss out on
future generations of biotechnology products, and the ability to remain
competitive in the global marketplace should Brazil not formally approve
Roundup Ready soybeans.

Another point Casale will make in his testimony is that "enforcing our
intellectual property rights will not solve the global competitiveness
issue...we have to look at the total competitiveness issue and
intellectual property rights is but a small part of a broad issue."
Casale said Monsanto strongly supports the conclusions drawn by the
American Soybean Association about factors impacting greater global
competitiveness, including transportation issues, foreign exchange, land
prices, and cost of production issues. He stressed that the future
success of the soybean industry will not be driven by low-cost commodity
products, but by value-added, high quality products.

Comments: I will provide more detailed information about Monsanto's
proposal, and comments from the testimony of others, including USDA
Undersecretary J.B. Penn, and several commodity and farm group officials,
from this afternoon's hearing via my column, Inside Washington Today to
be released around the time the hearing begins at 1:30 pm CT. In another
column today I will include key remarks from another hearing this morning
regarding the state of the U.S. dairy industry.

                                  PART II
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TITLE:  Grassley Wants Brazilian Ag Questions Answered
SOURCE: AGWeb, USA, by Julianne Johnston
DATE:   May 20, 2003

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Grassley Wants Brazilian Ag Questions Answered 

Following is text of a letter sent by Senator Charles Grassley (R-IA) to USDA:

May 20, 2003

The Honorable Ellen Terpstra,
Administrator Foreign Agricultural Service

Dear Administrator Terpstra:

The American Soybean Association (ASA) recently led a soybean study
mission to Brazil. The purpose of the trip was to assess Brazil's soybean
production, existing and potential infrastructure and transportation
issues, processing capacity, and intellectual property rights, as well as
to educate the trip's participants on these issues.

Brazil's potential for soybean production is a matter of great interest
to American soybean producers. During the last five years, Brazil has
increased its production of soybeans by 57 percent. The Economic Research
Service (ERS) of the U.S. Department of Agriculture (USDA) estimates that
Brazil has the potential to bring more new ground into production in
coming years than is currently used in production in the United States.

I have attached a list of questions generated by ASA participants through
their observations in Brazil. I request that you work with your
colleagues from the ERS, the Office of the U.S. Trade Representative, and
the Subsidies Enforcement Office of the Department of Commerce's
International Trade Administration to provide answers to these questions.

Given the importance of soybeans to Iowa and other states, I look forward
to your timely response.


Charles E. Grassley

cc: The Honorable Robert Zoellick, U.S. Trade Representative

The Honorable Susan Offutt, Administrator, Economic Research Service

The Honorable Grant Aldonas, Under Secretary for International Trade
Department of Commerce


WTO Reporting Requirements, Definitions and Disciplines

Has Brazil fully notified in accordance with its WTO obligations tax,
credit, input, transportation, investment, or energy subsidies (discussed
below) that affect agricultural production? If so, are these subsidies
being calculated properly and reported to the WTO in accordance with
Brazil's obligations? Should new reporting requirements be considered to
capture the value of such subsidies, or are existing WTO reporting
requirements sufficient?

Tax Policies

Are Brazilian tax policies helping to drive the expansion of soybean
production in Brazil? Are tax credits, rebates, or deferments available
to Brazil's soybean producers or marketing groups? Are federal, state, or
local taxes reduced, deferred, or waived if a soybean product is exported?

Credit Policies

Reportedly, soybean growers in Brazil are receiving credit from a variety
of sources (e.g., the government, Banco do Brazil, equipment and input
suppliers, exporters, and processors) at rates substantially below the
rate of inflation and foreign exchange risk. For instance, it is reported
that growers may be receiving credit from the government at 8.75 percent,
whereas the rate of inflation is 12.5 percent. It is also reported that
equipment manufacturers offer credit to growers at rates and terms
substantially below the commercial rates and foreign exchange risk
offered by banks. In each instance - whether it is government, equipment
supplier, or other - more information is needed with respect to the
policies that may be facilitating the offering of credit to soybean
growers at subsidized rates.

Input Prices

Do government policies influence input prices for Brazilian farmers,
leading to prices that are sharply lower than prices paid by U.S. growers
for comparable inputs? Rampant soybean seed piracy affords Brazilian
growers a competitive advantage; however, are there other high technology
inputs, such as farm equipment, available to Brazilian growers at
discounted prices due to the infringement of intellectual property
rights? Are there any government policies that can explain sharply lower
prices for farm machinery in Brazil? Are there any government policies
that influence the market for herbicides, leading to lower prices in
Brazil than in the United States?

Transportation Policies

How are Brazilian infrastructure improvements, and in particular federal
highway construction projects, being financed? Who pays the funds? Since
much of the highway use in the cerrados area is to support agriculture,
do agricultural producers contribute to the cost? How does their
contribution compare to contributions from other users? The same kind of
information is needed for state highways, waterways, and rail. This
information on transportation financing is particularly important due to
the draft Doha Round agricultural text prepared by Agriculture
Negotiating Group Chairman Harbinson that proposes to declare
agricultural transportation subsidies for developing countries as "green
box" subsidies that would be exempt from domestic support reduction
commitments under the WTO Agreement on Agriculture.


More information is also needed on domestic and foreign investment that
may be fueling expansion of soybean acreage in Brazil. Do we know which
countries are investing in Brazilian soy production and why? Does this
funding come from private or government investment sources? To what
extent does government policy encourage investment in agriculture? Is
agricultural production required on new land to maintain ownership or
reduce taxes? What penalties do farmers face if they do not develop
acquired land within certain time periods?

