February headlines

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US farmers could find GM wheat a tough sell

February 28
Agence France Presse

The US biotechnology giant Monsanto was on the defensive again Wednesday in the face of growing international hostility to its plans to market a genetically modified (GM) version of wheat.

The Roundup Ready wheat, which has been spliced with a gene to make it resistant to the company's Roundup herbicide, has barely made it out of the laboratory, but wheat buyers from Japan and Europe have already registered their opposition to it.

"We have a lot of time ahead of us to work with the industry," on the crop, Monsanto spokesman Bryan Hurley said Wednesday. "The market place isn't at all reflective of what it might be in five years."

The transgenic crop requires another two to four years of testing before it could be marketed commercially to farmers, but gatekeepers in the United States' two leading export markets -- Japan and the European Union -- have already balked at the prospect of a consumer revolt fueled by negative press over what critics have dubbed "Frankenstein foods."

The Japan Flour Millers Association (JFMA), which accounts for 90 percent of the country's wheat imports, last week signaled that it would boycott the product because of consumer sentiment there.

"Flour millers strongly doubt that any bakery, noodle and confectionery products made of GM wheat or even conventional wheat that may contain GM wheat will be accepted in the Japanese market," the JFMA said in a position statement.

"The flour milling industry will not use any raw ingredients that will be unacceptable to consumers," it concluded.

Rank Hovis, the leading British flour milling, baking and retail food group, demanded assurances from US wheat growers that no GM wheat would taint or find its way into any of their supplies.

In a letter to US Wheat Associates, the Washington DC-based trade group which coordinates US wheat exports, it warned its suppliers they "should treat this issue with the utmost gravity and priority, given that the alarm generated by even the perception that Spring Wheat may contain GM traits, could be enough to jeopardize the entire export program to the EU."

According to Wheat Associates, Monsanto has earmarked Spring Wheat, one of the six versions of wheat grown in the United States, as the one that would best lend itself to its Roundup Ready Wheat once it is brought to market.

But US farmers, who export about 46 percent of their produce overseas, will be very wary of trying to sell their customers on such an unpopular crop in what is a very competitive international market, Wheat Associates spokeswoman Dawn Forsythe said.

Japan and the European Union "are absolutely vital customers for us. We have to make sure they get the wheat they want."

"Give us Roundup Ready bread? I don't think so," said Forsythe.

Mexico: Gruma denies GM corn allegations

February 28
Reforma/Infolatina

Mexico's Grupo Maseca (Gruma), the world's leading maker of corn flour and tortillas, denied it uses genetically modified (GM) corn in any of the products it makes. Several environmental protection organizations, including Green Peace, have accused Gruma of using genetically modified inputs. 

"We're not working with any varieties of genetically modified corn, not in any part of our operations," Gruma Director of Finance and Planning Javier Velez Bautista said. "In addition, in Mexico, we only use white corn. We're the major buyer of the country's corn crops and in this country, planting of these kinds of genetically modified crops is not permitted," Velez said.

Japan: Traders fret Japan's StarLink review may drag on

February 28
Reuters

Japan could take at least five months to decide whether to approve gene-altered StarLink corn as animal feed, raising fears of possible supply disruptions, traders said on Wednesday.

Japanese feed importers cautiously welcomed an application last week by Aventis CropScience Japan KK, a unit of Franco-German life sciences company Aventis SA , to sell its StarLink biotech corn to Japan for use in animal feed.

The gene-spliced corn is controversial in Japan, where consumer opposition to genetically modified products has intensified since traces of StarLink were detected in food and animal feed last October.

The discovery prompted Japan, the single-biggest buyer of U.S. corn, to sharply cut its corn purchases, leading the U.S. and Japanese governments to set up a testing protocol to prevent StarLink from being mixed in U.S. corn exports to Japan.

"It's too difficult to say when the government will complete its reviews of StarLink," said a senior trader of a major importer. "But they might be concluded as early as May if there are no problems."

However, as well as reviewing the Aventis application, the ministry is conducting its own safety tests on StarLink, which are not expected to be completed until July.

Ministry officials declined to comment on whether or when they would approve StarLink, which is currently unauthorized for either human or animal consumption in Japan.

In the United States, StarLink was approved for animal feed but not for human consumption due to concerns about potential allergic reactions. It was found in taco shells in September, leading to an eventual recall of more than 300 food products.

FARM MINISTRY SEEN IN DILEMMA

The application has put the Agriculture Ministry in a dilemma since it is trapped between hostile consumer groups and a feed industry concerned about a possible disruption to corn supplies, said a trader at a leading Japanese trading house.

