20 June 2001

GAO Report on Challenges Facing U.S. Biotech Exports

U.S. agricultural biotechnology exports face significant challenges in world markets, according to a new report from the U.S. General Accounting Office (GAO), Congress' investigative agency.

The June 15 report, "International Trade: Concerns Over Biotechnology Challenge U. S. Agricultural Exports," says that because the United States is the only major producer of biotech products -- also known as genetically modified organisms -- it has been "relatively isolated" in trying to maintain markets for these products.

Growing consumer concerns about the safety of biotech foods have led countries to implement or consider restrictive import regulations, according to the report. Efforts in the European Union (EU) to require documented tracing of the presence of biotech products throughout the handling and food production processes -- which U.S. industry says would be expensive and may not be possible -- also pose challenges to U.S. exporters, according to the report.

The report adds that with international discussions of biotech taking on "greater importance," the U.S. government faces increasing demands for staff and for agencies that deal with biotech issues to coordinate.

The full report in PDF format, requested by Senator Charles Grassley, now senior Republican on the Senate Finance Committee, is available at http://www.gao.gov/cgi-bin/getrpt?rptno=GAO-01-727

Following is the text of the report summary:

Results in Brief

U.S. exports of crops with a biotech component are facing restrictions in foreign markets. Since 1998, the EU has effectively blocked approval of new agricultural biotech products. In addition, new regulations and guidelines that may further restrict exports of biotech products, such as requirements for labeling and traceability, or tracking, are being enacted or considered by U.S. trading partners and are being discussed in international organizations. For example, the EU, Japan, and Korea have enacted mandatory labeling requirements on foods containing or derived from biotech products. Other countries are in the process of enacting similar regulations. The EU is expected to enact requirements for traceability of biotech crops and foods throughout the distribution chain, a measure that could further limit exports. As countries move forward independently with regulatory measures, international organizations are also developing guidelines and rules for biotech products. Multilateral discussions affecting biotech trade are taking place in Codex Alimentarius, which sets international food safety standards, and the Biosafety Protocol, a U.N. environmental agreement. U.S. officials are working to ensure that measures adopted by other countries and international guidelines are consistent with member countries' obligations under various agreements of the World Trade Organization (WTO).

U.S. corn and soybean exports are most threatened by new foreign regulatory measures because of their biotech content. While U.S. soybean exports have not yet experienced disruptions, U.S. corn exports have been largely shut out of the EU market because U.S. farmers are producing some biotech varieties that have not been approved for marketing in the EU. In contrast, only one biotech variety of soybeans is now in general production in the United States, and this variety has been approved in most major markets, including the EU. However, U.S. soybean exports could also encounter difficulties in the future if foreign regulations are adopted that would raise handling costs by ultimately requiring segregation of biotech from conventional varieties.

U.S. agricultural biotech exports face several significant challenges in international markets. First, as the single major producer of biotech products, the United States has been relatively isolated in its efforts to maintain access to markets for these products. Second, in many parts of the world consumer concerns are growing about the safety of biotech foods, which have led key market countries to implement or consider regulations that may restrict U.S. biotech exports. Another challenge is that biotech and conventional varieties are typically combined in the U.S. grain handling system, which relies on the efficiency of mixing crops from multiple sources. U.S. industry contends that segregating biotech from conventional varieties would significantly raise handling costs, and that completely removing traces of biotech grain from bulk shipments may not be possible. Consequently, foreign regulations governing biotech varieties could affect all U.S. exports of these commodities as well as food products containing or derived from biotech crops. Finally, as international discussions in Codex and elsewhere take on greater importance, the U.S. government faces increasing demands for staff resources and coordination among the multiple agencies involved in biotech trade issues.

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