16 May 2002
CHINA'S BAN ON BIOTECH INVESTORS MAY VIOLATE WTO OBLIGATIONS
Thanks to Paul Goettlich - www.mindfully.org - for these.
"China has imposed the most restrictive regulations on the production, research and importation of GMO crops in the world," says John L. Killmer, Monsanto's greater China president
"I think [the biotech investment ban] was imposed due to extreme nervousness about biotech in general because the government hasn't come to a consensus about whether biotech is good for China and the potential consequences that going down the GMO road might have on major trading partners like Japan" - diplomatic source
China's Ban on Biotech Investors May Violate WTO Obligations
PHELIM KYNE / Dow Jones News Wires 13may02
BEIJING -- While Chinese restrictions on genetically modified farm goods have drawn strong protest, few have noticed China has quietly sealed off investment in its burgeoning biotechnology sector.
Chinese import regulations on genetically modified agricultural products created widespread concerns that China was exploiting international worries over genetically modified food to circumvent its World Trade Organization commitments to open its agricultural sector to foreign competition.
The new import rules have drawn the ire of the U.S. farm lobby, motivating everything from special U.S. trade missions to President Bush specifically raising the issue during his meeting with Chinese Premier Zhu Rongji in Beijing during February.
An interim agreement brokered on March 20 has lifted the immediate threat of an interruption of U.S. soybean imports valued at more than $1 billion annually, but a satisfactory resolution of the dispute has been plagued by vague and contradictory regulations issued by competing government ministries.
Meanwhile, on April 1 China's "Catalog for the Guidance of Industries for Foreign Investment" went into effect -- including a set of rules prohibiting foreign companies from investing in the lucrative genetically modified seed-development business.
The investment ban so far hasn't attracted widespread attention. But to companies such as U.S.-based agribusiness giant Monsanto Co., the new prohibition suggests a disregard for the spirit, if not the text, of China's WTO obligations. And although China-based joint-venture operations of Monsanto and other major international biotech companies haven't been affected by the new regulations, the company is plainly aggrieved by the new regulations.
"China has imposed the most restrictive regulations on the production, research and importation of GMO crops in the world," says John L. Killmer, Monsanto's greater China president. The ban, Mr. Killmer argues, is specifically designed to shut foreign companies out of the world's largest government-funded biotechnology-development programs.
"They have one foot on the accelerator, which is funding biotech research and development, and they have the other foot on the regulatory brake," Mr. Killmer says.
Much of the interest in investing in China's biotech industry stems from the fact that the Beijing itself is investing so much. While public funding for biotech development in industrialized countries has waned in recent years in reaction to consumer wariness about the potential health and environmental impact of the new technology, China has gone on a spending spree to boost its genetically modified agriculture sector.
"China is accelerating investments in agricultural biotechnology research and is focusing on commodities that have been mostly ignored in industrialized countries," notes a recent article in the journal Science. China's Ministry of Science and Technology boosted its funding of biotech research to $48 million in 1999 from $8 million in 1986, the article notes. And China devotes 9.2% of its national crop-research budget to biotech research, up from 1.2% in 1986 and well above the 2%-to-5% range of other developed countries.
Those funds have helped produce a bumper crop of 141 genetically modified plants, including cotton, rice, wheat, soybean and tobacco, that have been approved for field trials, environmental release or commercialization, the article says. And if it follows through on its announced plan to raise its national plant biotech-research budget by 400% before 2005, China will account for one-third of the world's spending on biotech research and development, the article adds.
But China's willingness to spend on developing its own biotech sector isn't matched by a willingness to allow foreign investment in the industry.
"Up until a year ago we were of the opinion that China was a wholehearted supporter of this technology and [the prohibition] really was a surprise to us and, as far as I know, to Chinese scientists," a Beijing-based Western diplomat says of the issue.
While the purpose of the policy is not entirely clear, some agricultural experts say the prohibition is an attempt to protect domestic biotech companies against competition from more technically and commercially sophisticated Western biotech companies like Monsanto.
Several Chinese biotech companies and researchers declined to comment on the issue.
In any case, it isn't likely that international biotech companies such as Monsanto will change China's policy soon, says the Beijing-based diplomat. "Lawyers don't seem to find any WTO violation in this investment prohibition," he says.
Another Western diplomat involved in agricultural-trade negotiations said calling the investment prohibition a protectionist measure would oversimplify the complexity of internal divisions among China's leaders on the best approach to cultivation of GMO agricultural crops.
"I think it was imposed due to extreme nervousness about biotech in general because the government hasn't come to a consensus about whether biotech is good for China and the potential consequences that going down the GMO road might have on major trading partners like Japan," this diplomat says. "On the other hand, there may also be the thought that if China can become a leader in biotech development without foreign involvement, it will be a matter of pride and national achievement, a high-tech sector that's theirs."
China risks going it alone and failing, however. The cost could be high. If China doesn't have its own top-quality genetically modified seeds to offer its farmers, they may turn to illegally imported foreign seeds, says one agricultural expert.
"Perhaps people involved will come to the understanding that it's a high-tech industry and without injections of vigor and technology from outside, [China's] going to see countries like India getting ahead," he said. "They say they're protecting their consumers and farmers from foreign competition, but all they're doing is delaying the inevitable."
