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EU/US GM Trade War Escalates Over Corn

[ We seems to be witnessing something of an epic struggle for control of the World's food supplies with the surge of organic farmers on the one hand, and patent and GMO weilding multinationals on the other. Parts of Africa, Europe and around the world are battling to maintain or develop relative food sovereignty. While the US (joint holders of the 'terminator seed' patent) and Canadian governments and others are supporting the multinationals.

After oil peak, the energetic base of societies looks set to move back away from fossil fuels towards agriculture. In this context the battle for control of the World's food supply takes on added significance. It is the battle for control of the dominant industry of the middle of the coming century.

Whether or not the multinationals can provide models which function in a low energy future, where sensitivity to locale and an ecological perspective may be necessary, is another question. -AF ]

Since last Friday, the EU has banned the import of US corn feed. The new embargo has further strained a trade relationship already tense over genetically modified food, Airbus subsidies, and the weapons embargo against China.

In a state of agitation, United States economics officer Robert Cekuta invited his German counterpart, Rainer Wend, to a meeting at the embassy in Berlin last week. It was an unusual move, but Cekuta was extremely worried. The Germans, he complained to Wend -- who is the chairman of economics committee in the German parliament, the Bundestag, and a trusted advisor to Economics Minister Wolfgang Clement -- worked behind the scenes on a European import ban on corn from the US. Cekuta explained to Wend that his country now faces "an enormous economic loss," and left no doubt that the step could strain relations between the EU and the US enormously.

Towards the close of last week, other US diplomats also tried once more to avoid the threatened embargo. According to a source at the Consumer Protection Ministry, "they called regularly every half hour." Even EU authorities were in constant contact with US envoys in Brussels. But the telephone and backroom diplomacy didn't help. On Friday, April 15, the European Commission decided against the interests of the superpower -- and put the ban on some imports of corn feed into effect.

From now on, the EU will require an analytical report from an accredited lab for all corn imports from the US. The report must unequivocally guarantee that the contents do not include any Bt10 corn, a genetically modified corn variant from the Swiss company Syngenta. The plant has a gene that makes it resistant to the antibiotic Ampicillin -- and it is not certified in either the US or Europe. The fear is that if humans consume animals that have been fed with the corn, they could develop immunities to antibiotics.

Between 2001 and 2004, Syngenta released about 700 tons of the illegal seeds into the US market by mistake, enough to produce about 150,000 tons of corn. In the US, the exact source of an agricultural product can't be traced. A certificate from the producers stating that any given shipment doesn't contain Bt10 is thus simply not possible.

Green environmental politicians, led by Consumer Protection Minister Renate Kuenast, feel that this confirms their skepticism over genetic engineering and are up in arms about what Kuenast calls the "unbelievable sloppiness" of mixing genetically modified corn in with other variants (see interview).

Chief among the products hit by the quasi-embargo is corn gluten feed, of which approximately 4 million tons are sent to the EU every year. The sales loss might amount to nearly $350 million. Other countries, including Japan, are now considering whether they will follow the draconian EU measures as well.

In addition to the ban on feed, the US faces recalls, actions for liability as well as enormous damage to the reputation of US corn. A similar accident with Starlink brand genetic corn cost the US economy over a billion dollars in 2001. The subsequent costs could be much higher this time, especially if until-now lethargic US consumers begin to question the safety of genetically modified varieties of grain.

The nonchalant behavior of the Americans infuriated the environmental protection authorities in Brussels and Berlin more than anything else. The US Department of Agriculture knew about the illegal Bt10-infused corn since December 2004. Officials remained silent though, until the science magazine Nature reported the incident at the end of March.

On the same day, Stan Cohen of the US Embassy informed EU authorities in Brussels about the Bt10, where he played down the incident consciously. The still upbeat Cohen wrote at the time that he hoped "the recent report of a technical breach of US laws won't lead to a disturbance of US feed imports to the EU."

A Failed Compromise

The efforts of the Economics Ministry to reach a compromise on corn imports fell apart last Thursday. The specialists from the various EU member-states had already met on Wednesday and established the EU line, unanimously pushing for the corn feed import ban. Even the office of German Chancellor Gerhard Schroeder, despite all threats to the contrary, in the end stood behind the ban.

Since the US produces approximately 300 million tons of corn annually, with a sales value of over $30 billion, Washington is accordingly alarmed over the ban. In the Economics Ministry in Berlin, high-ranking officials therefore fear a new trade war with the US. Certainly, the current issues between the two trade partners are already enough to put a lot of strain on their relationship:

  • The US wants to prevent the planned French subsidies of approximately €1 billion for the Airbus A350 aircraft. They have threatened proceedings before the World Trade Organization.
  • The US has already initiated proceedings against the rigid rules of the EU concerning genetically modified food. Their complaint is currently at the arbitral tribunal of the WTO.
  • The Americans feel the current considerations to waive the weapons embargo against China are a provocation.

The tensions all have a long history. Boeing head Harry Stonecipher complained a few months ago during his visit to Germany that his company has "now collected two years of data" proving that Airbus has violated the subsidy agreement that the EU and the US signed in 1992. Stonecipher has meanwhile been sacked, but the rumblings about the subsidies continue. And Pfizer head Hank McKinnell, speaking during the World Economic Forum in Davos in February, said this of Germany's price limits on medicine: "You give preference to your own companies," and he brought the issue up with Federal Chancellor Gerhard Schroeder as well.

US Republican Senator Richard Lugar openly warned the Europeans a few weeks ago about "dramatic consequences" should American soldiers ever be killed by Chinese equipped with European weapons. In the worst case scenario, Congress could ban the export of US high-tech equipment to the EU.

"The situation is markedly tense," is how one government official described the current state of affairs. "Everyone is waiting for what stage of escalation is going to come next."

Until the ban, the threats on both sides confined themselves to pithy remarks. Escalation of commercial disputes has always been prevented so far between the two trade partners, even if only at the last minute. But not this time. "Though whether the Europeans did themselves a favor in adopting this hard stance," says Wend, "is extremely questionable, in view of the already-strained relationship."
 

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