Agricultural Biotechnology: The U.S.-EU Dispute

Agricultural Biotechnology:

The U.S.-EU Dispute

(name redacted)

Senior Specialist in Agricultural Policy

April 8, 2010

Congressional Research Service

7-....

www.crs.gov

RS21556

CRS Report for Congress

Prepared for Members and Committees of Congress

Agricultural Biotechnology: The U.S.-EU Dispute

Summary

In May 2003, the United States, Canada, and Argentina initiated a dispute with the European

Union concerning the EU’s de facto moratorium on biotechnology product approvals, in place

since 1998. Although the EU effectively lifted the moratorium in May 2004 by approving a

genetically engineered (GE) corn variety (MON810), the three complainants pursued the case, in

part because a number of EU member states continue to block already approved biotech products.

Industry estimates are that the moratorium costs U.S. corn growers some $300 million in exports

to the EU annually. Corn gluten exports from the United States to the EU have been blocked since

2007 because of a zero tolerance policy governing the accidental presence of non-approved U.S.

GE corn in such shipments.

On November 21, 2006, the WTO’s Dispute Settlement Body (DSB) adopted the dispute panel’s

report, which ruled that a moratorium had existed, that bans on EU-approved GE crops in six EU

member countries violated WTO rules, and that the EU failed to ensure that its approval

procedures were conducted without “undue delay.” The EU announced it would not appeal the

ruling. The United States and EU agreed on November 21, 2007 (subsequently extended to

January 11, 2008), as a deadline for EU implementation of the panel report. On January 11, 2008,

the U.S. Trade Representative announced that, while it was reserving its rights to retaliate, it

would hold off seeking a compliance ruling while the United States sought to normalize trade in

biotechnology products with the EU.

In the meantime, co-complainants Canada (July 15, 2009) and Argentina (March 18, 2010) have

reached “final settlements” in the biotech dispute with the EU. Canada, Argentina, and the EU

notified the DSB of their mutually agreed solution under Article 3.6 of the DSU. The parties

agreed to establish a bilateral dialogue on agricultural biotech market access issues of mutual

interest.

U.S. agricultural and trade officials continue to criticize the EU for its biotech approval processes.

During the second session of the 111th Congress, Members with agricultural interests may debate

the issue of whether to continue a dialogue with the EU on re-establishing trade in biotechnology

products or to seek retaliation for presumed lack of EU compliance with the panel decision.

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Agricultural Biotechnology: The U.S.-EU Dispute

Contents

Background ...................................................................................................................................... 1

The WTO Case ................................................................................................................................ 2

The Dispute Panel’s Ruling ............................................................................................................. 2

Differing Regulatory Approaches .................................................................................................... 3

United States .............................................................................................................................. 4

European Union ......................................................................................................................... 4

Labeling and Traceability ................................................................................................................ 4

Differing Public Attitudes? .............................................................................................................. 5

Congressional Interest...................................................................................................................... 6

Appendixes

Appendix. Chronology of the U.S.-EU Biotech Dispute (DS291) .................................................. 7

Contacts

Author Contact Information............................................................................................................. 8

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Agricultural Biotechnology: The U.S.-EU Dispute

Background

In May 2003, the United States, Canada, and Argentina requested consultations—the first step in

WTO dispute settlement—with the European Union (EU) concerning the latter’s de facto

moratorium since 1998 on approving new genetically engineered (GE) products. U.S. agricultural

interests contended that these policies not only blocked their exports to the EU, but also fueled

unwarranted concerns about the safety of agricultural biotechnology throughout the world. The

United States also maintained that a number of EU member states maintained national marketing

and import bans on GE products even though those products had already been approved by the

EU for both marketing and import in the EU. Although the EU recommenced approvals in May

2004 with the approval of a GE corn variety for human consumption, a number of EU member

states continue to block dissemination of approved biotech varieties. The EU restarted its

approval process following adoption of new labeling and traceability rules for GE crops and

foods in 2003.1

The United States accounted for 48% of the 331 million acres (134 million hectares) planted

globally with GE crops in 2009.2 In 2009, 91% of all U.S. soybean, 88% of U.S. cotton, and 85%

of U.S. corn acres were planted with GE varieties, designed mainly to control pests (weeds and

insects).3 GE production is not segregated from production from conventional varieties because

the U.S. regulatory system recognizes GE crops (once approved for commercialization) as

substantially equivalent to non-GE varieties. Gaining market acceptance of GE crops within the

United States has been easier than overseas, however, where, in markets like the EU, consumers

and their governments have been more wary of biotechnology.