Energy Policies

ERS reports that diesel fuel is sold to farmers at a single, uniform
price throughout Brazil, even though costs to supply diesel to the
Center-West are substantially higher due to transportation costs. This
policy provides a fuel subsidy to farmers in the Center-West and further
encourages development of the cerrados area. How does the fuel subsidy
program work? Who is eligible? Is the subsidy available only for on-farm
use of fuel, or is it also available for the transportation of
agricultural goods? What is the estimated value of the fuel subsidy in
recent years and currently? Are there other energy or fuel subsidies
being made available to Brazilian agriculture, processing, and transport?

Environmental Consequences

The International Food Policy Research Institute has reported, "The
generally positive trends in food production may mask negative trends in
the underlying biophysical capacity of ecosystems, e.g., nutrient mining,
soil erosion, and over-extraction of groundwater resources." What are the
environmental consequences of Brazil's land clearing policies in the
cerrados? Are soil resources being mined of their nutrient values? Is
soil erosion being addressed in Brazil?

                                  PART III
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TITLE:  ASA: Brazilian Farmers Not Paying for Benefits of GM Technology
SOURCE: AGWeb, USA, by Julianne Johnston
DATE:   May 23, 2003

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ASA: Brazilian Farmers Not Paying for Benefits of GM Technology

To promote a more equitable playing field for U.S. soybean producers, the
American Soybean Association (ASA) is urging international grain and
oilseed traders to adopt a new royalty collection system for exports of
Brazilian soybeans and soybean meal derived from illegally obtained
Roundup Ready(R) Soybean (RRSB) seed.

ASA says Brazilian farmers presently have an unfair competitive advantage
over U.S. farmers in the global soybean market because they are receiving
all of the cost-saving and yield-enhancing benefits of Monsanto's Roundup
Ready soybeans without paying for the right to use the technology.

"ASA has long been concerned about the theft of Roundup Ready soybean
technology in Brazil because of the competitive advantage this illegal
use gives Brazilian growers over U.S. growers who are paying to use the
technology," said Dwain Ford, a soybean farmer from Kinmundy, Ill. "Since
the Brazilian government has been unable or unwilling to stop the piracy
of Roundup Ready soybean seed, ASA has repeatedly urged Monsanto to do
something to correct this inequity."

Despite Monsanto's efforts to obtain approval to commercialize RRSB seed
in Brazil each of the last five years, it remains illegal under Brazilian
law for growers to plant RRSB seed. Although the Brazilian government has
threatened to destroy illegally planted Roundup Ready soybeans, Brazil
hasn't done so, and is finalizing Provisional Measure 113, which allows
Roundup Ready soybeans in the current Brazilian harvest to be legally
sold for consumption in Brazil or exported overseas.

"According to our calculations, U.S. growers are paying a premium of
$9.30 to $15.50 per acre for Roundup Ready Soybean seed, while Brazilian
growers are paying nothing for the technology on seed smuggled into
Brazil," Ford said. "This gives Brazilian growers an ill-gotten $9.30 to
$15.50 per acre competitive advantage over U.S. growers just from the
failure to pay for patented seed technology. Using national average
yields, this translates into a 24 to 41 cent per bushel unfair
competitive advantage over U.S. growers and U.S. soy exporters."

Following numerous discussions with Monsanto over the past year, ASA
leaders recently learned from company officials about Monsanto's plans to
implement a royalty collection system based upon the enforceability of
intellectual property rights in the European Union, Japan, and other
countries where Monsanto has patent protection. Approximately 70 to 75
percent of Brazil's total soybean production is exported as whole
soybeans or soymeal, and of that amount, approximately 70 to 73 percent
is shipped to the European Union and Japan.

"It is ASA's position that the program outlined is a giant step forward
toward leveling the playing field for U.S. soybean producers," Ford said.
"Although it is not a perfect solution, the program does present a viable
option given the lack of planting authorization in Brazil, which
currently prevents Monsanto from collecting royalties on its patented seed."

ASA is supporting the royalty collection system announced by Monsanto
because it begins to address the problem by offering a workable solution,
and sets an important precedent for the crop biotechnology industry. ASA
supports the protection of intellectual property rights and a company's
right to enforce its patents for seed technology. Given the present lack
of planting approval and patent enforceability within Brazil, this
external collection system provides a "next best" approach to fairness.

"It is essential that Monsanto and the grain traders work together to
reach a successful agreement," Ford said. "ASA encourage grain traders to
engage in negotiations and to work in partnership with Monsanto for
prompt implementation of this system to allow for royalty collection on
Brazilian exports of Roundup Ready soybeans and soybean meal processed
from Roundup Ready soybeans."

Under this system, Monsanto will not be able to collect royalties on
soybeans grown in Brazil for domestic consumption, which represent about
25 to 30 percent of total Brazilian production, until RRSB is legalized
for planting by the Government of Brazil, nor on soybeans destined for
export to countries like China that do not currently enforce patent
protection for seed technology.

Implementation of the program is set for July 1, 2003, to give the
Government of Brazil, Brazilian farmers, and Brazilian soy processors and
traders advance notice prior to planting and pre-planting
commercialization contracts between growers and traders for the '03/'04
Brazilian crop. The source of the funds paid to Monsanto, ultimately,
will be generated from the discounted prices paid to Brazilian producers
who deliver soybeans grown from RRSB seed.

"Not cooperating in the implementation of the royalty collection system
perpetuates the competitive disadvantage U.S. growers and the entire U.S.
soy industry face because of the ongoing theft of Roundup Ready
technology by some Brazilian farmers," Ford said. "In addition, traders
and processors who do not cooperate will be assisting in the continued
piracy of a patented product, and confronted with inspection and testing
for the presence of RRSB in Brazilian shipments arriving in the European
Union, Japan, and other countries where Monsanto has patent protection
and can utilize its legal patent status."


European NGO Network on Genetic Engineering

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

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