The decision to approve the GM crop for cultivation is the first in over a decade-the last being Monsanto’s MON 810 insect-repellent corn in 1998. The move is pivotal on two accounts: not only does it represent a change in policy of the traditionally GM-resistant EU, it also marks a departure from the collective decision-making tendencies of the body by deferring specific decisions on whether to grow the GM products to member countries themselves.

The GM Amflora potatoes are intended for industrial purposes, with the modification allowing the tuber to produce significantly more starch when manufacturing products such as paper and textiles. Conventional potatoes produce two types of starch; the Amflora consists nearly entirely of the type ideal for technical applications, reducing by-product and waste and optimising the use of potatoes for starch. These starch potatoes, the kind specifically used for industrial purposes, are most commonly grown and processed in Germany, the Netherlands, France, Denmark, and Poland. Already, BASF intends to plant the crop in Germany and the Czech Republic, with Sweden and the Netherlands expected to begin cultivating the crop shortly after.

Safeguarding measures

Controversy over the approval of the Amflora potatoes centred on the use of an antibiotic-resistant gene that serves as a marker for the efficacy of the modifications.

A memo released by the European Commission states that the use of the Antibiotic Resistant Marker (ARM) gene in the potato received high scrutiny in the decision making process and assures European citizens that the EU will implement stringent regulations to ensure that the crop does not propagate or disperse the controversial gene into the environment. In 2007, the European Food Safety Authority (EFSA) acknowledged the importance of guaranteeing that the antibiotic-resistant crop does not interfere with the therapeutic properties of medicinal antibiotics. However, the body now says that the ARM is safe and that it will have no harmful effect.

In addition to the decision regarding the cultivation of the Amflora potato, the European Commission also adopted decisions allowing the import and processing of three Monsanto types of GM maize for food and feed.

Reactions to the move

Some European manufacturers have claimed that the EU’s hesitation to approve the cultivation of GM crops has hurt the competitiveness of European farmers and biotech companies, and compromised the bloc’s long-term food security. Nevertheless, several member states continue to express significant concern over GM foods, despite scientific research that the modifications pose no health risk.

Marco Contiero, Greenpeace’s EU Policy Director on Genetic Engineering, called the application of the ARM and admittance of the potato “problematic,” adding that he finds it “shocking that one of the Commission’s first official acts is to authorise a GM crop that puts the environment and public health at risk.” Italy has threatened to rally other EU states against the measures, with the country’s agriculture minister, Luca Zaia, heading the charge. In addition to the GM issue itself, Zaia has said that he believes the decision infringes on the sovereignty of EU member states.

The decision marks a commitment by EC President José Manuel Barroso to approach the GM question in the EU with what he calls sound science, rather than emotions. The EU decision comes in the wake of a string of national bans against the cultivation of MON 810 implemented last year despite safety reassurances from Brussels.

In the US, Dick Lugar, a senator and ranking member on the Senate Foreign Relations Committee, lauded the decision, saying that the approval of Amflora potatoes could be a first step toward more general EU acceptance of biotech products. The US has long been critical of the EU’s anti-GM position, arguing that it is not in line with Europe’s WTO commitments.

ICTSD reporting; “Brussels breaks ground with go-ahead for modified potato,” FINANCIAL TIMES, 3 March 2010; “EU Approves First Modified Crop for Planting in 12 Years,” THE NEW YORK TIMES, 2 March 2010, “EU Clears Biotech Potato for Cultivation,” THE NEW YORK TIMES, 2 March 2010; “EU Commission under fire over GM Potato,” THE PARLIAMENT.COM, 9 March 2010; “European Commission okays GM Potatoes,” FRANCE 24, 03 March 2010; “GM potato Cleared for EU Farming,” BBC NEWS, 2 March 2010; “Is the EU finall embracing GM crops?” REUTERS, 2 March 2010.

The committee members approved a report requiring clear country of origin labelling on meat, poultry, dairy, fresh fruit and vegetables and other single-ingredient foods. The committee also voted to require the labelling on processed foods that use meat, poultry and fish as ingredients.

