The Virginian-Pilot, June 2, 2003

The United States is taking on Europe … again. This time the dispute is over the European Union’s ban on imports of most types of genetically modified foods. The Bush administration has given up its longstanding attempt to persuade the EU that the ban violates international trade law and has announced that it is filing a formal complaint with the World Trade Organization (WTO). Canada, Argentina, and Egypt have joined in the complaint, and many other nations -- including China and India -- have a strong stake in altering European policy.

Ironies abound. To win its case, the U.S. needs a favorable decision from an important global organization. Yet the U.S. itself is not in compliance with a major WTO ruling declaring certain U.S. tax breaks as illegal export subsidies. Nonetheless, the administration is right to push this issue toward resolution. Although it's hard to quantify the effect on Virginia of a U.S. win on this issue, agricultural goods at present constitute well over a quarter of the export volume handled by the port of Virginia.

The European Union claims there is no ban on GM products and points to a small set of genetically modified foodstuffs that have been approved for sale. This is disingenuous posturing. A de facto moratorium on new approvals has been in place since 1999.

The substantive arguments are over health and sovereignty. The WTO allows nations great latitude to regulate what is sold in domestic markets as long as two conditions are met. Product standards should be based on the best available scientific evidence, and any prohibitions must apply equally to domestic and foreign products.

The European Commission itself recently reviewed 81 European studies of GM foods and found no evidence of health risks. The Commission even stated that because of greater regulatory scrutiny, GM crops are "probably even safer than conventional plants and foods."

Europeans are understandably concerned about the wholesomeness of their food supply. Mad Cow disease has been a traumatic experience for consumers and producers alike. In the context of this general unease, strong lobbying by farm interests and anti-GM environmental groups has led to the approval moratorium.

As a justification, the EU invokes the "precautionary principle." But the WTO does not recognize this "better safe than sorry" idea as a legitimate exception to international trade law based on nondiscrimination, and for good reason. Under the precautionary principle, every nation could ban the goods of any of its trading partners if that commodity could remotely be tied to health, and do so unilaterally. New products could be excluded without a shred of evidence offered as justification. The temptation to remove from the local market goods that compete effectively with ones own producers would be irresistible.

So Canadian and American corn and soybean products currently are shut out of the European market. Meanwhile, EU cheese producers are free to use already approved genetically modified enzymes. Thus far there hasn't been any apparent consumer backlash and no one has called for labeling Camembert as a Frankenfood.

Unlike the politicized and rather dysfunctional UN Security Council, the WTO has a fairly narrow mandate, and its dispute resolution processes have teeth. If the US prevails, and that is the likely outcome, the EU would have to revise its regulatory procedures, offer tariff concessions on other products worth at least as much as the lost sales of GM foods, or face a WTO-sanctioned punitive response from all nations whose agricultural goods are thus excluded from EU markets. The European Union could indeed choose the middle alternative, but as genetically modified products assume a greater role in the human food supply the pressure on the EU to conform would increase.

Ending the EU moratorium would not mean the end of consumer choice in Europe. Voluntary labeling by producers intent on capturing a sizeable market offers a way to expand choice significantly.

European sovereignty is indeed hedged in somewhat by its long-standing commitment to a world trading system based on enforceable rules. American sovereignty is equally hedged. These rules help ensure that the world trading system does not degenerate into an interest-group-led protectionist free fall. The alternative to clear rules is trade policy based on arrant non-science.

 David H Feldman teaches in the economics department at the College of William and Mary. dhfeld@wm.edu