Now, Will Europe Swallow Frankenfoods?

Probably not, even though the U.S. has won a major victory in the WTO over genetically modified food exports

Chalk one up for the U.S. On Feb. 7, the World Trade Organization ruled against the European Union in a dispute over import restrictions on genetically modified (GM) crops and foods. The preliminary ruling is hailed as a major win for the U.S. government, farmers, and the biotech industry. But across the Atlantic, the victory is seen as a pyrrhic one unlikely to erase European consumers' longstanding aversion to what the local press has dubbed Frankenfoods.

The long-simmering dispute centers on a 2003 complaint brought by the U.S., Canada, and Argentina, all major producers of GM crops. These countries claimed that the EU's six-year de-facto ban on GM products, beginning in 1998, constituted an unfair trade barrier with no scientific justification. Although the EU began allowing imports of GM products in 2004 on a case-by-case basis, individual European countries have reserved the right to ban GM products that already have been given the green light by Brussels. The EU, which grows less than 1% of the world's gene-modified crops, says it has approved more than 30 GM food and animal products since 1994.

IMPORT BOOSTER? The U.S. charges that the EU's current approval system, which calls for detailed labeling and traceability requirements, is slow and unworkable. Brussels says it's simply responding to consumer concerns and ensuring that GM products are safe. "Europe's decision to halt GM approvals [in 1998] wasn't about erecting barriers to trade," says Sue Mayer, director of GeneWatch UK, a nonprofit group that monitors genetic technologies. "It was about responding to public concern in order to have better rules and scientific knowledge."

American farmers and industry giants such as Monsanto (MON ) charge that Europe's resistance to GM has cost them hundreds of millions a year in lost sales in a global market worth $5.5 billion. The U.S. hopes that the new ruling from the world's trade court will reverse the trend. At a Feb. 8 press conference in Brussels, Deputy U.S. Trade Representative Susan Schwab said the WTO decision is likely to lead to a change in the EU's attitude toward GM products that will be result in greater imports.

That may be wishful thinking. A 2005 Eurobarometer poll showed 54% of European consumers think GM food is dangerous. And many major supermarket chains across Europe no longer sell GM products. Britain's Unilever (UN ) and Cadbury-Schweppes (CSG ), along with Switzerland's Nestlé, stopped using GM ingredients in their products years ago in the face of growing consumer opposition. "The U.S. effort to force GM foods upon unwilling consumers is offensive and misguided," Jim Murray of the European consumer organization BEUC said in a statement.

PROTECTIONISM IN DISGUISE? Americans, who have been chowing down on GM-derived foods for years, say European concerns over safety are unwarranted. It's a sentiment echoed by EuropaBio, the EU association for bioindustries, which maintains that no scientific evidence indicates GM products are anything but safe.

But many Europeans remain sceptical. After all they have experienced numerous scares in recent years that sensitized the population to the hidden dangers lurking in their food supply such as mad cow, dioxin-infested chicken, and hormone-laden beef. There's also the perception that the U.S. is trying to bully Europeans in order to boost America's thriving biotech industry. "European safeguards" are being "sacrificed to benefit biotech corporations," claimed environmental group Friends of the Earth Europe in a statement.

The U.S. views Europe's carping over safety issues as an attempt to disguise old-fashioned trade protectionism as consumer protection. Free-trade proponents in the U.S. see Europe's resistance to GM as politically motivated -- a means of protecting the bloc's all-important farming industry from foreign imports. But others disagree. "It's a bit rich for the U.S. to say Europe is politically motivated when the main reason for taking this before the WTO is that the U.S. doesn't want other countries to follow Europe's lead and place restrictions on GM," says GeneWatch's Mayer.

DEFIANT ACTIONS. The full details of how the WTO ruling will affect Europe won't be known until the organization releases its final verdict later this year. In the meantime, officials on both sides of the Atlantic are plowing through the 1,000-page decision. The EU hasn't announced whether it will ask for more time to comply with or appeal the decision.

But already many in Europe expect some national governments might decide to go with public opinion and defy the EU by banning GM crops. Greece's Agriculture Minister was quoted in the press last week saying his country would ignore EU regulations and broaden its unauthorized ban on GM-modified maize seeds. It seems this food fight is far from over.

READER COMMENTS

Capell is a BusinessWeek correspondent in London
Edited by Cristina Lindblad

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