A preliminary World Trade Organization dispute settlement panel had sided with the United States, Canada, and Argentina who had argued that the European Union's review process for biotech commodities was broken and unfairly restricted trade. While welcoming this WTO ruling against Europe's flawed and non-science based approval process, the American Soybean Association called on the Bush Administration to promptly mount a WTO challenge against Europe's discriminatory traceability and labeling laws that apply to biotech crops.
"This favorable WTO ruling should only be seen as 'step one' of the actions against Europe's unjustified and unscientific policies toward biotechnology," says Rick Ostlie, ASA First Vice President and a soybean producer from Northwood, N.D. "What must now follow is the more important 'step two', which is a WTO challenge of the EU's unfair traceability and labeling laws which are costing U.S. soybean growers hundreds of millions of dollars in lost sales each year."
Sen. Tom Harkin, D-Iowa, says "EU's restrictions have scared a number of countries, especially developing countries, away from biotechnology crops that could help supply more food to people in desperate need."
A statement from U.S. Trade Representative Rob Portman adds that the facts on agricultural biotechnology are clear and compelling. "It is a safe and beneficial technology that is improving food security and helping to reduce poverty worldwide," he says.
In 1997 the EU introduced mandatory labeling requirements for all foods with detectable presence of ingredients derived from biotech crops. In March 2004 the EU implemented new legislation that significantly broadened the scope of those labeling requirements. Labeling is now required for all foods and feeds that contain or consist of biotech products, regardless of whether that presence is detectable through testing.
"The EU imposed these requirements despite repeated pronouncements by EU scientific committees that biotech foods and feeds are entirely safe," Ostlie says. "Indeed, many EU leaders have admitted that the labels serve no food safety purpose. Nevertheless, consumers perceive the labels as health warnings, and most EU food companies and retailers have therefore decided against marketing labeled foods. As a result, U.S. exports of biotech products to the EU, including U.S. soybeans, have fallen sharply."
In quantity terms, U.S. soybean exports to the EU have fallen from 8.3 million metric tons (304.9 million bushels) in 1996 to 3.7 million metric tons (135.9 million bushels) in 2004. Between 2002 and 2004, there was a drop of 39%. The most important factor in this slide is the declining demand among EU food manufacturers and retailers for soybean oil and other food products derived from U.S. soybeans.
Between marketing years 1996/97 and 2003/04, a period during which food companies were reformulating their products and seeking new sources of supply in anticipation of the new labeling rules, soybean oil's share of the total EU vegetable oil market fell from 19% to 13%. At the same time, the proportion of soybean oil on the EU market that comes from U.S. soybeans was falling even more rapidly. From 1996 to 2004 the U.S. share of EU soybean imports decreased from 61% to 27%. At the same time, the share of imports from Brazil, which until recently denied producing biotech soybeans, rose from 22% to 64%.
"With this WTO victory fresh in hand against Europe's discriminatory biotech system, the United States and our allies must now challenge Europe's even more egregious biotech traceability and labeling rules," continued Ostlie. "These unfair and non-science based rules are costing U.S. soybeans farmers and U.S. food companies hundreds of millions of dollars in lost sales each year. ASA looks forward to working closely with U.S. Trade Representative Portman and others in the Administration to mount such a WTO challenge."
The ruling released Tuesday is a preliminary ruling. A final ruling is expected out in March 2006. Harkin says he hopes this WTO decision will be upheld on appeal, that the EU will comply with it and that the end result will be reasonable and scientifically sound rules throughout the world regarding genetically modified crops.