The vote was part of a larger discussion that concluded on 16 March after 18 months of debate on the subject of clearer, more informative food labels. After nearly 800 amendments, the report passed, concluding that food labels ought to provide information on energy content and nutritional value, and that they must be easy to understand and not misleading in order to help consumers make more informed dietary regulations.

However, the committee rejected a segment of the report that proposed a universal EU ‘traffic light’ system for nutritional information. MEPs were in agreement that the regulation should give only general guidelines on the display of such data and that it should allow EU member states to maintain their own labelling systems, assuming that they are in line with the new requirement.

The UK-based National Farmers Union celebrated the new ruling after its “sustained lobbying” of Brussels, but NFU deputy president Meurig Raymond said that there were still more battles to fight. “There is still a long way to go, and I’m sure the change to labelling rules will be challenged strongly by others in the EU,” he commented.

The NFU intends to keep pushing the issue in the European Parliament. “It is clear the current guidelines aren’t working, so it’s essential that we try and keep country of origin labelling high on the agenda,” said Mike Thomas, a spokesman for the NFU.

“People buying meat and dairy products want to know where the animal was reared so they know exactly what they are getting,” Thomas said. “We believe there is no reason why mandatory country of origin labelling should not be extended to the remaining sectors as well as to the main ingredients of semi-processed foods.”

On Tuesday at a hearing of a High Level Expert Group on the EU’s dairy sector, leaders of the EU farming industry also called for clearer EU marketing, labelling and quality standards.

“EU dairy farmers have to comply with some of the highest requirements in the world…By clearly distinguishing their products in the marketplace, they can reap the benefits of these stringent requirements,” said Pekka Pesonen, Secretary General of Copa-Cogeca in a press release. He described any EU measures to promote EU dairy products on both the EU and world markets as “vital.”

The committee’s labelling proposal will be put to a vote before the entire European Parliament in late May and if passed will then go on to the Council of the EU before it returns to the European Parliament for a second round of debate.

ICTSD reporting; “Country of Origin Labelling a Step Closer,” FARMERS GUARDIAN, 17 March 2010; “EU Food Labels Should Be Easier to Understand, Give More Information - MEPs,” THE SOFIA ECHO, 17 March 2010.

Australia questioned the methods used by the EU to revise its export subsidy commitments to factor in the addition of new members, on the basis that this could lead to weaker commitments from the bloc. Successive enlargements have seen the EU grow from 15 to 27 member states since 1995; however, the WTO membership has yet to approve a new schedule of tariff and subsidy commitments for the growing bloc.

in response, the EU argued  that revised commitments for export subsidies should not be calculated by simply adding the previous levels to those of its new members, since trade with many of the new states should now be classified as within the Union.

Australia, Brazil, and Thailand - three of the world’s main sugar exporters - objected to the EU’s recent decision to export an additional 500,000 tonnes of “out of quota” sugar, which they believe are above quota limits established by the WTO. The three states, which are involved in disputes with the EU brought to the WTO (cases DS265, DS266, and DS283), had recently condemned the EU moves, which they believe have depressed world prices. The EU maintains that the sugar is not subsidised and that the additional exports are temporary.

Australia and Canada also posed  questions about how spending by the EU met the WTO’s criteria for green box subsidies - support that is exempt from an overall ceiling or any cuts because, ostensibly, it does not result in more than minimal trade distortion.

Australia also queried why a number of countries are substantially behind in officially notifying their subsidy spending to the WTO, and noted in particular delays by Venezuela, Egypt, Korea, Turkey and China. Of the 153 member states, 81 countries have yet to provide data for 2004 or earlier. Australia urged members to keep this data current, inquiring about the reasons for backlogs of up to eight years for some states.

The next meeting of the regular committee on agriculture is scheduled for 23 September.

ICTSD reporting; “WTO members behind in providing farm subsidy data,” REUTERS, 10 March 2010.

Several Geneva-based delegates who spoke to Bridges this week acknowledged that little progress may be made in the negotiations over the course of this year (see related article, this issue). The pervasive sense of inertia has not helped countries to overcome polarised positions on the controversial ’special safeguard mechanism’ - a tool that would allow developing countries to impose additional duties on goods to tackle surges in import volumes or price depressions.

Trade officials expressed little surprise that no progress was emerging from informal consultations being held this week by the chair of the agriculture talks, Ambassador David Walker (New Zealand). “Negotiations are stalled,” observed one delegate, who told Bridges that countries were simply repeating their established positions.

