EU Ban on Biotech Products
To Face Challenge From U.S.

NEIL KING JR. / Wall Street Journal 9may03

WASHINGTON -- In what could be one of the most bitter trade battles in years, the Bush administration has decided to challenge the European Union's longstanding moratorium on genetically modified foods and drugs.

U.S. officials say there is now interagency agreement within the administration to lodge a biotech case within the World Trade Organization, but the White House may hold off on filing a suit in the hope of mustering international support from countries such as Canada, Australia and Argentina. There is also concern that lodging a case now could complicate U.S. diplomatic efforts on Iraq within the United Nations.

"People are fed up," said one U.S. official deeply involved in the issue. "There is a deep sense that to be taken seriously, we must do something -- and sooner rather than later."

The EU imposed a de facto moratorium on approving new biotech products in 1998, a move that has roiled trade relations with the U.S. ever since. Farm exporters say the ban has blocked sales of genetically modified corn, soybeans and cotton. U.S. corn growers contend the ban has blocked around $300 million in annual sales of bioengineered corn.

Coming amid continued bitterness over the Iraq war, a biotech suit against the EU would strengthen anti-U.S. sentiment in many parts of Europe, where consumer and environmental groups are deeply opposed to genetically modified foods. EU officials warn that European consumers would respond with a boycott of U.S. food products -- a threat that many U.S. food exporters take seriously.

U.S. officials, however, contend that foot dragging in Europe has left the administration with no choice but to go ahead with a suit. The big decision now is whether to take a case to the WTO even as debate continues within the U.N. over Iraq, and as President Bush prepares to travel to Europe in early June to attend a meeting in France of the major industrialized powers.

The administration has threatened for months to go after the EU on the biotech ban. U.S. Trade Representative Robert Zoellick in January blasted the EU for what he called its "Luddite" and "immoral" opposition to biotech crops, calling the ban "a complete violation of the WTO" rules. But the White House later decided to defer a decision on filing a suit until after the Iraq war. Pressure is now building in Congress and within the administration to move forward quickly.

A fight over biotech products would join a lengthening list of high-profile WTO disputes between Europe and the U.S. The EU this week got WTO approval to impose up to $4 billion in sanctions on U.S. imports in retaliation for a system of export tax breaks given to U.S. companies that the international trade body has determined to be illegal. The EU is also fighting to overturn the Bush administration's wide-ranging tariffs on imported steel.

Arancha Gonzalez, spokeswoman for European Trade Commissioner Pascal Lamy, said that EU officials "haven't been notified of the existence of any WTO complaint. If and when one is made, we will look at it before commenting."

Richard Mills, spokesman for the U.S. Trade Representative's office, declined to comment on any impending case but said that "the EU's moratorium is illegal under both EU and WTO rules and needs to be lifted."

Mr. Zoellick and other Bush officials acknowledge that even a successful case at the WTO would probably not pry open the EU market or change the deep consumer distrust there for bioengineered crops. Some industry representatives fear a suit could deepen opposition in Europe to all biotech foods and buttress efforts to fight the spread of such technology elsewhere in the world.

Nicholas Clegg, a member of the European Parliament who sits on the external trade committee, said a WTO biotech case now "would be an unwelcome move and counterproductive … At a time when trans-Atlantic relations are strained, we should be trying to avoid this kind of thing."