Order Code RS21556
Updated January 21, 2005
CRS Report for Congress
Received through the CRS Web
Agricultural Biotechnology:
The U.S.-EU Dispute
Barbara A. Johnson and Charles E. Hanrahan
Resources, Science, and Industry Division
Summary
In May 2003, the United States, Canada, and Argentina initiated a formal challenge
before the World Trade Organization (WTO) of the European Union’s (EU’s) de facto
moratorium on approving new agricultural biotechnology products, in effect since 1998.
Although the EU effectively lifted the moratorium in May 2004 by approving a GE corn
variety, the three countries are pursuing the case. The WTO is expected to decide the
case by March 2005. The moratorium reportedly cost U.S. corn growers some $300
million in exports to the EU annually. U.S. growers plant genetically engineered (GE)
varieties mainly for weed and pest control. They do not segregate them from non-GE
varieties, because the U.S. regulatory system recognizes them (once approved for
commercialization) as substantially equivalent to non-GE varieties. The EU moratorium,
U.S. officials contend, threatened other agricultural exports not only to the EU, but also
to other parts of the world where the EU approach to regulating agricultural
biotechnology is taking hold. The EU approach presumes that the products of
biotechnology are deemed to be inherently different than their conventional counterparts
and should be more closely regulated. This report will be updated if events warrant.
Issue1
On May 13, 2003, the United States, Canada, and Argentina announced their intent
to challenge in the World Trade Organization (WTO) the European Union’s (EU’s) de
facto moratorium (since 1998) on approving new agricultural biotechnology products.
U.S. agricultural interests contend that these policies not only blocked their exports to the
EU, their fourth-largest foreign market, but also fueled unwarranted concerns about the
safety of agricultural biotechnology throughout the world. EU officials say they moved
as quickly as possible to reinstate biotechnology approvals while trying to reassure their
1 Sources include USTR, 2003 National Trade Estimates Report on Foreign Trade Barriers; Pew
Initiative on Food and Biotechnology, U.S. vs. EU: An Examination of the Trade Issues
Surrounding Genetically Modified Food
, updated August 2003; Biotechnology Regulations and
the WTO
, International Agricultural Trade Research Consortium, Working Paper #02-2, 1/02; and
various EU documents.
Congressional Research Service ˜ The Library of Congress

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consumers regarding safety issues. The EU effectively ended its moratorium with its May
2004 approval of a GE corn variety for human consumption, and approved a second
variety in October 2004. The EU has also implemented new labeling and tracing rules for
genetically engineered (GE) crops and foods. The U.S., Canada, and Argentina are
pursuing the case, with U.S. agricultural interests contending that despite the approvals
the EU approval process is unpredictable and not transparent.2 In August 2004, the WTO
announced that it would establish a panel of expert scientists to advise on scientific issues
raised by the dispute, as requested by the EU, delaying its decision from September 2004
to March 2005. The WTO case is one of several high-profile trade disputes between the
United States and the EU, which share two-way agricultural trade valued at approximately
$15 billion annually.3
Background
The United States accounted for 59% of the 200 million acres planted to GE crops
in 2004, according to the International Service for the Acquisition of Agri-biotech
Applications (ISAAA), a group supportive of the technology. In 2004, 85% of all U.S.
soybean, 76% of U.S. cotton, and 45% of U.S. corn acres were planted with GE seed
varieties, designed mainly to control pests (weeds and insects).4 Gaining market
acceptance of GE crops within the United States has been easier than overseas, however,
where, in markets like the EU, consumers and their governments have been more wary
of biotechnology.
With minor exceptions, the EU and its member states approved no agricultural
biotechnology products between 1998 and 2004. As of January 2004, 22 GE products or
crops were awaiting approval. A block of EU states had effectively halted the release of
any new GE crops into the environment, saying that they would not implement the EU-
wide legislation for approvals until new, stricter regulations for labeling and tracing GE-
containing products (discussed below) took effect.5
In the three years before the de facto ban, U.S. corn exports to the EU averaged about
$300 million annually (Spain and Portugal were the largest EU importers), according to
USDA data. During the ban, they declined to less than one-tenth of that value annually
— the result, according to analysts, of the EU’s moratorium on the approval of new corn
varieties already approved in the United States. Although one variety of biotech corn was
approved by the EU prior to the moratorium, the United States grew other varieties. Thus,
U.S. export of any corn to the EU was impractical because of the difficulty of segregating
EU-approved from EU-unapproved varieties.
