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Last Updated: Tuesday, 13 May 2003, 18:17 GMT 19:17 UK
US launches GM trade war

By Steve Schifferes
BBC News Online, Washington

Ship carrying genetically modified produce from the US
Widespread EU opposition to GM foods
Washington has brought a complaint against the European Union for refusing to allow the sale of genetically modified (GM) food or crops, escalating trade tensions between the world's two biggest economic blocs.

The United States - and twelve other agricultural exporting nations - want the EU to repeal its five-year moratorium on GM foods, or face trade sanctions under World Trade Organisation (WTO) rules.

US Trade Representative Robert Zoellick said that the US had run out of patience after years of EU procrastination on the issue.

"The EU's persistent resistance to abiding by its WTO obligations has perpetuated a trade barrier unwarranted by the EC's own scientific analysis, which impedes the global use of a technology that could be of great benefit to farmers and consumers around the world," he said.

(The EU) has perpetuated a trade barrier which impedes the global use of a technology that could be of great benefit to farmers and consumers around the world
Robert Zoellick
US Trade Representative

The EU is unlikely to lift the block on GM food imports, which is widely supported by European consumers, and is also developing tough new labelling regulations which worry US farmers.

EU trade commissioner Pascal Lamy questioned the motives behind the US case, and denied there was a "moratorium" on GM foods.

"The EU regulatory system for GM authorisation is in line with WTO rules: it is clear, transparent and non-discriminatory. There is therefore no issue that the WTO needs to examine," he said.

If this attempt succeeds, the US will force GM foods onto European markets regardless of the wishes of consumers
Linda Stupples
Friends of the Earth
And EU consumer and green lobby groups vowed to oppose the US decision.

"If this attempt succeeds, the US will force GM foods onto European markets regardless of the wishes of consumers," said Friends of the Earth Policy Director Liana Stupples.

Trade wars

Under WTO rules, the two parties have 60 days to consult before a trade disputes panel is set up.

Ultimately, if the panel rules against the EU, it could impose trade sanctions, giving the US the right to impose retaliatory tariffs on EU goods.

Mr Zoellick told BBC News Online that the US would be seeking "several hundred million dollars" in damages, but that the importance of the case went far beyond the immediate damage to US agriculture.

Developing countries in Africa, Asia, and Latin America were cutting back on research and production of GM crops, because they were afraid they could not export them to Europe, he said, hurting poor farmers worldwide.

And to support his point, scientists and farmers from developing countries joined the press conference to argue for the economic benefits of GM crops.

Mr Zoellick denied that the US decision to bring the case had anything to do with the WTO's recent approval of $4bn in EU retaliatory sanctions against the US in another case, involving tax breaks for foreign subsidies of US companies.

However, he appeared to concede that the US had delayed bringing the case in the run-up to the Iraq war, when it was trying to gain EU support for a fresh UN resolution.

World trade talks

The US move could also increase the difficulties of reaching a deal on agriculture in the Doha round of global trade talks.

Those talks appear stalled ahead of a summit in Cancun, Mexico, in the autumn.

The US and the EU are at loggerheads over how to reform agricultural subsidies to benefit developing countries.

Many of the countries joining in the US action are part of the Cairns group of agricultural exporting nations which has been lobbying the WTO to open agricultural markets.

A number of them are now seeking separate free trade agreements with the United States.

Countries joining US trade complaint: Argentina, Canada, Egypt

Countries joining as third parties: Australia, Chile, Colombia, El Salvador, Honduras, Mexico, New Zealand, Peru and Uruguay.

The BBC's Andrew Clark
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