Genetically modified plants in China as of 1999
Crop: Introduced trait
Cotton: Insect resistance, Disease resistance
Rice: Insect resistance, Disease resistance, Herbicide resistance, Salt tolerance
Wheat: Virus resistance, Quality improvement
Maize: Insect resistance, Quality improvement
Soybean: Herbicide resistance
Potato: Disease resistance, Quality improvement
Source: Science magazine
Monsanto Says Crops May Contain Genetically-Modified Canola Seed
SCOTT KILMAN and JILL CARROLL / Wall Street Journal 15apr02
* Monsanto Delays Debut of Wheat Bioengineered to Resist Herbicide 02/27/02
* Pharmacia's Profit Drops 45% on Monsanto Quarterly Loss 02/06/02
* FDA Warns of Misleading Labels on Genetic Modification in Foods 12/20/01
* U.S. Will Heed the Call of Scientists Not to Allow Biotech Corn in Food 07/27/01
Monsanto Co. believes that some of its canola seed might contain genetically modified material that isn't federally approved. Angling to avoid a massive recall of food products, the company is asking regulators to forgive any presence of it.
The St. Louis-based biotechnology company has yet to detect it in the seeds it has tested, but says trace amounts of the material were found last year in Canadian seed, leading it to believe the same is possible in the U.S. In conceding that for three years U.S. farmers have been planting canola seed that may contain certain genetic material that was never meant to leave the laboratory, Monsanto has become the latest example of the biotechnology industry failing to control plants whose genes it has altered.
Monsanto, which is 85% owned by drug maker Pharmacia Corp., Peapack, N.J., insists that the canola seed in question is safe to consume. But genetically modified food is an emotional issue for many consumers. And Monsanto's admission is sure to fuel consumer skepticism and inflame opponents of gene-altered crops, who object to the idea of tinkering with nature and who worry about cross-pollination with other crops.
Clearly, Monsanto is hoping to avoid a repeat of the biotechnology industry's most embarrassing and costly episode, in which a variety of genetically modified corn approved only for livestock consumption and industrial use found its way into the human food supply. Called StarLink, the corn was detected in more than 300 products with brand names such as Kraft and Taco Bell, resulting in enormous recalls in 2000.
At least one group opposed to genetically modified food, having learned about Monsanto's request, intends to fight it and to publicize its implications -- that the biotechnology industry can't always control the spread of its own creations. "This is genetic pollution," says Joseph Mendelson, legal director of the Center for Food Safety, a Washington advocacy group.
The U.S. Department of Agriculture is leaning toward granting Monsanto's unusual request, which the company made in a November letter, but hasn't done so formally. The Food and Drug Administration is reviewing safety data from Monsanto.
If Monsanto fails to receive federal approval for the altered organism, known as GT200, the discovery of its presence in U.S. canola wouldn't necessarily mandate a food recall, as the laws don't spell it out. But antibiotechnology groups would likely clamor for a recall. The situation is potentially a big headache for the U.S. food industry, because canola oil is a basic ingredient in hundreds of products. Canola's popularity has increased because it is lower in saturated fats than other edible oils. About two-thirds of the canola crops in the U.S. are already genetically modified.
A spokesman for ConAgra Foods Inc., maker of Wesson oil, says the company doesn't screen its canola oil for genetically modified ingredients. He wouldn't comment on what the company would do if GT200 is detected in its supplies.
Monsanto created GT200 in the 1990s while trying to produce a seed capable of growing into a canola plant invulnerable to Roundup, a Monsanto weedkiller. Such a plant would enable farmers to liberally apply the herbicide without damaging their crop.
Ultimately, Monsanto chose to develop and market canola seed that had been modified differently. Called RT73, it is also invulnerable to Roundup. Deciding that the second version performed better, Monsanto sought and received federal approval to market RT73 canola seed. Federal scrutiny is required of any plant containing a foreign gene. Monsanto inserted genes from microorganisms into both versions of its canola seed.
But in the November letter to the USDA, Monsanto said that GT200 "has the potential to be present in low, adventitious levels in commercial canola varieties." A majority of the 1.5 million acres of canola fields in the U.S. are believed to be planted with seed containing Monsanto's federally cleared Roundup-tolerant gene.
Last year, the GT200 version showed up in Canadian canola seed, forcing Monsanto to recall hundreds of tons of it. Although Monsanto had sought and received Canadian approval for GT200, the recall was necessary because Canada exports huge amounts of canola to Japan, which hadn't approved GT200. Monsanto says it never sold the GT200 version commercially in Canada and isn't sure why it wound up in canola seed there.
In the corn-contamination case of two years ago, StarLink's inventor, the cropscience division of French pharmaceutical giant Aventis SA, had to stop selling the seed and set aside o100 million ($88 million) to compensate food companies and growers for their costs.
The fallout was widespread. A market exploded for food products free of genetically modified ingredients. Some farmers got cold feet about jumping into the biotech era. Wheat growers, for example, are telling Monsanto to proceed slowly with plans to supply them with genetically modified seeds. The Aventis cropscience division is being sold to German pharmaceutical giant Bayer AG.
The biotechnology industry concedes the primary point of its opponents -- that crops mate too freely to keep genetically modified versions entirely separate. The wind and insects can carry the pollen of a genetically modified plant great distances to where it isn't wanted: an organic farm, for instance. The pollen from a genetically modified corn plant can fertilize corn that wasn't intended to be bioengineered.
The problem extends to genetically modified crops that are legal but unwanted by a certain segment of consumers. A Wall Street Journal laboratory investigation last year of 20 products labeled as containing no genetically modified ingredients found evidence of the material in 16 of them.
"As we see more and more varieties come out ... you might find trace amounts [of bioengineered ingredients] in food that didn't go through the full regulatory measure," says Michael P. Phillips of the Biotechnology Industry Organization, an industry trade group.
But rather than hysterical reactions, the industry argues that government and society should accept trace-level contaminations. Officials of Monsanto, Aventis and other crop biotech companies want a new policy from the White House that would allow for the accidental presence of trace amounts of some genetically modified materials in seed and food.
But the Bush administration couldn't do that without setting off protests from antibiotechnology groups. "We don't want the federal government to insulate the crop-biotechnology industry from liability," said Mr. Mendelson of the Center for Food Safety.
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