Daniel Schramm

December 3, 2006

The World Trade Organization (WTO) issued an 1100 page panel report this past September on a four-year long case brought by the U.S., Canada, and Argentina, challenging a series of European Union (EU) measures that effectively blocked the import of products made from or containing genetically modified organisms (GMOs). The panel held that the EU had violated its obligations under the WTO's Sanitary and Phytosanitary (SPS) Agreement, which requires that restrictions on trade to protect human and environmental health must be scientifically justified and cannot result in undue delays in approval procedures. And now the U.S. biotech and agricultural industries are asking the U.S. Trade Representative, Susan Schwab, to bring another WTO challenge against the EU's regulation of GMO products.

The industries, led by companies like Monsanto, Dow Chemical, Cargill, Du Pont, and Syngenta, remain dissatisfied with the EU's continued enforcement of regulations similar to those invalidated by the case, as well as the EU's labeling and traceability requirements for GMOs, which were not challenged in the first case but pose costly obstacles to exports of GMOs. It remains unclear to what extent the WTO's ruling will change current EU regulatory practices, which the EU says had already been brought into compliance with the WTO's rules even before the panel decision was handed down. Many restrictions, both by the EU, and its member states, remain in place, out of widespread social concern throughout Europe about the ecological and health impacts of GMOs. The EU's tight regulations, in sharp contrast to the U.S. government's refusal to treat GMO crops differently from conventional ones, stem in part from the Mad Cow scare of the late 1990s, which revealed the inability of European health agencies to deal with the latent threats posed by modern agricultural technologies.

U.S. industry and federal agencies, like the FDA and USDA, point to recent EU actions, such as its demand to increase the sample-size taken from U.S. rice exports to Europe to test for presence of GMOs (contamination of a shipment of U.S. rice with an unauthorized GM strain forced at least one barge to return to the U.S. without dropping its shipment), to argue that the EU regime remains a significant barrier to trade. Deputy U.S. Trade Representative Peter Allgeier maintains that the de facto moratorium the WTO panel found to be in existence has not yet been fully lifted, despite EU representatives' statements to the contrary. Many EU politicians—particularly from the Group of Five countries (France, Italy, Greece, Luxembourg, and Denmark) that were instrumental in blocking more GMO-friendly procedures from being put in place at the EU level—have explicitly stated their intention to work towards a "GM-Free Europe." U.S. officials blame the restrictions for contributing to the EU's $6–7 billion trade surplus with the U.S.

Chairmen and ranking members of the Senate and House Agriculture and Trade committees wrote an open letter on November 13 requesting Schwab to take action. The letter pointedly stated, "Winning the WTO case without achieving any positive changes in the approval process would greatly erode the credibility of the WTO in the eyes of U.S. agriculture." Significantly, the EU has informed the WTO's Dispute Settlement Body that it will not seek an appeal of the panel's decision. Language in the panel report, while generally critical of the EU's position, seems to suggest that procedural changes could be sufficient to bring the regulations into compliance with WTO rules. For example, while the labeling and traceability requirements may not be justifiable in the WTO's eyes on scientific grounds, the EU could maintain them for purposes not covered by the SPS Agreement, such as informing consumers who are morally opposed to purchasing GMOs. Any future cases brought by the U.S. will probably have to overcome this jurisdictional obstacle in order to make out a valid claim.

While the industry and its congressional backers have been strongly supported by the U.S. Trade Representative's office under the Bush Administration, larger political and diplomatic considerations may lead the Bush Administration to choose not to move a claim forward in the near future. The current Doha Round of trade negotiations has been slowing, and the EU and U.S. both recognize the need to present a unified front in fighting for greater trade liberalization generally. Further, the U.S. is wary of sparking a trade war with the EU at a time when both governments are seeking to mend political rifts stemming from Bush's foreign policy blunders.

The following sources contributed information for this article:

U.S., EU Fight Over GMO Rice, Cooperate on Third-Country Barriers, FDA Week, October 27, 2006, no. 43.

Steve McGiffen, A GM-Free Europe; Steve Giffen Puts Forward the Case for Keeping Europe GM Food-Free, Morning Star Press, September 16, 2006.

EU Decides Against WTO GMO Panel Appeal; U.S. Presses for Approvals, Inside U.S. Trade, November 24, 2006.

Agriculture, Trade Chairs Press USTR for Tough Line on EU GMO Case, FDA Week, November 24, 2006.