With minor exceptions, the EU and its member states approved no GE products between 1998

and 2004. As of January 2004, 22 GE products or crops were awaiting approval. A bloc of EU

states had effectively halted the release of any new GE crops into the environment, saying that

they would not implement the EU-wide legislation for approvals until new, stricter regulations for

labeling and tracing GE-containing products (discussed below) took effect.4

In the three years before the de facto ban, U.S. corn exports to the EU averaged about $300

million annually, according to USDA data (Spain and Portugal were the largest EU importers).

During the ban, they declined to less than one-tenth of that value annually—the result, according

to analysts, of the EU’s moratorium on the approval of new corn varieties already approved in the

United States. Although one variety of biotech corn was approved by the EU prior to the

moratorium, the United States grew other varieties. Thus, U.S. export of any corn to the EU was

impractical because of the difficulty of segregating approved from unapproved varieties.

1

The EU’s labeling and traceability regulation is at http://europa.eu.int/eur-lex/pri/en/oj/dat/2003/l_268/

l_26820031018en00240028.pdf.

2

Data are from ISAAA Brief 41-2009, Global Status of Commercialized Biotech/GM Crops: 2009,

http://www.isaaa.org/resources/publications/briefs/41/executivesummary/default.asp.

3

USDA, Economic Research Service website, Adoption of Genetically Engineered Crops in the U.S., at

http://www.ers.usda.gov/data/BiotechCrops/.

4

Before the moratorium, the EU had approved the commercial release of 18 genetically modified organisms (GMOs),

including MON810 and “Roundup-Ready” soybeans. Until the EU’s approval in March 2010 of a potato variety for

cultivation for industrial use, the corn variety MON810 was the only GE product approved for cultivation in the EU.

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Agricultural Biotechnology: The U.S.-EU Dispute

The WTO Case

The United States and co-complainants argued that the EU moratorium violated provisions of the

WTO Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures. The SPS

agreement permits countries to regulate crops and food products to protect health and the

environment, but their rules must be scientifically justified, and approval procedures must occur

without undue delay. U.S. interests contend that there is no scientific evidence that GE food and

feed crops are substantially different from, or any less safe than, conventional varieties, a

conclusion they say even European scientific authorities have reached. The United States

contends that EU biotechnology measures also are inconsistent with provisions of other WTO

agreements, namely the Technical Barriers to Trade Agreement (TBT), the General Agreement on

Tariffs and Trade (GATT 1994), and the Uruguay Round Agreement on Agriculture.

EU officials counter that their cautious approach to regulating biotechnology is necessary to

cultivate trust among European consumers. At the same time, they also assert that they have

shown good faith in moving to restart the approval process.

The Dispute Panel’s Ruling

The WTO dispute panel found that the EU had maintained a moratorium on approvals of

genetically engineered crops between June 1999 and the beginning of panel deliberations in

August 2003.5 The EU had claimed that there were no measures imposing a moratorium. The

panel agreed with the United States and the co-complainants that marketing or import

prohibitions on GE products in six EU countries (Austria, France, Germany, Greece, Italy, and

Luxembourg) violated the WTO’s Agreement on Sanitary and Phytosanitary (SPS) Measures,

which requires such measures to be based on science and risk assessment. The panel upheld the

complainants’ charge that the EU also violated the SPS agreement by not ensuring that approvals

for 24 of 27 genetically modified (GM) products in the approval pipeline were carried out without

“undue delay.”

