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June 9, 2003
Volume 81, Number 23
CENEAR 81 23 pp. 25-33
ISSN 0009-2347
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CLASHES OVER AGBIOTECH
Disputes between the U.S. and the EU over labeling and traceability heat up; complaint to WTO on crop approvals adds to trans-Atlantic tensions

BETTE HILEMAN, C&EN WASHINGTON

PILE IT ON Under EU rules, all strains of corn in a shipment would have to be listed on the label.


Over the past five years, the rift between the u.s. and Europe over genetically engineered foods has widened. During this time, a blocking minority of European member states placed a de facto moratorium on new biotech crop approvals. The moratorium angers U.S. farmers and their allies on Capitol Hill because it restricts exports of agricultural commodities to Europe.

The impact of this moratorium is not trivial. Because the European Union refuses to accept corn shipments with genetically engineered content, the annual value of U.S. corn exports to Europe declined from $191 million in 1997 to less than $2 million in 2001.

U.S. food processors are angry that the EU is developing legislation that will require all biotech foods and products derived from them to be labeled and to be traceable from the farm to the consumer. According to EU legislation, the exact strains of all genetically engineered crops must be listed on the label. Also, it must be possible to reconstruct a paper trail of the buyers and sellers of each biotech food or ingredient in the product.

The U.S. food industry claims that such measures will make it nearly impossible to sell biotech foods or feeds in Europe. It also argues that the legislation is unnecessary, is unjustified scientifically, and will serve only to perpetuate irrational fears of biotech foods and crops.

The EU, on the other hand, says labeling and traceability are necessary to build consumer confidence and satisfy consumer demands. It promises to step up its approval process as soon as the legislation is in place, probably by this fall.

On May 13, the U.S., in concert with Egypt, Argentina, and Canada, announced it would lodge a formal complaint with the World Trade Organization, alleging that the de facto moratorium on biotech approvals is an unfair trade barrier and violates WTO rules. If the dispute cannot be resolved during the consultation phase, it will be adjudicated by a WTO tribunal. A finding in the U.S.'s favor could lead to trade sanctions against the EU. Also, the U.S. might then submit a WTO complaint over the EU labeling and traceability legislation.

The rift over labeling and traceability stems from fundamentally different views about biotech foods. In the U.S., the government and the majority of consumers consider genetically modified (GM) foods basically safe and essentially the same as conventional products. Nearly all processed foods in the U.S. contain ingredients derived from biotech crops, and the public shows little reluctance to buy them. U.S. officials believe product tracing should be required only for food safety purposes.

European consumers, on the other hand, consider biotech foods and crops potentially dangerous and therefore demand that they be labeled and separated from conventional products. They are demanding that not only biotech crops and feeds be labeled but also the oils and starches derived from them, even if they do not contain any genetic material.

Owing to food crises in the EU, such as outbreaks of mad cow disease and the discovery of dioxins in chicken feed, European consumers do not trust regulators' assertions that bioengineered foods are safe. They want foods to be traceable so that if a particular product or crop begins to create health problems, the cause can be identified. The European Commission is now calling for stronger safety assessments of GM foods and crops than what the U.S. requires.

Michael J. Phillips, who is executive director for food and agriculture at the Biotechnology Industry Organization (BIO), and who supports White House policies, says: "Traceability is not worthwhile. There are no reasons for it. There has been no risk analysis done that shows there is any type of food safety concern." There is nothing about biotechnology that exacerbates ordinary risks in the food supply, he adds. U.S. firms will lose $4 billion in exports annually as a result of the European labeling and traceability legislation, he says.

Traceability and labeling "are basic conditions to restore consumer confidence in Europe," counters Tony Van der haegen, minister-counselor for agriculture, fisheries, and consumer affairs at the Delegation of the European Commission to the U.S. Labeling legislation is not intended to be "science-based; it is designed to allow the consumer to choose," he adds. "The purpose of traceability is to be able to trace back a food product in case something goes wrong, as was the case in the U.S. with StarLink," he explains.

Van der haegen argues that the traceability requirements in the EU legislation are essentially the same as the Food & Drug Administration's food regulations promulgated under the Public Health Security & Bioterrorism Response Act of 2001. Under this law, the U.S. requires each member of the food chain to keep a record of whom he or she bought the food from and to whom it was sold, a so-called trace-back system.

"A LOT OF PEOPLE in the U.S. felt that a complete paper trail had to be kept by everybody" under the EU traceability legislation, Van der haegen says. "It's not the case at all. The misunderstanding came about because we said
Van der haegen
Fernandez
PHOTOS BY BETTE HILEMAN
we wanted to trace from the farm to the fork," he says. For example, he explains, exporters who purchase grain from elevators receive invoices for the grain. When they export to Europe, they have to give copies of their invoices to the European importers.