"At the moment, we can replace some of our U.S. corn needs for April/June shipment with Argentine corn, but we can't be sure where to get supplies after that," he said.

Japan imports four million tons of corn per year for food and another 12 million tons for animal feed, mostly from the United States.

The trader said it was questionable whether Japan would copy Washington and opt for a split-approval of Starlink given that the U.S. go-ahead for its use in animal feed has been blamed for StarLink contamination of food for human consumption.

Regardless of the outcome of the Aventis review, another trader said he expected StarLink approval would have to await the completion of the ministry's safety tests.

The ministry, which overseas feed products, said earlier this month that its test results showed no genetic problems in poultry raised on feed containing StarLink corn.

It is also conducting similar tests on chicken eggs, dairy cattle and pork to probe the safety of animal feed.

In 1998, Aventis sought approval from Japan's Health Ministry to include the gene-spliced grain in food products, but did not receive a reply.

EU trade officials disappointed as US signals tough approach

February 23
Bloomberg

The Bush administration appears to be taking a tougher line on key  trade disputes with Europe, dashing hopes for early progress with the new leadership in Washington, Europe's top trade official in the U.S. said.

``I think there's a political need to demonstrate toughness,'' said Bert van Barlingen, head of the trade section at the European Union office in Washington. ``And we understand that, as long as it doesn't stand in the way of getting business done.''

Van Barlingen said he was disappointed by reported U.S. moves to revive trade penalties in a long-running banana dispute, and to protest new EU rules for labeling genetically modified foods.

The comments indicate that the disputes over bananas, beef, airline industry subsidies, steel production and export-related tax law between the U.S. and Europe during the Clinton administration will linger during the Bush administration.

The U.S. already has imposed more than $300 million in trade penalties  after winning a World Trade Organization ruling in beef and banana cases, and the EU is threatening $4 billion in trade penalties if it wins a final WTO ruling over tax laws.

The Bush administration's trade representative, Robert Zoellick, reportedly is threatening to increase pressure by rotating $300 million in punitive tariffs to different European products every six months.

Carousel Rotation

Zoellick told European governments the U.S. may enact the so- called carousel rotation if the EU moves ahead in July with a change in its banana import rules that the U.S. has rejected as insufficient, the Financial Times reported.

The Bush administration also is reportedly considering issuing a formal complaint with the EU concerning new EU rules expected to require the labeling of all foods derived from genetically modified organisms. 

The rules, replacing an informal moratorium on the import of such foods into the EU, will allow sales to the EU by U.S. farmers, who regularly use genetically modified food and seed products. The Bush administration, however, is considering a complaint on behalf of U.S. companies who contend the new rules would be burdensome, reported Inside U.S. Trade, a trade newsletter.

Such threats in the early days of the Bush administration may be designed mostly for domestic political consumption, van Barlingen said. 

``The Bush administration needs to show that it can do better on trade than the Clinton administration,'' he said, particularly if it wants to win congressional approval for so-called fast-track legislation. 

Trade Agreements

Fast-track authority requires Congress to approve or reject without amendments trade agreements the administration negotiates. President  George W. Bush said yesterday he is asking Congress to grant the authority. 

A spokeswoman for Zoellick declined to comment on the reports concerning genetically modified food or the proposed carousel rotation of tariffs in the beef and banana cases.

The Clinton administration argued the banana case on behalf of Chiquita Brands International Inc., which said the EU rules have cost it $200 million annually. Chiquita filed a $525 million lawsuit last month against the EU's ruling body, blaming the dispute for almost wiping out the company's market value.

Zoellick, at a congressional hearing last month on his confirmation as U.S. trade representative, criticized the EU for blocking imports of U.S. beef and bananas, while avoiding a commitment concerning the carousel rotation.

``For Europeans who blame the United States on being anti- multilateral and being unilateral, I look and say, who's being unilateral on this?'' Zoellick said.

Van Barlingen warned, meanwhile, that the U.S. should be ready to fundamentally reform its tax code this summer if the WTO, as expected, signals that the U.S. did not sufficiently modify its foreign sales corporations tax law in response to an earlier complaint.

The EU has successfully attacked the tax law as a violation of WTO rules against tax systems that create benefits solely for exporters. Because the U.S. already has lost a previously ruling in the case, the EU will be able to immediately implement $4 billion in tariffs against U.S. products if the EU wins a final WTO ruling expected in November, van Barlingen said.