The dispute panel’s ruling dismissed several other U.S. and co-complainant claims, including

claims that EU approval procedures were not based on appropriate risk assessment; that the EU

unfairly applied different risk assessment standards for GE processing agents; and that the EU

had unjustifiably discriminated between WTO members. The panel made no recommendations as

to how the EU should bring its practices in line with WTO rules, nor did the ruling require the EU

to change its regulatory framework for approving GE products. The EU announced on December

19, 2006, that it would not appeal the panel’s ruling in the case. The United States and EU agreed

that a reasonable period of time would be until November 21, 2007, a deadline subsequently

extended by mutual agreement until January 11, 2008. Time would likely be required to reach

intra-EU agreement to lift the prohibitions on already approved GE products or to launch court

challenges to require member countries to lift their prohibitions on GE products.6

5

Background on the U.S.-EU biotechnology dispute is available at http://www.wto.org/english/tratop_e/dispu_e/

cases_e/ds291_e.htm.

6

See “EU Council Rejects Proposals to Lift Bans on GMO Products” in Inside U.S. Trade, December 22, 2006, at

http://www.insidetrade.com/secure/dsply_nl_txt.asp?f=wto2002.ask&dh=70507021&q=gmo.

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In May 2004, the EU effectively ended the moratorium by approving a GE corn variety (Syngenta

Bt-11) for human consumption. Since then, the EU has approved GE corn varieties (Monsanto’s

NK603) for both human and animal consumption, Pioneer’s 1570 corn for feed use, and 17

strains of GE corn seed (all derived from the MON810 strain approved in 1998) for commercial

use.7 The latest EU approval is the Amflora starch potato, approved for cultivation and for use in

the production of industrial starch.8 The Amflora potato is only the second GE variety approved

for cultivation in 12 years; in 1998, the EU had approved MON810, a GE corn, for cultivation

and for use as food and livestock feed.

While the United States and the EU are continuing technical discussions on market access issues

for biotech products, both Canada and Argentina have settled their disputes with the EU. On July

15, 2009, Canada and the EU signed a final settlement of the WTO dispute that Canada had

brought against the EU in May 2003. Similarly, Argentina and the EU announced their final

settlement of the biotech dispute on March 18, 2010. All three parties have notified these

settlements to the DSB as mutually agreed solutions. Both settlements provide for bilateral,

biannual meetings between competent services of the European Commission and the cocomplainants’ authorities regarding the application of biotechnology to agriculture and related

trade issues of mutual interest, including

•

follow-up of authorizations of genetically modified products of interest to each of

the parties;

•

measures related to biotechnology that may affect trade between the parties,

including measures adopted by EU member states;

•

specific issues that arise in the context of requests for authorization submitted to

regulatory evaluations;

•

any trade impacts of asynchronous authorizations of genetically modified

products;

•

renewal of authorizations of genetically modified products; and

•

exchanges of information regarding such issues as new legislation affecting

biotechnological agriculture, or coordination mechanisms to solve eventual cases

of adventitious presence of non-authorized GMOs in shipments of authorized

products.

Differing Regulatory Approaches

The United States has embraced the concept of substantial equivalence with regard to GE

products: if a GE product is substantially the same as its conventional counterpart, it should be

regulated no differently than the conventional product. The EU, on the other hand, takes a

“precautionary approach,” which means that if scientific evidence is insufficient or inconclusive

regarding a practice’s or product’s potential dangers to human or environmental health, it should

7

For a list of GE products authorized or pending authorization in the EU, see http://www.gmo-compass.org/eng/gmo/

db/.

8

BASF Plant Science, News Release, “European Commission Approves Amflora Starch Potato,” March 2, 2010,

P179/10, at http://www.basf.com/group/corporate/en/function/conversions:/publish/content/news-and-media-relations/

news-releases/downloads/2010/P179-Amflora-e.pdf.

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be more vigorously regulated or even prohibited if there are reasonable grounds for concern, thus

providing a safeguard against future unforeseen problems. Under this approach, the products of

biotechnology are deemed to be inherently different from their conventional counterparts and to

require a separate regulatory regime.