BIO's Phillips, however, does not believe the U.S. trace-back system is similar to the European proposal. In the EU proposal, he says, "our understanding is that each person in the supply chain has to have a complete set of records."

One essential difference between the U.S. trace-back system and the European traceability system is that in Europe, each crop strain, technically called an event, included in the shipment or product must be identified. "That is the primary difference between U.S. and EU requirements," says Michael Fernandez, director of science at the Pew Initiative on Food & Biotechnology. The EU system is "a combination of identity preservation and traceability," he explains.

It is easy for the U.S. food industry to have each member of the supply chain keep records documenting purchases and sales of products, Fernandez says. "That is not terribly burdensome." But the industry argues that it would be much more difficult to identify every strain of crop in the product or to have each member of the supply chain keep a complete set of records, he says.


Nearly all processed foods in the U.S. contain ingredients derived from biotech crops, and the public shows little reluctance to buy them.

The National Foreign Trade Council (NFTC) says the EU regulations on labeling and traceability will have a chilling effect on developing countries' R&D efforts in agricultural biotechnology. "Developing countries lack the expertise to comply with these regulations," NFTC President William A. Reinsch says. Consequently, "they may decide to abandon GM crops," he says.

Even though the majority of Americans are not demanding labeling and traceability, various trends in the U.S. and worldwide could eventually lead to such measures. One push in the direction of traceability and labeling is taking place in the Codex Alimentarius Commission, an international organization created in 1963 by the United Nations Food & Agriculture Organization and the World Health Organization to develop food standards and guidelines. Codex standards are not binding on the 160 member countries, but they are important because WTO references them when it settles trade disputes.

Various Codex committees have been discussing labeling and traceability over the past decade. Just as in other forums, the U.S. finds itself in conflict with the EU in Codex committees. The U.S. wants Codex rules to require traceability only of those foods that present food safety concerns. The EU wants all biotech foods to be traceable. The issue has been worked out with a compromise, but it isn't settled. To begin new work on traceability, the U.S. eventually agreed to a discussion paper that will consider traceability for biotech foods that do not present any potential health hazards.

Hansen
PHOTOS BY BETTE HILEMAN
At the Codex Committee on Food Labeling, only Canada, Argentina, Australia, New Zealand, Mexico, and sometimes South Africa support the U.S. position of not requiring labels on biotech food and crops. According to Michael K. Hansen, senior research associate at the Consumer Policy Institute, "There does not seem to be much support for the U.S. position on traceability and labeling, even though for the past few years the U.S. has been trying to cajole and wheedle countries all over the world."

However, Codex is operated by consensus, and several countries can block the progress of a proposed standard. The U.S. and its allies have stalled the biotech labeling guidelines for nearly a decade.

Biotech crops can be those grown as food and those used to produce pharmaceuticals (pharm crops). Changing the regulatory system for biotech crops--both pharm and food--is not going to be easy. Two years of meetings among biotech industry representatives, food processors, and consumer and environmental groups to try to come to an agreement on stronger biotech crop regulations collapsed on May 22. The talks were sponsored by the Pew Initiative on Food & Biotechnology.

The failure of the talks means that the groups will not be able to show a united front favoring stricter rules to Congress or to the three agencies that regulate biotech crops and foods--FDA, USDA, and EPA. A report on the stakeholder meetings is available on the Internet at http://www.pewagbiotech.org.

Another trend that may lead in the direction of labeling is that value-added crops are gaining a larger share of U.S. agricultural production. Many observers believe that a solid economic future for U.S. agriculture lies not in large commodity bulk production, in which all varieties of a crop are mixed and sold in bulk, but in value-added crops for specific markets. And whenever a crop is grown for a specific value-added purpose, it must be segregated from other crops and labeled to capture its value. "As the agriculture industry matures, two types of agriculture are evolving: commodity agriculture and value-added agriculture," says Rick Tolman, chief executive officer of the National Corn Growers Association. "Commodity agriculture, based on razor-thin margins and huge scale, offers options for a handful of elite commercial operators," he says.

However, bulk commodity systems are increasingly being fractionated into smaller submarkets, Fernandez says. Such a submarket would include varieties of corn that have particular attributes for milling to make corn chips, for example. Therefore, some corn is segregated and labeled, not to satisfy safety or legal requirements but for marketing purposes. Gerber Baby Foods also has particular requirements on vegetable varieties and pesticide residues, so it contracts with specific growers. Overall, this value-added market is a small but increasing part of crop production.

