Daniel Schramm

February 24, 2007

American rice farmers in the Midwest are fretting that Europe may never again buy another grain of their rice, due to fears of Genetically Modified Organism (GMO) contamination. In August of 2006, officials from the U.S. Department of Agriculture (USDA) announced that they had detected a strain of genetically engineered (GE) rice called "Liberty Link" not approved for human consumption in supplies of long-grain rice in Arkansas and Missouri that were intended for human use. That announcement triggered a chain reaction of regulatory decisions, trade negotiations and class action litigation that perfectly illustrates the complexity, risks and regulatory conundrums of GE crops in the global agricultural market.

The European Community (EC), which in 2005 imported $72.7 million worth of U.S. rice, responded within a week by establishing a new requirement that all shipments of long-grain rice from the United States over the next six months be certified GMO-free. Japan banned rice shipments from the United States altogether. In September, 229 U.S. rice farmers, representing 125,000 acres of farmland in the Midwest, filed twin class action suits in federal courts in St. Louis and Cape Girardeau, Missouri against Bayer CropScience, the manufacturer of the "Liberty Link" rice strain. They alleged that the contamination will hurt rice exports up to three years into the future and may drive many rice farmers into bankruptcy. The unauthorized presence of GMOs in crop exports to countries like the EC and Japan, who have strict regulations on GMOs is, in the words of one farmers advocate, "economic suicide."

The farmers' worst fears came to pass that same month when three barges of U.S. long-grain rice sitting at port in Rotterdam, Netherlands tested positive for the presence of the "Liberty Link" rice. The barges, which the United States had certified to be free of the GE rice under the EC's new certification protocol, were forced to return to U.S. soil without unloading their cargo. Because the United States had incorrectly certified the shipment GMO-free, the EC government in Brussels called for national regulators in Europe to do their own testing from then on, with costs borne by the exporters, undermining the competitiveness of U.S. rice on the European market. The United States and the EC then held negotiations on the testing protocol, but could not reach agreement on the level and degree of accuracy of the testing. As of January 2007, the EC continues to keep in place mandatory testing for the presence of GMOs in U.S. rice. In reality, however, the failure to reach agreement on testing has left an even greater burden on U.S. rice farmers: there are simply no longer any U.S. rice shipments to Europe.

The saga of the "Liberty Link" rice—whose name ironically conjures memories of the great transatlantic alliance between Western Europe and the United States throughout the wars of the past century—illustrates the difference in regulatory attitude the United States and the EC have taken to GMOs and other forms of biotechnology. More specifically, it reveals the significant burdens the EC's current regime of GMO labeling and traceability (L&T) requirements continues to impose on U.S. exporters. The "Liberty Link" controversy demonstrates that the September 29, 2006 release of the final panel report of the World Trade Organization's (WTO) Dispute Settlement Body (the "DSB") resolving claims by the United States, Canada, and Argentina challenging the EC's restrictions on GMO imports will by no means mark the end of transatlantic dissension over GMO regulation. Indeed, no sooner had the ink dried on the Biotech Report then the U.S. biotechnology and agriculture industries—smarting from the "Liberty Link" controversy—began clamoring for U.S. Trade Representative (USTR) Susan Schwab, to bring another complaint in the WTO, this time against the EC's current GMO L&T requirements, which took effect in 2003. While it remains unclear whether the United States will bring a second case, the "Liberty Link" controversy as well as larger concerns within U.S. agribusiness that the EC's current GMO regulations could provide a model for other countries make a future WTO challenge a very real possibility.

Sources:

Anthony Fletcher, FSAI bans GM rice, US farmers sue Bayer, FoodNavigator.com, Aug. 31, 2006, http://www.foodnavigator.com/news/ng.asp?n=70222-fsai-gm-rice.

US Rice Farmers Sue Bayer Cropscience Over GM Rice, Reuters News Serv., Aug. 29, 2006, http://www.planetark.com/dailynewsstory.cfm/newsid/37868/story.htm

Crops: Rice, GMO Compass, http://www.gmo-compass.org/eng/grocery_shopping/crops/24.genetically_modified_rice.html (last visited Feb. 25, 2007).