United States

The basic federal guidance for regulating biotechnology products is the Coordinated Framework

for Regulation of Biotechnology.9 One of its key principles is that GE products should be

regulated according to their characteristics and unique features—not according to their method of

production. Once approved, food products do not have to be labeled as to whether or not they

contain any genetically modified organisms, except to the extent that a GE food is substantially

different (e.g., contains an allergen or has a changed nutritional content). Because they are

deemed substantially equivalent, GE products are regulated under existing federal statutory

authorities.10

European Union

The EU has established separate structures specifically for approving GE products and for

labeling products derived from them. Currently, the key measure is Council Directive 2001/18 (as

amended in July 2003) which spells out steps for assessing human health and environmental risks

before any GE product can be released into the environment or marketed.11 Prior to the 2003

amendments, the competent authority in the EU member state where the product was to be

released was responsible for assessing its safety and, if approved, notifying other member states,

opening the way for marketing throughout the EU (with EU-level intervention if one member

state disagreed with another’s decision). The amended directive provides for a “one-door-onekey” approach, whereby the European Food Safety Authority (EFSA) conducts all scientific risk

assessments and communicates risks to the public. Then, the EU Council of Ministers decides

whether or not to approve a GE product for the EU market. EU regulations empower the

European Commission to approve applications by default if the Council of Ministers fails to act

on them within three months.

Labeling and Traceability

The WTO case does not involve EU labeling and traceability regulations, which, U.S. agricultural

interests argue, continued to discriminate against U.S. exports even after the GE product approval

moratorium was lifted. The labeling and traceability regulations, adopted in July 2003, require

that most foods, ingredients, and (for the first time) animal feeds from GE products be labeled,

even if they no longer contain detectable traces. The regulations (1830/2003 on the Traceability

9

Executive Office of the President, Office of Science and Technology Policy (51 FR 23302), Coordinated Framework

for Regulation of Biotechnology, June 26, 1986, viewed at http://usbiotechreg.nbii.gov/

CoordinatedFrameworkForRegulationOfBiotechnology1986.pdf; see also CRS Report RL32809, Agricultural

Biotechnology: Background and Recent Issues, by (name redacted) and (name redacted).

10

See http://heinonline.org/HOL/Page?handle=hein.fedreg/051123&id=96&collection=fedreg.

11

See the EU’s Directive on the release of genetically modified organisms, together with amending acts, at

http://europa.eu/scadplus/leg/en/lvb/l28130.htm.

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and Labeling of GMOs and 1829/2003 on Genetically Modified (GM) Food and Feed) were

implemented in April 2004.

Under the regulations, a tolerance level for non-GE foods, feeds, and processed products of 0.9%

is set for allowable “adventitious presence” (AP)—that is, unintended, low-level presence—of an

EU-approved GE substance. All products with more than 0.9% must be labeled as containing GE

products. Products like meat, milk, and eggs from animals fed or treated with GE materials will

not have to be labeled, however. Traceability provisions now require all firms that produce, store,

move, or process GE products to track and keep records on them from farm to consumer.

Compliance with the EU labeling rule requires segregation of GE crops and foods derived from

them from the time they are planted all the way through the processing and marketing chain. This

entails prevention of pollen drift from GE to non-GE fields; and difficult and costly handling

procedures such as using separate equipment, storage, and shipping containers, or at least

painstakingly cleaning them. U.S. interests argue that food companies forced to label accurately

all GE products face huge risks and liabilities. All of these problems discriminate against U.S.

shipments—even though they are as safe as “conventional” shipments, they contend. In practice,

many U.S. manufacturers have opted not to market GE products in the EU, in part due to the

EU’s stricter GE regulations.12

The European Commission is currently discussing new technical guidelines for the allowable

level of genetically engineered organisms in food and feed shipments for GE products that have

been approved in exporting countries but not the EU.

Differing Public Attitudes?

