January 21, 2003 U.S. Food Firms Face Backlash Over Possible WTO Complaint By SCOTT MILLER and BRANDON MITCHENER Staff Reporters of THE WALL STREET JOURNAL BRUSSELS -- U.S. food companies face a consumer backlash in Europe if Washington follows through on threats to lodge a formal complaint at the World Trade Organization over the European Union's biotech food policies, an EU commissioner said. David Byrne, the EU commissioner for health and consumer protection, charged that increasingly harsh U.S. rhetoric on Europe's 4½-year ban on testing new genetically modified food is unfair, arguing that Europe is making progress toward restarting approvals this year. "If the U.S. or another trading bloc sought a regime on how food was put on the market in Europe, I think the public would react extremely badly," Mr. Byrne said in an interview. Europe has maintained an effective moratorium on testing genetically modified food and animal feed, limiting sales of the food to only a small portion of what the U.S., the world's largest producer of biotech foods, believes it could sell here. Last week, the International Service for the Acquisition of Agri-biotech Applications, a research organization, predicted the global market for biotech crops would reach $5 billion (€4.7 billion) in 2005, up from $3.8 billion in 2002. That has prompted increasingly bitter complaints from the U.S. Earlier this month, U.S. Trade Representative Robert Zoellick called Europe's stance "luddite" and said that he favored bringing a case to the WTO's dispute-settlement body. Such a move would likely strain already tender relations between the world's two largest trading partners, now at odds over a number of issues, including U.S. steel tariffs and slow progress the EU is making on liberalizing its agriculture. U.S. officials weighing whether to go ahead with a WTO case against Europe over biotech foods say they are well aware of the downside, including a possible backlash against U.S. food companies. Even U.S. companies that support taking action say they are concerned it may hurt their bottom line. But many in the Bush administration, including Mr. Zoellick, now believe that lodging a WTO case is important as a matter of principle, even if it fails to open the EU market to biotech foods or deepens anti-American sentiment. Although the EU made progress toward replacing the genetically modified organism, or GMO, approval ban in November and December with new rules, U.S. farmers fear they still won't gain more access to the European markets. Under the proposed rules, foods containing even small amounts of genetically modified materials would have to carry warning labels, and food makers would have to provide an account of genetically modified materials at each stage of the production process. Mr. Byrne didn't indicate specifically what form he thought a European consumer backlash could take. But trade analysts have warned that Europeans might steer clear of U.S. food products if Washington brought a WTO case, to protest what consumers could consider an American attempt to restrict information about the food they find on store shelves. European consumers might also avoid all U.S. products for fear that that they contain GMOs, they add. "It would have an adverse effect on the evolution of consumer confidence," Mr. Byrne said. Although Americans have eaten biotech food for decades with no negative side-effects, Europeans remain wary of the technology after authorities here were unable to prevent agricultural problems like mad-cow disease, which are unrelated to genetic modification of foods. Mr. Byrne said he expects the latest EU proposals to undergo a second hearing at the European Parliament this summer. Should Parliament be unable to agree to the plan approved by EU agriculture and environmental ministers, the legislation would have to go before a conciliation committee, delaying its implementation at least until the autumn. Still, Mr. Byrne said he thought testing could again begin this year.