Europe struggles to put the GM genie back in the bottle The Times, UK, 14 May 2003 By Carl Mortished YOU may remember the spat between the Prince of Wales and Monsanto, the US agribusiness company. Five years ago Monsanto tried to build a market in Europe for soya and maize that were genetically altered to tolerate herbicides, in particular Roundup, a herbicide made by Monsanto. The Prince, a keen organic farmer, accused companies such as Monsanto of playing God and trying to “industrialise life itself”. Monsanto was unamused, but played its public relations hand badly, running aground in a storm of public concern and protests across Europe about “Frankenstein food”. Monsanto retreated, but the US is now fighting back. Angry that a multibillion-dollar industry is being treated with such contempt, the US Government is launching a legal challenge to the European moratorium on the approval of GM foods. Since 1998, the European Commission has not approved a single GM product and six states, Austria, France, Germany, Italy, Greece and Luxembourg, are banning GM crops, such as maize and soya, that have already been approved. There is worse. Governments in southern Africa recently refused to accept GM food aid, fearing it would contaminate their own crops and fall foul of trade with Europe. America will certainly win its case. Under the Sanitary and Phytosanitary rules of the World Trade Organisation, a state can ban the import of goods if it has scientific evidence that they are harmful. The EU has not even suggested it has such evidence. Crop science companies, such as Aventis, are being encouraged abroad in search of a more favourable regulatory climate and the big European food groups Nestlé and Unilever give warning that food security in the developing world is being compromised by the ban on using technology to create drought-resistant crops, for instance. There is also concern in the Commission that Europe is scoring an own goal, denying its biotech industry a market to develop products. Efforts are in hand to create a GM-product labelling scheme that will enable the ban to be lifted. But this is not about labels, nor even about some $50 million (£31 million) per year in US corn sales forgone. The Prince has lost the scientific argument, but America is determined to win a wider trade battle over agriculture. Both the EU and the US are under huge pressure to agree to open up their markets at a WTO meeting in Cancun in September. Robert Zoellick, the US Trade Representative, knows that he must ask Congress to swallow big concessions and he must therefore score some wins, such as markets for GM crops. America has won important friends in the debate. Supporting its stand on GM food are big agriproducers and agitators against Europe’s Common Agricultural Policy, such as Argentina, Australia, Canada, New Zealand and Uruguay. And it will not escape notice that the EU states most resistant to GM foods are America’s loathed duo, France and Germany. Winning a legal battle does not change hearts and minds. Monsanto miscalculated very badly in its aggressive campaign to convince EU consumers. For President Bush to seek a remedy by sending lawyers into Europe’s larder could be a step too far. America and Europe can ill afford to go to war over trade. Italy holds the EU to ransom THE European Commission is crying over spilt milk, millions of litres of it, spilt by the Italians who are now refusing to clean up the mess. Italy wants to delay the payment of €650 million (£465 million) in fines for breaching milk production quotas and unless it has its way it will veto the Savings Tax directive, a pet project of Frits Bolkestein, the Internal Markets Commissioner, which seeks to prevent capital flight from the EU to tax havens. Although it is difficult to find a link between a law concerning the taxation of savings and milk quotas, Italy is unrepentant and is more than ready to bargain its support for Bolkestein’s directive in exchange for a few million euros of interest saving. Some governments, such as Germany’s, are so desperate for the Savings Tax directive that they are willing to play ball with Italy, proposing repayment over several decades at nil interest. Other states, such as the Netherlands and Denmark, are outraged. Both efficient dairy producers, they are not enthused by the idea that Italy should be allowed to flout the rules. The Savings Tax directive, which proposes a scheme of information exchange between EU tax authorities, ought to be of interest to Italy which has suffered in the past from tax evasion to neighbouring Switzerland. Italy, however, solved its tax problem with aplomb several years ago, offering an amnesty to the cheats, which resulted in huge repatriation of capital from Swiss accounts. No doubt Italy sees no reason why its dairy farmers should not also enjoy a ritual wiping clean of the slate. Tale of two budgets SOFTLY, softly, European governments are ditching the target of balancing their budgets by 2006. Hans Eichel, Germany’s Finance Minister, declared yesterday that the date was unrealistic, throwing in his lot with France, which did not agree to the deadline. No such problems with the EU’s own budget which, once again, last year produced a big surplus. Not as big as the 2001 surplus of €15 billion (£10.7 billion), but last year, the EU failed to find a home for €7.4 billion. Member states will get money back: the UK gets €1.2 billion, Germany €1.5 billion and so on. The EU Budget Commissioner says this is good news for finance ministers. But is it good news for French and German citizens? What if Francis Mer, the French minister, took up the EU’s bold idea and simply forgot to spend €15 billion? Problem solved. carl.mortished@thetimes.co.uk