International Trade Daily Tuesday, November 12, 2002 ISSN 1533-1350 News Agriculture EU's Lamy Warns U.S. Against Opening WTO Proceedings Against GMO Import Ban CHICAGO--European Trade Commissioner Pascal Lamy said Nov. 8 warned the United States against launching formal dispute settlement proceedings in the World Trade Organization against the European Union over its de facto ban on imports of genetically modified foods, saying it would "freeze" the process now under way to lift the ban for years to come. "The whole thing will be blocked," he said. Lamy told BNA that the EU member states that currently oppose lifting the ban will harden their opposition and press the Commission to "fight" the United States and refuse to move. Other EU officials said that a half dozen or more of EU member countries, led by France, continue to oppose removing the import ban at least until new regulations on labeling and tracing GMO food products have been put in place, which is not expected until late next spring at the earliest, if at all. The warning from Lamy came as U.S. agriculture producers led by the American Farm Bureau Federation Nov. 8 called on the Bush administration to request immediate consultations with the EU in the WTO aimed at ending the EU's four-year-old ban on imports of food products derived from or containing genetically modified organisms (GMOs). "The United States has exercised considerable patience as the EU grapples with this internally sensitive political issue," the groups said in a letter to U.S. Trade Representative Robert B. Zoellick. "But the continuing failure of the EU to move toward resolution should end U.S. patience. We believe it is time to engage the EU in a WTO dispute settlement proceeding against its illegal moratorium, and urge that you begin such engagement immediately." 'Illegal' Moratorium Cited by U.S The letter, a copy of which was obtained by BNA, was signed by 29 U.S. agriculture associations in addition to the American Farm Bureau Federation ranging from the American Soybean Association to the National Cattlemen's Beef Association and the National Pork Producers Council. "The EU's ongoing and illegal moratorium has resulted in lost markets for U.S. producers and exporters," the letter said, "a slowdown in the adoption of new technologies in the United States and other countries, and increased production and testing costs for U.S. agricultural interests." It said that the United States should also be prepared to begin WTO proceedings against the EU if significant changes are not made to proposed regulations now being considered in the EU on GMO labeling and traceability "should they become effective." Lamy said in an interview with BNA that the Commission wants the reauthorization process for GMO approvals to begin "as soon as possible." But he said that a number of EU member states continue to block the process. "We [in the Commission] are striving hard to have them on board," he said. "But we're not yet there." Zoellick has told representatives of EU member states in recent weeks that the United States is losing patience over the issue and is on the verge of taking the dispute to the WTO, officials said. Requesting consultations with the EU under the WTO's dispute settlement regime would allow the United States up to 60 days to decide whether to ask the WTO to set up a panel to adjudicate the dispute. A WTO panel normally has six months to conclude its deliberations under WTO rules. Lamy also told BNA Nov. 8 that the EU will present its long-awaited proposal for further reforming agricultural trade at the WTO within weeks. "We're working extremely actively on it," he said, adding that it was still undergoing review within the Commission and with the 15 EU member states, "and we will [submit it] probably in weeks rather than months." Other European officials, however, said that the EU proposal will not be nearly as specific as the U.S. proposal submitted earlier this year in terms of proposed reductions in support for the agricultural sector or time tables for action. "It will basically be a reiteration of what we've said all along, which is that we want to cut government support," one source told BNA. Lamy Declines Comment on Election 2002 Lamy also said in his interview with BNA that he and Zoellick had met in New York Nov. 6 to discuss the WTO talks and the whole range of current WTO dispute settlement cases involving the United States the EU, including U.S. and EU non-compliance, respectively, with WTO rulings against U.S. tax breaks for exporters and EU restrictions on imports of hormone-treated beef. Speaking on the margins of the annual meeting of the Trans-Atlantic Business Dialogue (TABD), Lamy declined to comment on the impact the congressional elections Nov. 5 likely will have on prospects for passage of legislation to bring the United States into compliance with the WTO rulings in the so-called foreign sales corporation (FSC) tax-related dispute. But Lamy did say that "in theory, if you look at history, it makes things easier" to enact legislation when one party controls both the House and the Senate. He said that, in the meantime, he expects to begin "interacting" on the FSC issue with Sen. Charles E. Grassley (R-Iowa), who will take over as chairman of the Senate Finance Committee in the 108th Congress beginning next year. "He knows about this stuff," Lamy said of Grassley. "He's a rather trade-conscious guy--at least above average." By Gary G. Yerkey Copyright © 2002 by The Bureau of National Affairs, Inc., Washington D.C.