The informal talks come two weeks ahead of a “stock-taking exercise” in Geneva, which will involve senior officials and not ministers, as some had speculated. With the WTO keen to avoid another high-profile failure, a decision was taken to hold a low-key event, trade sources said.

Pascal Lamy, the WTO Director-General, has reportedly asked the chairs of key negotiating groups to prepare reports on progress ahead of the ’stock-taking’, which will take place the week of 22 March. One delegate observed that these reports, as much as the chances of achieving progress, may be the real objective of the chair’s recent informal meetings.

Special safeguard mechanism still deadlocked

The G-33 developing country group that favours a strong special safeguard mechanism (SSM) has recently circulated five technical notes on the tool, along with a ‘political’ paper - although these, and related talks, have done little to break the deadlock on the issue, sources said.

On Monday, Walker hosted informal small-group discussions on whether safeguard duties should be made conditional on the co-existence of both a surge in import volumes and a price depression, following a G-33 paper on the issue. Further talks on Wednesday morning examined the group’s new submission on the price-based safeguard - although these only accorded cursory attention to two more recent G-33 papers, on special flexibilities for small, vulnerable economies, and on the question of ‘pro-rating’ the calculation of average import volumes so as to discount months in which safeguards had been imposed.

The consultations follow discussion one month ago of a G-33 paper examining whether the safeguard should accommodate seasonal variations in trade.

Delegates from exporting countries nonetheless dismissed the G-33 submissions as being essentially “political” documents that offered “nothing new” to the discussion. They queried G-33 claims that developing countries would find it too difficult to monitor both price and volume data to verify the co-existence of import surges and price depressions, claiming that this would be necessary in any case if countries wished to use the two types of safeguard mechanisms. They also sought clarification on why the group considered that a volume surge could cause injury to domestic producers in the absence of a price depression.

While the G-33 had sought to relax conditions on using the safeguard for small, vulnerable economies (SVEs), exporting countries argued that this discussion should take place only after there was greater clarity on the flexibilities that would be provided to developing countries as a whole. The paper reiterates calls for SVEs to be allowed to impose safeguard duties when average import levels are lower than for other developing countries (10 percent above historical averages); to impose heavier duties (75 percentage points or 75 percent of the maximum permitted ‘bound’ ceiling, whichever is higher); and to apply safeguard duties that exceed bound rates on a larger share of a country’s imports (on 30 percent of tariff lines). “Developing countries, and in particular those that are small and vulnerable, need a simple and effective SSM mechanism,” the G-33 paper argues.

Another new G-33 proposal on ‘pro-rating’ calculations of average import volumes by excluding months in which safeguard duties were applied seeks to address exporters’ calls for the mechanism to protect ‘normal trade’, by underscoring the role of the rolling three-year average and the related but higher ‘trigger’ threshold that must be breached before additional duties can be imposed. These conditions, the group says, would themselves allow for trade to grow while providing a means to tackle sudden import surges or a drop in prices. The group also argues that the exporters’ focus on a limited number of “hyper growth” products is misleading, claiming instead that “double or triple digit growth rate products are not the norm, but the exception.”

Sensitive products: Japan, Canada, US anger developing countries

In informal talks on Tuesday, Japan and Canada reiterated their request to be allowed to designate an additional two percent of tariff lines as ’sensitive’ - a category of products that would be allowed to undertake a gentler tariff cut in exchange for expanded tariff quotas. In response, the US repeated its suggestion that, if this should be granted, all countries should be allowed to benefit from an additional 2 percent allocation. Developing countries such as China, India and Brazil opposed any such move, arguing that developed countries should not be allowed to take advantage of additional flexibility.

One observer speculated that the US suggestion could be a tactical move aimed at dissuading Canada from seeking extra sensitive product tariff lines. As trade between the two countries is significant, US exports could be significantly affected by their trading partner’s sensitive product allocation. However, one source noted that the proposal sat uneasily with the US’s continued insistence on expanding developing country market access.

Other import-sensitive countries such as Switzerland were reportedly happy with the existing draft text.