2 Food Chemical News, August 2, 2004.
3 WTO documents related to this dispute can be viewed at [http://docsonline.wto.org/imrd/
gen_searchResult.asp?RN=0&searchtype=browse&q1=%28+%40meta%5FSymbol+WT%
FCDS291%FC%2A%29&language=1].
4 USDA, Economic Research Service website, Adoption of Genetically Engineered Crops in the
U.S.
, at [http://www.ers.usda.gov/data/BiotechCrops/].
5 Before the moratorium, the EU had approved the commercial release of 18 genetically modified
organisms (GMOs), including “Roundup-Ready” soybeans.

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The WTO Case
The United States and its allies argue that the EU moratorium violated the WTO
Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures. The SPS
agreement permits countries to regulate crops and food products to protect health and the
environment, but their rules must be scientifically justified, and approval procedures must
occur without undue delay. U.S. interests contend that there is no scientific evidence that
GM-derived food and feed crops are substantially different from, or any less safe than,
conventional varieties, a conclusion they say even European scientific authorities have
reached. The United States contends that EU biotechnology measures also are
inconsistent with provisions of other WTO agreements, namely the Technical Barriers to
Trade Agreement (TBT), the General Agreement on Tariffs and Trade (GATT), and the
Agreement on Agriculture.
The United States has argued that the moratorium has not only impacted U.S. exports
to the EU, but also caused other countries — particularly in the developing world — to
shun biotechnology, which the U.S. asserts holds great promise for vastly improving
agricultural productivity and feeding growing populations. U.S. officials cite the 2003
famine in six sub-Saharan countries. A number of these countries imposed conditions on
the use of GE corn food aid, and Zambia refused all GE shipments because of unspecified
environmental and food safety concerns. U.S. officials argue that these actions are
directly linked to the EU policy. (Some African producers may fear that the EU will
refuse African agricultural exports if GE crops are widely introduced in Africa.)
EU officials counter that their cautious approach to regulating biotechnology is
necessary to cultivate trust among European consumers. At the same time, they also
assert that they have shown good faith in moving quickly to restart the approval process.
On July 15, 2003, the EU announced that it was taking 11 of its 15 member states to the
European Court of Justice for failing to implement the GM approval legislation. In May
2004, the EU effectively ended the moratorium by approving a GE corn variety (Syngenta
Bt-11) for human consumption. Since then, the EU has approved a second GE corn
variety (Monsanto’s NK603) for both human and animal consumption, and has approved
17 strains of GE corn seed (all derived from the MON 810 strain) for commercial use.
Differing Regulatory Approaches
The United States has embraced the concept of substantial equivalence with regard
to a GE food or agricultural product. That is, as long as such a product is substantially
the same as its conventional counterpart, it should be regulated no differently (except for
products marketed as “organic,” where genetic engineering is prohibited). The EU, on
the other hand, takes what has been called the precautionary approach, which says that
if scientific evidence is insufficient or inconclusive regarding a practice’s or product’s
potential dangers to human or environmental health, it should be more vigorously
regulated or even prohibited if there are reasonable grounds for concern, thus providing
a safeguard against future unforeseen problems. Under this approach, the products of
biotechnology are deemed to be inherently different than their conventional counterparts.