Differing U.S. and EU perspectives may reflect the fact that U.S. consumers apparently have been

not only less fearful of GE foods than their European counterparts, but also more confident in

their food safety regulators. According to USDA’s Economic Research Service (ERS), surveys of

consumer attitudes toward GE products, conducted both here and overseas, have yielded mixed

results. Still, “U.S. consumers have voiced little objection to genetically modified foods, while

EU consumers have been vocal in their disapproval,” ERS observed.13

Europeans may be much more wary of changes in how their food is produced due to a series of

recent food safety crises during the 1990s. Bovine spongiform encephalopathy (BSE, or “mad

cow disease”) emerged in the United Kingdom and spread to other parts of Europe. U.K. food

safety authorities first insisted that the disease could not be transmitted to humans eating meat

from BSE-infected animals. By 1996 scientific evidence indicated there was a link between some

cases of a similar human disease and consumption of BSE-contaminated beef. In 1999, high

levels of dioxin were found in meat products and eggs originating in Belgium. Also, foot-andmouth disease (FMD) outbreaks in Europe added to consumer concerns and to their “waning faith

in regulatory agencies,” according to the Pew Charitable Trust’s Initiative on Food and

12

Personal communication with Economic Research Service, January 21, 2005.

Details on these surveys can be found at ERS, Economic Issues in Agricultural Biotechnology (Information Bulletin

No. 762), February 2001, pp. 28-30. In December 2006, the Pew Initiative on Food and Biotechnology released a new

survey of U.S. attitudes on GM foods which, Pew said, determined that Americans’ knowledge of them remains low,

that their opposition to such foods has softened somewhat since 2001 (from 58% to 48%), and support remains stable at

27%. Survey results can be found at http://pewagbiotech.org/research/2006update/2.php.

13

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Biotechnology. Pew is careful to point out that these crises have not been caused by GE food, but

that GE food has been caught up in the general suspicion about food safety. Environmental

groups in the EU, such as Greenpeace and Friends of the Earth, also have raised concerns about

environmental impacts.

Recently, concerns have been voiced by European grain and feedstuffs traders and compound

feed manufacturers about EU regulations and attitudes about GE corn and soybeans.14 They point

to short supplies and high prices for feedstuffs and call for changes in the EU regulations that

impose strict limits on adventitious presence and that have helped create a shortage of feed

supplies in the EU. COCERAL, the association of EU feedstuffs traders, has pointed out that

neither Argentina nor Brazil, who along with the United States supply the bulk of annual EU feed

supplies, could guarantee that its corn and soybean shipments contain only EU-approved GMOs.

Congressional Interest

In the last Congress, Members representing agricultural interests urged the United States to take

an aggressive stance with respect to EU biotechnology regulations. Senator Grassley, the Ranking

Member of the Senate Finance Committee, expressed hope that the EU would soon come into

compliance with the WTO ruling in the biotechnology case. He noted that, although he would

have preferred the U.S. Trade Representative to take a harder line in the case, he recognized that a

“hard approach” of seeking retaliation might not be successful.15 At the same time, many

lawmakers are well aware of the risks involved in escalating U.S.-EU trade tensions to new

heights.

How to proceed with the EU on biotechnology trade is an issue that the Bush Administration left

unresolved. The options for the Obama Administration appear to be either to continue a dialogue

with the EU on biotechnology policy and trade or to pursue retaliation for failure to comply with

the earlier adverse ruling. Before the United States could impose retaliatory measures, however, it

would have to request establishment of a panel to determine whether the EU had complied with

the November 21, 2006, decision in the dispute. As the 111th Congress monitors the

Administration’s conduct of agricultural trade policy, the issues raised by the U.S.-EU

biotechnology dispute will likely remain on the agenda.

14

“GMO zero tolerance devastating for EU feed industry,” from AgBioWorld, July 19, 2007, viewed at

http://www.agbioworld.org/newsletter_wm/index.php?caseid=archive&newsid=2747.

