The Effects of GMOs on U.S.-Europe Trade Relationship

By: Hyun Muniz

"GMOs are not inherently bad . . . . We are able to feed 7.2 billion people, which a century and a half ago you could barely feed 1 and a half billion people and [it's] largely because of the success of modern farming." –Bill Nye the Science Guy [1]

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Trade Harmonization

The European Union and the United States share the largest two-way trade and investment relationship in the world; this is especially the case for the international trade of food.[2] Cooperation, mutual recognition, and harmonization are key factors in establishing minimal international food standards to prevent trade barriers and reduce transaction costs.[2] The rise of genetically modified (GMO) crops in the U.S. paired with the E.U.’s precautionary approach to regulating GMO products has resulted in trade difficulties that threaten the harmony of this longstanding trade relationship.

The GMO Problem

The E.U. last approved a GMO food product in 1998, subsequently beginning an unofficial moratorium on GMO approval.[3] In addition to this lack of approval, the European Commission adopted a regulation that required labeling all final products with GMO content.[3] In May 2003, the U.S., Argentina, and Canada filed a complaint with the World Trade Organization,[4] claiming that the E.U.’s unofficial ban on GMOs was an unfair trade practice in violation of trade treaties.[5] The U.S. specifically claimed that the ban unfairly discriminated against U.S. products since U.S. products were, in large part, genetically engineered.[2] The labeling requirement would increase production costs, disrupt trade, and falsely imply the food is unsafe because consumers would view the label as a warning.[2]

The Lawsuit

According to Sanitary and Phytosanitary Measures (SPS Agreement), the E.U. cannot arbitrarily discriminate against products unless there is a scientific justification.[5] While the U.S. presented the scientific findings that there was “no rational relationship between EU’s moratorium and the risk assessment for unapproved biotech products,” the E.U. responded that the “complaining parties seek[ed] to evade or ignore the whole socio-political, legal, factual, and scientific complexity of the case,”[5] and that sufficient evidence exists to question the safety of GMOs to human and environmental health.[5]

The World Trade Organization ruled in favor of the U.S. holding that the blocking of GMO crops was a violation of international trade law.[6] While the E.U. ultimately ended its moratorium, the U.S. simply won a battle, not the overall war.[2] With or without the ban, the U.S. had to accept that European consumers remained closed to the idea of GMO products and that it should shift its focus to other markets more receptive to GMO foods.[2]

The Way Forward

The E.U. is entitled to its perception of GMO products, but with the increase in international trade in food, it should consider harmonizing and incorporating GMO products rather than resisting them for two main reasons: (1) its resistance imposes trade barriers and (2) its negative perceptions are unsupported by scientific evidence.

First, the E.U.’s precautionary principle is undefined and flawed. The precautionary principle is designed to prohibit a potentially risky activity until it is proven safe.[7] However, there is no standard meaning for this principle. The lack of quantitative or objective standard can lead to exploitation by imposing trade barriers disguised as precautions.[2] Most states have interpreted the precautionary approach as a “better safe than sorry” policy. [2] This approach is unrealistic because no food is ever 100% safe; clinging to any miniscule finding of health risks and deeming the food unsafe for consumption is flawed. In situations where absolute safety is not guaranteed, it may be easier to believe that inaction equates to zero risks, but this rationale has its shortcomings. For example, in 2002, the Zambian government refused to accept U.S. donated corn because it was likely some of the products were genetically engineered.[2] This rejection based on a theoretical risk actually put 2.9 million people at risk for starvation.[2]

Second, the E.U.’s GMO ban due to potential health risks is largely “unsupported even by the EU’s own scientific studies.”[2] Even, if scientific studies were to show some health risks from GMO consumption, food safety can never be 100% guaranteed: reactions to food differ from person to person due to allergies and a variety of other personal reasons. Rather, the wariness of GMOs is fueled by public fear and lack of confidence in the food industry. For instance, Europe’s outbreak of mad cow disease and other food safety disasters is one factor responsible for E.U. citizens’ lack of acceptance of GMO products compared to U.S. citizens.[2]

Conclusion

As GMOs gain traction as a cheaper alternative and are scientifically proven to be a safe product, China and other Asian countries have started to soften their attitudes towards GMO products, thereby engaging in more international food trade with the U.S.[2] This shift in market focus and the E.U.’s continued resistance towards GMO products could significantly impact U.S.-E.U. trade relations. However, while the U.S. has opportunity to shift trade relations with other countries, the E.U.’s strong stance against GMOs considerably puts it at risk for isolating itself from international food trade, which could prove costly.

[1] Rahel Gebreyes, Bill Nye Explains Why He Changed His Mind About GMOs, Huffington Post (Nov. 13, 2015), http://www.huffingtonpost.com/2015/05/11/bill-nye-gmos-changed-mind_n_7245092.html.

[2] Neal D. Fortin, Food Regulation: Law, Science, Policy, and Practice (2009).

[3] Timeline: The EU’s Unofficial GMO Moratorium, Financial Times, (Feb. 8, 2006, 3:58 AM), http://www.ft.com/intl/cms/s/0/624a88c6-97db-11da-816b-0000779e2340.html#axzz3rJRiMiyI.

[4] The World Trade Organization is the international body dealing with rules of trade between nations.

[5] Laura Moore Smith, Divided We Fall: The Shortcomings of the European Union’s Proposal for Independent Member States to Regulate the Cultivation of Genetically Modified Organisms, 33 U. Pa. J. Int'l L. 841 (2012).

[6] Julian Borger, Nicholas Watt, & John Vidal, US Wins WTO Backing in War with Europe over GM Food, The Guardian (Feb. 7, 2006), http://www.theguardian.com/science/2006/feb/08/gm.wto.

[7] Precautionary Principle, SEHN, (Nov. 12, 2015) http://www.sehn.org/precaution.html.