EU Loses a Round On Biotech Crops

A World Trade Organization panel found that the European Union had illegally banned some genetically modified crops, in a ruling that could open more of Europe to biotechnology products it has long resisted.

U.S. officials said the finding against the EU sends an important warning to other parts of the world -- particularly nations in Africa and Asia -- against following the European lead in throwing up bans or partial bans against genetically modified crops. The case was launched in 2003 by the U.S., Canada and Argentina, three of the world's biggest growers and exporters of genetically modified crops.

Washington has waged an intensive campaign to pry open the EU market, in large part because U.S. biotechnology officials still hope Western Europe some day could be a rich market for their genetically modified seeds. After saturating the American Farm Belt over the past decade, U.S. companies such as Monsanto Co., DuPont Co. and Dow Chemical Co. need new places to sell their seeds, and Europe represents the biggest largely untapped market. Last year farmers around the world paid about $2.2 billion in premiums for seeds with biotech traits.

The WTO ruling may not mean immediate changes in the European market, though. After the U.S. and others challenged the regulatory process, charging it was used to block EU approval of any gene-altered crop between 1998 and mid-2004, the bloc decided to rework it. The EU also could appeal or simply decline to comply and accept any penalties. At any rate, European consumers largely remain unconvinced of the safety and value of biotech products and tend to avoid buying such foods.

Meanwhile, the ruling may set the stage for the U.S. to launch a second case, attacking a new EU regulatory process that Washington says takes too long and is too subject to political forces.

European officials declined to comment immediately on details of the WTO finding, which runs more than 800 pages.

Bush administration officials, speaking on a background basis because the interim WTO report is supposed to be confidential, complained that about 20 genetically altered products are still in EU limbo. "The report is a significant milestone," said a U.S. trade official during a news briefing. "We are pleased."

Biotech critics objected that the WTO finding makes it harder for countries to keep out food they may feel is unsafe. "Contrary to the Bush administration's intent, this decision will only serve to harden attitudes against [genetically modified] crops in Europe and around the world," said Joseph Mendelson, legal director of the Center for Food Safety, a Washington group.

Many details of the lengthy ruling aren't clear yet, in part because it was released to the parties late yesterday and because it deals with complex rules designed to prevent WTO members from conjuring up food-safety fears for the purpose of blocking trade. Under WTO rules, the dispute panel that issued the report could take months to collect responses from the parties before it issues a final report.

But the preliminary finding provides at least some vindication for U.S. biotechnology companies such as Monsanto and DuPont, which have long complained that the EU didn't have any scientific basis when, in 1998, the bloc first closed its borders to any new gene-altered crops. Even if European consumers resist genetically modified food, the ruling might make it easier for the companies to sell such crops used in animal feed.

Genetically modified crops, many of them aimed at creating hardier strains and reducing the need for insecticides, have been gaining favor in many parts of the world since they were introduced in the mid-1990s. But in Europe, even with an effective Continentwide ban lifted, only a handful of countries -- notably Spain -- grow any.

European consumers have been particularly distrustful about food safety since unrelated outbreaks of mad-cow disease, and many grocery-store chains won't sell biotech food. EU regulations require labels on grocery products that contain more than a tiny amount of genetically modified ingredients.

The EU also has a history of ignoring WTO decisions that go against its food-safety policies, such as its refusal to allow the importing of beef from hormone-treated cattle raised in the U.S. A WTO dispute panel concluded in 1997 that the EU's hormone ban wasn't sufficiently rooted in science. But Europe hasn't budged, preferring instead for the U.S. to annually impose punitive duties of about $116 million on EU goods.

In the biotechnology case, U.S. corn farmers complain that they lost a $300 million annual export market when the EU cracked down on genetically modified crops in 1998. U.S. biotechnology-company executives say the EU's policies have had a chilling effect on their ability to sell transgenic seed to farmers in Europe, depriving them of access to one of the world's biggest agricultural markets.

The U.S. first brought the current case against the EU in 2003, when the bloc maintained a de facto moratorium against testing new types of genetically modified crops, freezing the number that could be sold or grown in the EU at 18.

In 2004, Europe adopted new rules, but U.S. authorities complain that national governments are still able to bar new types of crops. In its report yesterday, the WTO panel found the EU is breaking trade rules by allowing several of its member nations to ban genetically modified crops and food, said people familiar with the ruling.