15

“U.S. To Hold Off on GMO Retaliation Against EU, France Bans GMO Corn”, Inside U.S. Trade, January 18, 2008,

viewed at http://www.insidetrade.com/secure/dsply_nl_txt.asp?f=wto2002.ask&dh=107026683&q=.

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Appendix. Chronology of the U.S.-EU Biotech

Dispute (DS291)

May 13, 2003

The United States requested consultation with the European Union concerning

measures taken by EU and its member states affecting imports of biotech products

from the United States.

August 7, 2003

The United States requested establishment of a panel.

August 18, 2003

The Dispute Settlement Body (DSB) deferred the establishment of a panel.

August 29, 2003

The DSB established a single panel to examine the U.S. dispute and similar disputes

filed by Canada (DS292) and Argentina (DS293).

February 23, 2004

The United States, Canada and Argentina jointly requested the WTO DirectorGeneral to compose the panel.

March 4, 2004

The WTO Director-General composed the panel.

July 12, 2004

The chairman of the panel announced that it would not be able to complete its

work in six months time, owing in part to the parties’ request for additional time to

prepare their rebuttals.

August 18, 2004

The chairman of the panel estimated that it would issue its final report by the end of

March 2005, owing in part to the panel’s decision to seek scientific and technical

expert advice pursuant to Article 11 of the SPS Agreement and Article 13 of the

Dispute Settlement Understanding (DSU).

November 2, 2005

The chairman of the panel informed the DSB that the panel would submit its final

report to the parties by the end of June 2005, owing in part to a joint request of all

parties that they be granted additional time to prepare further submissions to the

panel,.

June 13, 2005

The chairman of the panel estimated that it would issue its final report to the parties

by the end of October 2005.

August 11, 2005

The chairman of the panel estimated that it would issue its final report to the parties

by the end of December 2005.

December 21, 2005

The chairman of the panel announced that it would require additional time to finish

its report and estimated that it would issue its final report to the parties by the end

of March 2006.

March 30, 2006

The chairman of the panel announced that it would not be possible to complete its

report to the parties because the panel had not received comments from the parties

on the interim final report. The panel estimated that it would issue its final report to

the parties by mid-May 2006 and the final report would be circulated to members

no later than the end of September 2006.

September 29, 2006

The panel reports were circulated to members.

November 21, 2006

The DSB adopted the panel report.

December 12, 2006

The EU announced its intention to implement the recommendations and rulings of

the DSB in a manner consistent with its WTO obligations.

June 21, 2007

The United States and the EU notified the DSB that they had agreed that the

reasonable period of time for the EU to implement the recommendations and

rulings of the DSB would be 12 months (by November 21, 2007).

November 21, 2007

The parties informed the DSB that they had agreed to modify the reasonable period

of time so as to expire on January 11, 2008.

January 14, 2008

The EU and the United States informed the DSB that they had reached an

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agreement on procedures under Article 21 and 22 of the DSU.

January 17, 2008

The United States requested authorization from the DSB to suspend concessions

and other obligations.

February 6, 2008

The EU objected to the U.S. request for authorizations to suspend concessions and

referred the matter to arbitration under Article 22.6 of the DSU.

February 15, 2008

The United States and the EU requested the arbitrator to suspend work pursuant to

their agreed procedures under Article 21 and 22 of the DSU. The arbitrator

suspended proceedings from February 18, 2008, until the United States requests

their resumption under the circumstances agreed between the parties on January

14, 2008.

July 15, 2009

Canada and the European Union notified the DSB of a mutually agreed solution

under Article 3.6 of the DSU. The parties agreed to establish a bilateral dialogue on

agricultural biotech market access issues of mutual interest.

March 18, 2010

Argentina and the European Union notified the DSB of a mutually agreed solution

under Article 3.6 of the DSU. As in the Canada-EU agreement, the parties agreed to

establish a bilateral dialogue on agricultural biotech products of mutual interest.

Author Contact Information

(name redacted)

Senior Specialist in Agricultural Policy

/redacted/@crs.loc.gov, 7-....

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