The first shadow boxing for the post-Brexit trade talks has begun. Wholly predictable hackles have been raised by the US Ambassador, Woody Johnson, who has accused UK farming of being a “museum of agriculture” which should embrace chlorine-washed chicken and the feeding of growth hormones to cattle. In his Daily Telegraph article, he argues that “it is time the myths are called out for what they really are: a smear campaign from people with their own protectionist agenda”. This is a clear warning to the UK Government to resist what the US considers to be demands from the British farming lobby and its allies to exclude US chicken and beef from the UK market.
Pitched battles over quality standards for meat will inevitably figure in the US-UK trade talks once the UK leaves the EU. But another battleground will form around genetically modified (GM) crops. Little has been heard about GM so far, but it is another potentially incendiary addition to the trade negotiations.
The US has exported GM crops since 1996. Starting with soybeans, it has since added maize, cotton, canola, sugar beet, alfalfa, papaya and squash. In 2015, the US was still the leading producer of GM crops, but had been joined by a further 27 countries. In total, 179.7 million hectares were under GM production, equivalent to more than 10% of the world’s arable land and more than seven times the land area of the UK. GM was not the sole preserve of large-scale agribusiness. In 2013, around 90% of the 18 million farmers engaged in growing these crops were poor farmers in developing countries.
WTO rules prevent importing countries from treating domestic products differently from “like” products imported from other WTO members. Defining what is a “like” product is tricky – should the products be physically the same, carry out the same function and/or have the same tariff classification? Sticking to this rule, for example, means that foreign products cannot be labelled differently from domestic equivalents if they are deemed to be “like”. However, the EU currently requires that imports containing more than 0.9% of approved GM content must be labelled. This contradicts the WTO rule, and particularly riles the US. However, the US perhaps feels it cannot bully the EU into compliance lest it face retaliation. Perhaps it is less worried about forcing the UK to adopt the rule, given its much smaller economy. This is certainly the implication of the objectives it set out last week for what it hoped a US-UK trade deal would achieve. Specifically, the US wishes that the trade agreement should establish:
“a mechanism to remove expeditiously unwarranted barriers that block the export of U.S. food and agricultural products in order to obtain more open, equitable, and reciprocal market access.”
“new and enforceable rules to eliminate unjustified trade restrictions or unjustified commercial requirements (including unjustified labelling) that affect new technologies”
Note that the WTO has nothing to say if countries want to ban production of GM crops: this is not a trade issue. But the clause referring to labelling implicitly suggests that the US does not wish to give US and UK consumers the opportunity to distinguish between GM and non-GM products, because the US regards these as “like” products.
The WTO has also developed rules to deal with cases where countries use health and safety arguments as implicit protectionist measures. These are set out in Application of Sanitary and Phytosanitary Measures (SPS) Agreement. The purpose of the SPS Agreement is “to protect human or animal life and health … from risks arising from additives, contaminants, toxins or disease-causing organisms in imports of food, beverages and feed stuffs” as well as “to prevent or limit other damage … from the entry, establishment or spread of pests”.
The possibility that GM harms humans or the environment is hotly contested. Of course, GM is not a single technology, but rather a wide range of applications of genetic engineering techniques to different organisms in pursuit of some desired objective. Each technology must be assessed on its own merits. The balance of argument favours the view that existing GM technologies have not harmed human health and their effects on the environment have ranged from extremely positive to no worse than equivalent non-GM products. Given the scientific evidence, it was no surprise that in 2006 the WTO upheld a US claim against EU restrictions on the import of biotech products. The WTO found there was insufficient scientific evidence to justify the moratorium on GM imports applied by some EU member states. Since that judgement, the EU has imported GM products, though in a somewhat half-hearted fashion. Thus, responding to popular concerns about GM, the EU has established restrictive import regulations. Since 2003, each new GM product has had to undergo a full scientific evaluation by the European Food Safety Authority (ESFA). Even if EFSA approves the product, individual member states can ban its import under a “safeguard clause” if it suspects potential harm to humans or the environment.
There are a patchwork of policies within the EU relating to the production of GM foods. Although around 20% of Spain’s maize production is GM, Bulgaria, France, Germany and Romania have completely banned GM production. It is not banned in England, though commercial production has yet to start. Scotland and Northern Ireland have banned GM foods in the sense that the EU has agreed to exclude them from European consents for the cultivation of GM crops. The decision in Scotland was made in 2015, when the then Secretary for Rural Affairs, Richard Lochhead, cited potential damage to the image of Scotland’s £14 billion food and drinks sector as the reason for the ban. Unfortunately, there are no quantitative estimates whether the benefits from the introduction of GM would offset the costs of such damage.
So what happens to the Scottish Government’s commitment to ban GM production in the light of the upcoming US-UK trade negotiations? The UK government is unlikely to prevent Scotland continuing its ban on GM even if there is no agreement on common policy frameworks after EU withdrawal because the ban is not itself relevant to trade negotiations. The issue for trade is the conditions under which GM and non-GM products compete against each other in UK and US markets. The US will clearly argue against the erection of non-tariff barriers which it views as unscientific. This argument is likely to find support in the WTO, though ironically, the US appears to wish to dismantle the already overstretched WTO judicial mechanism for dispute resolution.
Yet Michael Gove, in a recent speech to the NFU, argued that he wants to maintain UK food standards.
“We have been clear - across Government, from the Prime Minister down - that we will not lower our standards in pursuit of trade deals, and that we will use all the tools at our disposal to make sure the standards are protected and you are not left at a competitive disadvantage.” Michael Gove speaking to the NFU, Feb 2019
Whether the standards he intends to defend include EU rules for labelling GM products remains to be seen. The US will inevitably interpret these as non-tariff barriers.
If consumers wish to buy non-GM products and the US resists GM labelling, these consumers will have to be able to identify products originating in Scotland and also know of Scotland’s ban on GM. Of course, in the US market, Scottish produce will be competing with products from other countries, some of which may also have banned GM. There is obviously extensive potential for customer confusion, which will pose a considerable challenge for those marketing Scottish goods on a non-GM selling tag. Further, if customer resistance to GM products weakens as GM becomes more pervasive, other ways for marketing Scottish products will be required.
GM will provide another test of intergovernmental relations within the UK. A key challenge will be how far the UK government is prepared to defend Scotland’s commercial interests through its ban on GM in the US-UK trade negotiations. Free traders argue that the poor will benefit from lower food prices if the ban was abandoned. This argument seems to have little traction, perhaps surprisingly, in the present political climate. Perhaps this results from the benefits from lower prices being spread across the UK as a whole, while those gaining from the current policy have a clear geographical context which can be focused through the Scottish Parliament.