U.S. seeks to retaliate against EU in GMO case

January 31, 2008
By Jonathan Lynn

GENEVA - The United States underlined on Wednesday its right to retaliate against the European Union in a row over an EU ban on biotech crops.

The dispute has pitted the EU against the United States, Argentine and Canada, the world's three biggest growers of genetically modified (GMO) food. The World Trade Organisation (WTO) has ordered the EU to end the ban.

Brussels has found it hard to implement the WTO ruling because some of the 27 EU member states operate their own bans.

Many European consumers are wary of eating GMO crops after media scares about "Frankenfoods" and advocacy groups say they threaten biodiversity.

The WTO said it would hold an extraordinary meeting of its dispute settlement body on Feb. 8 to discuss a U.S. request for compensation in the dispute.

A trade official said this was in fact a procedural device to get around inconsistencies in the WTO's dispute rules. The item would probably be withdrawn from the agenda following a likely EU objection as part of an agreement between Washington and Brussels to pursue a negotiated solution, he said.

But if they do not succeed, the issue will return to the dispute settlement body's agenda. Wednesday's move prepares for that eventuality.

The extended deadline for Brussels to comply expired on Jan. 11. The following week the United States decided to give the EU more time to do so.

Washington reserved its right to push later for a WTO decision on whether the EU had done enough to end the ban and, if Brussels was found wanting, to retaliate.

U.S. Trade Representative Susan Schwab has said Washington's priority is to get Brussels to allow GMO crops, rather than to retaliate against EU goods.

But a document that the United States filed last week at the WTO said the U.S. reserved the right to retaliate against the EU to compensate for the annual value of lost US exports, royalties and licensing fees to the EU from biotech crops.

These would be levied by imposing extra tariffs on EU goods or lifting other WTO agreements regulating agriculture or health and safety, the document said.

Austria continues to ban MON 810 maize made by U.S. biotech company Monsanto and T25 maize developed by German drugs and chemicals group Bayer . And days after the Jan. 11 deadline expired, the EU's biggest food producer France also imposed a temporary ban on MON 810.

The case will be closely watched by other biotech companies such as U.S. chemicals groups Du Pont and Dow Chemical and Swiss agrochemicals group Syngenta .

(Editing by Robert Woodward)

© Reuters 2008