GAO Report: International GM Regulations Affect U.S. ExportsGAO Report: International GM Regulations Affect U.S. Exports

WASHINGTON--The U.S. General Accounting Office (GAO) issued a report entitled "International Trade: Concerns Over Biotechnology Challenge U.S. Agricultural Exports," delineating the difficulties faced by U.S. exporters who plant genetically modified (GM) crops. The GAO (www.gao.gov) addressed its report to Sen. Charles Grassley (R-Iowa), the ranking minority member in the committee on finance, which had asked for a summary of the biotech situation.

In its June 15 letter to Sen. Grassley, the GAO stated, "Agricultural biotechnology exports have already encountered disruptions in international markets and are likely to face further challenges. U.S. producers of corn and soybeans, in particular, have become increasingly concerned over the potential adverse effects of regulatory measures that have been adopted or are being considered by the European Union (EU) and other countries that could limit exports."

The GAO report listed four major threats to the U.S. agricultural export industry. First, because the United States is the biggest producer of biotech products, it has been "relatively isolated" in trying to maintain markets for these products. Since 1998, the EU has blocked approval of new agricultural biotech products, and new regulations for labeling guidelines and tracking are in the works in numerous countries and the EU. "The EU, Japan, and Korea have enacted mandatory labeling requirements on foods containing or derived from biotech products." The report said that other countries are in the process of enacting similar regulations as well.

Second, consumer concerns about the safety of biotech foods are growing, which has led some countries to implement or consider regulations that may restrict U.S. biotech exports. According to the report, the EU, Japan and Korea have already passed legislation, and Australia, New Zealand and Mexico are working to adopt labeling regulations. These actions may not bode well for U.S. exports. "U.S. officials have raised concerns that such regulations, depending on how they are crafted, could significantly increase production costs and disrupt trade," the report said. "U.S. producers argue that a label identifying foods as derived from biotechnology is likely to be construed by consumers as a warning label, inhibiting demand for these products."

The third problem outlined in the GAO report deals with the combination of biotech and conventional crops in the U.S. grain handling system. In order for the grain to be segregated, handling costs would go up significantly. "Ultimately, if food producers seeking to avoid [GM labeling] reject biotech-derived ingredients, grain handlers may be compelled to separate conventional products from biotech varieties, which would raise handling and documentation costs considerably," GAO reported. In addition, the agency noted that segregating biotech and non-biotech crops may be impossible. As a consequence, foreign regulations for GM products could affect all U.S. exports.

Finally, there are numerous international organizations that are researching the importance and necessity of regulating GM crops, their production and labeling. As these international discussions on biotechnology become more relevant, staff and agencies involved with biotech trade issues may be forced to comply with overseas regulations. According to GAO, "the Codex Food Labeling Committee is currently in the process of developing international guidelines for countries that choose to establish mandatory labeling of food and food ingredients obtained through biotechnology." The U.S. government and Codex have been discussing this issue for several years but remain at an impasse, according to the report.

Corn and soybeans are the principal U.S. commodities most threatened by foreign regulations. According to GAO, "corn exports have already experienced significant losses. From average annual sales of about $300 million in the mid-1990s, U.S. corn exports to the EU have dropped to less than $10 million in recent years." GAO attributed this loss to the fact that new biotech corn varieties have been introduced in the United States but have not been approved in the EU, and many exporters have simply stopped shipping corn to EU countries. Japan, Korea and Mexico, the largest Asian and Latin American markets for U.S. corn, have taken action to enact regulatory measures that would require labeling of biotech foods and food ingredients.

U.S. soybeans have not yet experienced disruptions, probably because most soybean exports from the United States to the EU are used in animal feed. Currently, only one biotech variety of soybean is in production in the United States, and this variety has been approved for use in the EU and other markets, according to GAO. However, as more varieties go into production, difficulties in the soybean export business may become prevalent.

In related news, Beyond Biodevastation (www.biodev.org), the fifth grassroots gathering to celebrate biodiversity and question genetic engineering, was held in San Diego June 22 to 27 to protest BIO 2001, the Biotech Industry Organization's (www.bio.org) annual biotech conference. Beyond Biodevastation is a protest conference organized by more than 15 organizations, including Greenpeace USA and the Campaign to Label Genetically Engineered Foods, and held annually to protest the BIO conference and genetic engineering. As many as 2,500 people showed at last year's protest in Boston, according to a June 18 article published in the San Francisco Chronicle. More people were expected to protest this year's BIO 2001 conference.