"This move toward value-added products is starting to show that there is a need for a system in order to be able to trace back the products and know where they come from," Van der haegen says. "I'm quite sure that a couple of years from now, labeling and traceability will be in U.S. legislation," he says. "When a crop has a special nutrient, processing, or pharmaceutical trait, you can imagine that companies will want to label their products, saying what trait it is," he adds.

But despite trends that could lead to labeling of some biotech foods in the U.S., the dispute between the U.S. and the EU over its moratorium on crop approvals has not subsided.

What is likely to happen as a result of the U.S. complaint to WTO? Already, the complaint may have led the Europeans to take a more confrontational approach regarding biotech crops. Last week, the European Parliament Environment Committee laid down a very hard line on traceability. It also decided that any product with a genetically engineered content of 0.5% or more would have to be given a biotech label, when previously the European Commission had settled on a threshold of 0.9%. For unapproved genetically modified crops, the committee set no threshold for labeling. That means that a product with an unapproved GM content as low as 0.1%, the lowest level detectable in standard tests, would require labeling as a biotech food.

In addition, some EU member states decided to take a hard-line approach regarding the coexistence of biotech and conventional crops. European farmers who grow conventional crops want legislation that would protect them from liability in the event that transgenes flow from biotech crops in neighboring fields. Consumer and environmental groups are demanding EU-wide legislation. Several member states have announced that they may not lift the moratorium on biotech crop approvals until such legislation is passed.

Van der haegen says that, when the labeling and traceability legislation is in place, probably by fall, the EU will start approving biotech crops. "I am very hopeful that before the WTO consultations are finished, there will be renewed approvals of new GMOs," he says. "I have assurance from my American sources that once the pipeline is flowing again, they will not ask for a WTO dispute panel," he explains.

Hansen concurs. "Once the EU starts approving biotech crops, the U.S. is likely to pull the WTO suit back and declare victory. In the absence of a negative WTO ruling, the U.S. can still use the threat of a suit as a club against other countries, especially African nations," he says. The motivation for the U.S. suit is like that for a slap suit, intending to warn other countries not to regulate biotech crops, he says.

However, new crop approvals in the EU are likely to have little impact on imports, Hansen says. The major supermarket chains in Europe--Kellogg's, Tesco, Unilever--have all decided not to sell any biotech products because their customers don't want them.

Rodemeyer
PHOTOS BY BETTE HILEMAN
EVEN IN THE U.S.,
approval of a GM crop is no guarantee that it will be grown or marketed. Biotech crops, such as herbicide-tolerant sugar beets, flaxseed, potatoes, and high-laurate canola, have been approved but are not cultivated by U.S. farmers.

Some of these crops are not grown because major buyers have rejected them. Hershey, for example, has said it won't purchase sugar from biotech sugar beets, and McDonald's won't buy GM potatoes.

"In Europe, retailers are more vocal on this than anyone," Fernandez says. "They are trying to out-compete each other in saying, 'We will never have a product that is labeled GM.' "

Before GM products can be accepted in Europe, "either public opinion on GM food will have to change or GM food will have to find a way to deliver a benefit, either in cost or product attributes so people will be able to overcome their reservations about the products and buy them," says Michael Rodemeyer, executive director of the Pew Initiative on Food & Biotechnology.

Even if the WTO complaint is not withdrawn and the U.S. wins its case before a tribunal, Europe could still refuse to accept exports of GM food, Rodemeyer says. In that case, the U.S. would have no recourse other than to impose additional retaliatory tariffs. The EU lost a U.S.-filed WTO case over beef hormones, but it still refuses to buy beef from hormone-treated cattle despite threats of retaliatory tariffs. "No one expects as a result of this case that we will be able to make Europeans eat GM food," he says.

HOST WITH THE MOST
Of crops studied, corn is the most suitable for producing monoclonal antibodies
CORN TOBACCO POTATO SOYBEAN
Propagation method Seed Seed Seed, tubers Seed
Pollination vector Wind Self/wind None Self
Minimum isolation to prevent cross-pollination 660 feet 1,320 feet 0 0
Wild relatives in U.S. No No No No
Monoclonal antibody production per acre 2-7 kg 4 kg 0.4 kg 0.04 kg
Monoclonal antibody storability/stability Yes No, degrades once leaf is harvested Somewhat Yes
Processing of monoclonal antibody Direct Complicated, requires freezing of large quantities of biomass Direct, requires large quantities of biomass Direct
Monoclonal antibody recovery 50-70% 10% Not available Not available
SOURCE: Monsanto Protein Technologies

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