Bush Rearms to Combat European Ban on Biotech Food
But the World Doesn't Want the Stuff 

Bloomberg 15may03

Brussels—Hi Sang Lee, head of an association of South Korean flour millers, traveled from Seoul to Bismarck, North Dakota, to buy $9.5 million of wheat for noodle and bread makers. After meeting with North Dakota farmers and Governor John Hoeven last month, Lee told Agriculture Commissioner Roger Johnson he needed one guarantee before agreeing to buy any more of the state's high-quality spring wheat: a signed pledge that none of it is genetically modified. "If wheat is biotech, Koreans will boycott our entire industry," said Lee, chairman of the Korea Flour Mills Industrial Association. "When we hear GMOs, we want to run away." Korean millers have had a ban on the import of bio-engineered food, whose seeds are modified in laboratories to make crops resistant to pests and disease, for three years. Four out of five South Korean consumers say they won't buy GMOs because of health concerns, according to one survey. Consumers from Seoul to Buenos Aires are joining those in Rome and London who say they don't want their supermarket shelves stocked like those in the U.S. with genetically modified organisms, or GMOs. "I really don't want to eat food that's been genetically modified. Who knows what kind of dangers they will discover in a couple of years? It's better to be safe than sorry," said Loide Evangelista, 30, a real-estate agent in Brasilia, Brazil.

Countries of the EU  

WTO Challenge

President George W. Bush on Tuesday challenged a European Union ban at the World Trade Organization on some gene-altered food, the latest effort by U.S. policy makers who have supported genetically modified food since the Clinton administration. The lawmakers and farmers who favor the challenge are not only seeking to influence European policy makers, they're also aiming to change the views of Lee and concerned consumers across the globe. "This has broadened from a European problem to a global problem," U.S. Trade Representative Robert Zoellick said, in announcing that the U.S. was going to the WTO. "The combination of these global effects led us to feel that we couldn't wait any longer. Our patience had run its course." Already, more than a dozen nations -- China and Japan among them -- have followed the European lead in imposing at least some restrictions, even though the U.S. says not a single study has shown evidence of a health risk. Last August, Zimbabwe and Zambia, in the middle of a famine, refused to accept 100,000 metric tons of corn donated by the U.S. because of fears the corn's genes had been manipulated.

Monsanto

The European Commission's Eurobarometer conducted a survey last year of 16,500 people, representing more than 1,000 in each of the EU's 15 member states, on their attitudes toward biotechnology, the fifth survey in a series on the issue. The survey asked citizens their views on all aspects of biotech, such as pharmaceuticals and genetic testing for diseases, as well as genetically modified seeds and foods. "Europeans continue to distinguish between different types of applications, particularly medical in contrast to agri-food applications," the study, published on March 21st, said. "A majority of Europeans do not support GM foods. These are judged not to be useful and to be risky for society." More than 70 percent of Europeans say they won't eat foods that contain genetic modifications even if they are cheaper, the survey found. At stake is a biotechnology market that could reach $2 trillion by 2010, almost twice the size of Italy's economy, according to another EU study. It includes products ranging from the seeds of Monsanto Co., the world's biggest developer of genetically modified crops, to the Oscar Mayer hotdogs of Kraft Foods Inc., the largest U.S. food maker.

Corn Exports

Monsanto estimates that $1 billion of the $2.3 billion gross profit it forecasts for next year will come from seeds and traits, including those that have been genetically modified, even if the European Union and Brazil maintain their prohibitions. Dow Chemical Co. and DuPont also have seeds businesses. Those companies, however, mainly license the traits from Monsanto. U.S. farmers lose out on $300 million a year in corn exports to Europe alone because of the ban on new approvals of gene- modified corn, according to the American Farm Bureau Federation, the U.S.'s largest agricultural organization, representing 5 million members. France and five other countries have prompted the EU to enforce the ban since 1998. "There are three issues discussed with regard to environmental risks of genetically engineered plants," said Dr. Norman Ellstrand, professor of genetics at the University of California. "One set of issues is if the trans-gene escapes, where the gene moves from the plants from which it was intended to those for which it is not intended," Ellstrand said. "Then there is allergenicity, crops not deregulated could become an allergen. The human health issue I'm most concerned about nowadays is industrial compounds getting into crop acreage it's not intended for." Industrial compounds are classes of pharmaceuticals, for example, drugs in plants.