United States. The basic federal guidance for regulating biotechnology products
is the Coordinated Framework for Regulation of Biotechnology (51 Fed. Reg. 23302),

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published in 1986 by the White House Office of Science and Technology Policy. One
of its key principles is that genetically engineered products should continue to be
regulated according to their characteristics and unique features — not according to their
method of production. Thus, if a food produced through biotechnology is determined to
be substantially equivalent to one produced by more conventional means, that food is
subject to no additional (or no different) regulatory processes. Once approved, food
products do not have to be labeled as to whether or not they contain any genetically
modified organisms (GMOs), except to the extent that a GE food is substantially different
(e.g., contains an allergen or has a changed nutritional content). However, marketers are
free to make such claims, one way or the other, so long as the labeling is truthful.
Assuming the essential equivalence of GM products, the framework regulates new
biotechnology products under existing federal statutory authorities.6
European Union.7 The EU has established separate structures specifically for
approving biotechnology crops and also for labeling products derived from them.
Currently, the key measure is Council Directive 2001/18 (as amended in July 2003).
Generally replacing several earlier GM directives, 2001/18 spells out steps for assessing
human health and environmental risks before any GMO or GMO-containing product can
be released into the environment or marketed. Prior to the 2003 amendments, the
competent authority in the EU member state where the product was to be released was
responsible for assessing its safety and, if approved, notifying other member states,
opening the way for marketing throughout the EU (with EU-level intervention if one
member state disagreed with another’s decision). The amended directive provides for a
“one-door-one-key” approach, whereby the European Food Safety Authority conducts all
scientific risk assessments and communicates risks to the public. Then, the EU Council
of Ministers decides whether or not to approve a GM product for the EU market. This
directive also mandates new GMO labeling and traceability requirements (see below).
Labeling and Traceability
The WTO case does not involve this new, stricter EU labeling and traceability
regulation, which, U.S. agricultural interests argue, has continued to discriminate against
U.S. exports even after the GMO approval moratorium was lifted. The labeling and
traceability regulation, adopted in July 2003, requires that most foods, ingredients, and
(for the first time) animal feeds from GMOs be labeled, even if they no longer contain
detectable traces. The regulations (1830/2003 on the Traceability and Labeling of GMOs
and 1829/2003 on Genetically Modified (GM) Food and Feed) were implemented in
April 2004.
6 The three lead agencies are USDA’s Animal and Plant Health Inspection Service, which
regulates the import, interstate movement, and field testing of GE plants; the Food and Drug
Administration, which regulates food and animal feed additives, including those derived from
biotechnology, to ensure that they pose no human health risks; and the Environmental Protection
Agency, which regulates pesticides, including those genetically engineered into plants. See CRS
Report RL30198, Food Biotechnology in the United States: Science, Regulation, and Issues.
7 Sources for this section include USDA Office of Agricultural Affairs, U.S. Mission to the
European Union, Genetically Modified Food and Feed, updated March 11, 2003; Pew Initiative
on Food and Biotechnology, U.S. vs. EU: An Examination of the Trade Issues Surrounding
Genetically Modified Food
, 2002 and 2003; and various European Commission materials.

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Under the regulations, a tolerance level for non-GMO foods, feeds, and processed
products of 0.9% is set for allowable “adventitious presence” (AP) — that is, unintended,
low-level presence — of an EU-approved GE substance. All products with more than
0.9% must be labeled as GM. The allowable level for unapproved GE varieties that
received a positive EU risk assessment during the moratorium is 0.5% for three years,
after which it drops to 0%. Previously, only products with detectable GM material had
to be so labeled. Products like meat, milk, and eggs from animals fed or treated with GM
materials will not have to be labeled, however. In addition, traceability provisions now
require all firms that produce, store, move, or process GM products to track and keep
records on them from farm to consumer.8
Compliance with the EU labeling rule requires segregation of GE crops and foods
derived from them from the time they are planted all the way through the processing and
marketing chain. This entails prevention of pollen drift from GE to non-GE fields; and
difficult and costly handling procedures such as using separate equipment, storage, and
shipping containers, or at least painstakingly cleaning them. U.S. interests argue that
food companies forced to label accurately all GE products face huge risks and liabilities.
All of these problems discriminate against U.S. shipments — even though they are as safe
as “conventional” shipments, they contend. In practice, many U.S. manufacturers have
opted not to market GE products in the EU, in part due to the EU’s stricter GE
regulations.9
Differing Public Attitudes?
