US has decided to challenge EU's policy on GM foods in WTO 

Source - AFX Asia (Eng)
Friday, May 09, 2003  07:04

    WASHINGTON (AFX) - The United States has decided to challenge the
European Union's de facto moratorium on genetically modified foods in the
World Trade Organization, senior administration sources said.

    "We've been pushed against a wall here," a senior administration
official told AFX News on condition of anonymity, adding that a case is
expected to be filed by "mid-June" at the latest.

    And it could come sooner. In fact, "sooner is probably more likely,"
the official said. Officials are still debating the timing of filing the legal
papers. At issue is whether to file the case before or after the
upcoming G8 summit in Evian, France.

    Bush is set to travel to the southern French coast early next month
for the annual gathering of the heads of state of the Canada, France,
Germany, Italy, Japan, Russia, the UK and the US.

    Richard Mills, spokesman for US Trade Representative Robert
Zoellick, whose office would lodge the complaint for the US, declined to
comment on the decision to go ahead with the case, saying simply "the
EU's moratorium is illegal under WTO rules and needs to be lifted."

    A group of EU countries including France has placed a moratorium on
approving GMO imports, effectively halting the trade.
    
The US contends that the ban, applied since 1999, harms its exports of
maize, cotton and soya.

    The US has been toying with the idea of filing a case against the EU
for several months, but delayed filing the case because of the war with
Iraq, officials have said.

    In January, Zoellick stunned reporters when he announced that he
"personally" held "the view that we now need to bring a case" in the WTO
even though there was not an official government consensus on the matter.

    Zoellick at that time was careful to note that a cabinet level
meeting hosted by the National Security Council still needed to take
place before a decision could be made.

    A formal meeting including the heads of the Agriculture, Commerce
and State Departments is no longer necessary, an official said.

    "There's been inter-agency consultation at that level but without a
formal meeting," the official said, "the consensus is there."

    Senate Finance Committee Chairman Charles Grassley, who has been a
vocal proponent for filing a case, separately summoned a group of senior
administration officials to his Capitol Hill office this week to press
for filing a case.

    "I called this meeting because I was tired of getting an inadequate
response from administration officials," Grassley, an Iowa Republican, said
in a written statement after the Tuesday meeting in his office.

    "They say they support bringing a case, but their actions don't match
their words. I finally decided that the only way to get a clear answer was
to bring administration officials to my office, so I did," Grassley added.

    EU Trade Commissioner Pascal Lamy has said in recent months that if
the US did file a case, the EU would win.

    "We would win a case like this," Lamy told reporters in Washington
in March after meetings with US lawmakers and administration officials,
including Zoellick.

    And EU officials have suggested that there would be a consumer
backlash against American goods resulting in boycotts of American food
products if
the US filed a case at the WTO.

    The spat comes on the heels of strained US-EU relations over the war
in Iraq and a separate trade dispute over tax breaks that benefit US
exporters such as Boeing Co and Microsoft Corp.

    Earlier this week, the EU was authorized by the WTO to levy up to 4
bln usd in sanctions against the US for tax breaks given to US exporters
that have been found to be illegal under the rules of the Geneva-based
trade body.

    The EU has given the US until autumn to change its tax laws or face
the sanctions that would be imposed beginning January 1, 2004.

    Asked if the US-EU relationship would be harmed if the fines were levied,
White House spokesman Ari Fleischer said trade disputes are a natural
part of the relationship.

    "Clearly, trade is always one of those many issues that allies are
going to differ about and remain the best of allies. That's the nature
of trade," Fleischer said Wednesday.

    "So it's part and parcel of a relationship that is as robust as it
is that we're going to have inevitable trade disputes. And that's why
the WTO has set up the mechanisms it has," Fleischer added.