International Herald Tribune
November 27, 2004


Trade protectionism

By Lawrence A. Kogan

Yrenton, N.J. -- If something walks, quacks and swims like a duck, it
probably is a duck. So the only thing surprising about a recent World
Bank report is that otherwise reserved scholars minced no words in
calling the European Commission's obsession with avoiding genetically
modified organisms, or GMOs, blatant trade protectionism.

The European Commission has long attempted to justify its strict
health and environmental regulations as necessary to protect the
public from uncertain risk associated with genetically modified crops.
The World Bank report debunks this myth and offers empirical evidence
of the commission's true motives.

What is really behind the commission's stringent regulations is
European industry's comparative disadvantage in the use of genetically
modified, or GM, crop technology. In drawing this conclusion, the
study points to the significant role played by European industry in
lobbying for protectionist barriers.

It is refreshing to see the report's authors move beyond the
conventional wisdom that the European Union has been reluctant to
allow GM crops and foods because Europeans are more concerned with
protecting the natural environment and are less trusting of their food
safety regulators than Americans are. The European Commission's anti-
GM stance is so strong that it had to be based on more than just
"cultural preferences."

The deeper question is this: Why would European producers lobby for
overly strict rules that they too must face? What do they gain?

The simple answer is based in classical trade economics. As the
authors note, "when faced with a more efficient competitor, the
optimal response of farmers in countries with a comparative
disadvantage in GM adoption is to lobby for (or at least not resist)
more-stringent GM standards."

Faced with increased competition in GM products from larger American,
Canadian and Argentine GM exporters -- which account for three-fifths
of the world's soybean exports and four-fifths of global maize exports
-- domestic EU producers lobbied their governments and the European
Commission to adopt strict GM controls.

Of course, GM imports also generated widespread opposition among
outspoken and politically influential European consumer and
environmental groups. This gave rise to a convergence of civil society
and industry concerns that moved member state governments and the
European Commission to respond in a politically popular manner that
also sought to eliminate EU industry's comparative economic
disadvantage. That disadvantage could be eliminated only by creating
artificial "product differentiation," first with the GM moratorium and
then through strict EU-wide traceability and labeling regulations.

All of this, of course, was rational from an economic and political
point of view. However, it is also arguably illegal from the
perspective of international trade laws enforced by the World Trade

Perhaps worse still, EU biotech policy has had serious global
repercussions, profoundly influencing the decisions of other food-
exporting nations to avoid or severely restrict the use of GM
technology. China, which has a steady but growing agricultural trade
with Europe, has been unwilling to approve GM food production for fear
of losing EU market access. But with nearly one-fifth of the world's
population, China is in desperate need of the kinds of yield increases
GM crops offer.

EU policies have also encouraged developing countries such as Zambia
and Zimbabwe to shun GM food aid for fear that even their non-GM food
exports would be tarnished with a "GM taint" and be denied access to
EU markets.

Some experts have blamed the now-ended GM moratorium for these
decisions, but poor countries are scarcely in a better position now
that the moratorium has been replaced with potentially crippling GM
labeling and traceability rules.

Furthermore, as I discuss in a recent article in the U.S. journal The
National Interest, EU support for antibiotech campaigns by
nongovernment organizations has even stymied basic research and
development programs in countries like the Philippines. There, EU-
funded activists have helped to reduce the financial incentives for
research into GM products by raising needless hurdles to research.
Activist campaigns have even made consumers reluctant to accept such
publicly funded GM products as nutritionally enhanced "golden" rice.
Tragically, while European industry has gained economically from these
policies, developing countries have continued to suffer the human
losses of hunger and disease.

The World Bank's findings are doubly disturbing because they reflect
the observation by many other scholars of a growing trend in the use
of EU regulatory policy to disguise trade barriers. Considering the
significant economic interests at stake in international trade, one
cannot help but suspect that similar motivations underlie
precautionary principle-based regulations, such as proposed EU
regulations on chemicals or its directives on hazardous wastes. Those,
too, are rules that walk, quack and swim like protectionist ducks.


Lawrence A. Kogan, an international environment and trade attorney,
has advised the U.S. National Foreign Trade Council on trade and
environmental issues.

Copyright 2004 International Herald Tribune