Differing U.S. and EU perspectives may reflect the fact that U.S. consumers
apparently have been not only less fearful of GE foods than their European counterparts,
but also more confident in their food safety regulators. According to USDA’s Economic
Research Service (ERS), surveys of consumer attitudes toward GMOs, conducted both
here and overseas, have yielded mixed results. Still, “U.S. consumers have voiced little
objection to genetically modified foods, while EU consumers have been vocal in their
disapproval,” ERS observed.10
Europeans may be much more wary of changes in how their food is produced due
to a series of recent food safety crises. During the 1990s, bovine spongiform
encephalopathy (BSE, or “mad cow disease”) emerged in the United Kingdom and spread
to other parts of Europe. U.K. food safety authorities first insisted that the disease could
not be transmitted to humans eating meat from BSE-infected animals. By 1996 scientific
8 For a description of the new rules, see the July 2, 2003, Commission press release at
[http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/03/935|0|RAPID
&lg=EN&display=]. The Commission also published “co-existence” guidelines, on July 23,
2003, on the planting of GM crops next to non-GM varieties.
9 Personal communication with Economic Research Service, January 21, 2005.
10 Details on these surveys can be found at ERS, Economic Issues in Agricultural Biotechnology
(Information Bulletin No. 762), February 2001, pp. 28-30. In November 2004, Pew released a
new survey of U.S. attitudes on GM foods which, Pew said, determined that Americans’
knowledge of them remains low, that their opposition to such foods has softened somewhat since
2001, and that they “have yet to roundly accept or intensely oppose” GM foods. Survey results
can be found at [http://pewagbiotech.org/research/2004update/].

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evidence indicated there was a link between some cases of a similar human disease and
consumption of BSE-contaminated beef. In 1999, high levels of dioxin were found in
meat products and eggs originating in Belgium. Also, foot-and-mouth disease (FMD)
outbreaks in Europe added to consumer concerns and to their “waning faith in regulatory
agencies,” Pew concluded. “Although these crises have not been caused by GE food, GE
food has been caught up in the general suspicion about food safety.”11 Vocal
environmental groups in the EU also have raised concerns about environmental impacts.
Outlook
It is unclear how a WTO dispute panel might rule on the U.S.-EU case. If the U.S.
case succeeds, it would validate the basic principles of the SPS agreement and could
discourage other countries from emulating the EU regulations. The United States has
pointed out that even many EU farmers would like to be planting and selling GE crops.
However, U.S. success might open EU markets to few if any significant GE imports (at
least partly because of the labeling and traceability regulation). The United States might
simply have to settle for some form of alternate compensation. Within the EU, some
member states have taken unilateral actions to block or slow adoption of GE crops and
foods even while other members push for their acceptance. Some analysts have
suggested that a U.S. win also could create a backlash among the European public and
governments who view the United States as forcing biotechnology on unwilling
consumers.
For several years, Members of Congress representing agricultural interests had urged
the United States to challenge the EU ban formally, in the belief that U.S. producers have
been adversely impacted there, and will face further barriers if more countries take the
EU approach to regulating the products of biotechnology. At the same time, many
lawmakers are well aware of the risks involved in escalating U.S.-EU trade tensions to
new heights. All are expected to monitor developments closely.
The House Agriculture Committee held hearings on March 26 and on June 17, 2003,
on the EU moratorium and related biotechnology issues. The Senate on May 23, 2003,
passed, by unanimous consent, a resolution (S.Res. 154) supporting the U.S. action
against the EU; a similar House measure (H.Res. 252) was passed on June 10, 2003, by
a suspension vote, 339-80. Also, the conference report to accompany the Consolidated
Appropriations Act for FY2005 (H.Rept. 108-792; H.R. 4818) notes that $3.3 million is
provided to USDA for “cross-cutting trade negotiations and biotechnology resources.”
11 Pew Initiative. Unlike BSE, scientists have not linked FMD to human health concerns, although
it is a serious animal health problem.