Red Spring Wheat

In the U.S., 80 percent of soybeans and one-third of corn are genetically modified to resist pests and disease, allowing less labor and pesticide application. Biotech soybeans are able to resist applications of Roundup, Monsanto's top-selling weed- killer. Monsanto has applied to U.S. regulators for approval to sell an engineered wheat seed that will also withstand Roundup. No modified wheat is grown in the U.S. yet, which is one reason North Dakota could pledge to South Korea's Lee that its wheat is "GMO free." The group of Korean millers led by Lee bought $30 million of wheat during the trip to the U.S., which included stops in Oregon, Montana, North Dakota and Washington, two weeks ago. The millers asked North Dakota for the GMO guarantee because that state is the center of production for hard red spring wheat.

`Immoral'

The head of Italy's largest miller, Grandi Molini Italiani SpA, told U.S. wheat exporters that the adoption of genetically modified wheat crops would mean the end of the $220 million annual market in Europe for U.S. wheat. "The European milling industry will simply not buy one more kilo of any U.S. wheat" if the U.S. approves GMO wheat crops, said Chief Executive Antonio Costato. "The European Union's refusal to approve new biotechnology products has contributed to the spread of anti-biotechnology hysteria to other parts of the world," said Senate Finance Committee Chairman Charles Grassley in a letter to Zoellick on April 28. The European Commission, the EU's Brussels-based executive agency, is pressing for an end to the ban. It says a law now in the works that sets strict food labeling and standards on tracing the crops through the food chain may persuade France and its allies to lift their objections to the crops. Industry representatives and U.S. officials are skeptical.

Labeling

The "labeling scheme for biotech foods would simply replace one trade barrier with a worse trade barrier," said Mary Sophos, a vice president of the Grocery Manufacturers of America. U.S. farmers and lawmakers say the labeling laws would have the same effect as the moratorium because the gene-altered food has garnered such bad publicity. The legislation would also warrant a WTO case because it would mean that GMO crops would be effectively shut out of the market. U.S. farmers have already abandoned selling biotech soy to Japan because of its labeling law. The labeling regime may also spread to other regions as farmers see that as a way to restrict competition from U.S. imports and guarantee their own markets for poultry and pork in Europe, U.S. officials said. "If we don't challenge the Europeans, then there is a real danger that the EU's attitudes and regulations will spread," said Craig Thorn, a Washington-based consultant and former head of the U.S. Agriculture Department's European trade division.

Japanese Consumers

Consumers worldwide already are showing resistance. Even in the U.S., where acceptance of genetic modification is high, consumers would demand an average 14 percent discount for products labeled as gene-modified, according to a Department of Agriculture study. As in South Korea, wheat importers in Japan and China said they won't buy any genetically modified wheat because their customers don't want it, according to an Iowa State University survey conducted last year. "Japanese consumers just won't accept products with genetically modified ingredients," said Yoichi Takemoto, an official at the All Nippon Kashi Association, an industry group. Thailand enacted a law requiring labels on genetically modified corn and soy products, adding itself to a list of more than a dozen nations including Japan, Korea and Australia that require some kind of labeling.

`Totally Worried'

In Brazil, the market for U.S. poultry feed has vanished because U.S. feed corn is gene-altered to resist pests and drought. Brazil's chicken farmers, who export almost a quarter of their production to Europe, didn't want to see that market wiped out by having that feed taint their chicken. "I have totally eliminated anything with soybeans from my family's diet," said Susana Zajd, a Buenos Aires mother of three children aged 11, 8 and 4. "The information is not there and I'm totally worried about the side effects it can have on my children's growth." There's a proposal in the Brazilian congress to legalize the use of genetically modified soybeans and other crops. It's expected to come up for a vote in the second half of this year. "To the extent that consumers want choice, they want to choose non-biotech," said Karil Kochenderfer, the biotechnology coordinator for the Grocery Manufacturers of America, which represents food companies such as Kraft and General Mills Inc. "Our larger focus is on how we make sure that the public feels comfortable with this technology."

--Mark Drajem in the Washington bureau (1) (202) 624-1964 or mdrajem@bloomberg.net, with reporting by Warren Giles in Geneva, John Fraher in Frankfurt, Tamra Santana in Washington, James G. Neuger in Brussels, Juliann Walsh in Plainsboro, New Jersey, Michael Smith in Brasilia and Daniel Helft in Buenos Aires. Editors: McQuillan, Ruane, Swardson, Henry, Ruane.