Cotton

The chair was expected to hold informal consultations on cotton with key countries on Wednesday afternoon, although delegates expected little progress to be achieved. The talks will be held in the shadow of recently announced penalties that Brazil intends to impose on the US following a panel decision on the cotton dispute between the two countries (see related article, this issue).

Subsidies

Aside from the negotiations, the regular committee on agriculture was also due to meet on Wednesday, with several countries submitting written questions in advance. Several countries had questions for the European Union, which recently submitted new data on subsidy spending to the WTO, with members such as Australia and Canada querying how spending related to the WTO’s criteria for green box support - payments exempt from any cuts or an overall ceiling, on the basis that they cause not more than minimal trade distortion.

Australia also questioned a number of countries about the reasons for substantial delays in officially notifying their subsidy spending to the WTO. These included China, Egypt, India, Korea, Turkey and Venezuela. Backlogs amounted to eight years’ delay or longer for many countries, Australia noted.

Looking for political leadership

Several delegates commented on the need for ministerial engagement and clear signs of political will at a senior level if the talks are to emerge from the current stalemate. One source reported that the EU, India and Australia were contemplating holding a ministerial meeting at some point between the stock-taking exercise later this month and the G-20 meeting of finance ministers in June. However, many officials remain sceptical about the chances of achieving progress in the near future.

ICTSD reporting.

The report considers three scenarios that are indicative of various policy stances - a reference scenario that assumes minor changes in policy, a conservative scenario that assumes little to no change in policy and a liberalisation scenario that assumes the elimination of the cornerstone of EU policy - the CAP.

The full report can be downloaded here.

For years, several green groups have been campaigning against the palm industry, which they say destroys wildlife habitat, causes widespread forest loss and releases huge quantities of greenhouse gases into the atmosphere, primarily in Southeast Asia. Some 80 percent of the world’s palm oil supply originates in Indonesia and Malaysia.

In an attempt to address global concern over the crop, a coalition of industry groups - including Unilever - and the environmental NGO WWF set up the RSPO in 2004 to promote “the growth and use of sustainable oil palm products through credible global standards and engagement of stakeholders.”

Revelations undermine sustainable certification

But critics say the recent discovery of unsustainable practices by certified “sustainable” companies calls the viability of the RSPO into question. Industry watchers suggest the revelations could drive a wedge of mistrust between purchasers and growers, making it increasingly difficult to justify the premium price of RSPO certified oil.

Unilever is the world’s largest purchaser of palm oil and has much at stake in ensuring RSPO certification remains credible. In an attempt to combat the negative image cast onto one of their key ingredients, the conglomerate has pledged to purchase all of its 1.3 million annual tonnes of palm oil from certified sustainable plantations by 2015.

The oil is found in a variety of foods, including margarine, cooking oil, potato chips, and cakes. It is also an ingredient in many cosmetics, soaps, shampoos, and detergents. Recently, palm oil has also begun to be used as a biofuel.

Unilever has reacted quickly when presented with evidence of unsustainable practices by its producers in the past. Three months ago, when Greenpeace alerted the company to illegal logging practices by PT SMART, the largest palm oil producer in Indonesia, it quickly suspended their US$33 million supply contract.

As a founding member of the RSPO and one of only a handful of companies committed to purchasing segregated sustainable palm Unilever has a vested interest in ensuring the certification system remains sound.

According to the RSPO, more than 28 million tonnes of palm oil are produced around the world each year - almost one third of the world’s vegetable oil production - and Indonesia is the world’s largest producer. But only three percent of world’s palm oil production is RSPO certified.

Sustainability standards “unenforceable”

Indonesian government representatives said they are aware of the footage in the BBC documentary and that the government is clamping down on illegal logging. Similarly, following their suspension, PT SMART admitted to “minor mistakes” and introduced stricter environmental controls. However, it is the enforcement of regulations, rather than establishing policy that has proven to be difficult.

Shailendra Yashwant, Greenpeace director for Southeast Asia told the BBC that RSPO certification is a “greenwash” because those commitments promised by producers are unenforceable on the ground.

Yashwant suggests that a more effective measure to help preserve Indonesian rainforests would be strong action by Jakarta on deforestation. “We want the Indonesian government to immediately announce a moratorium on further deforestation…beginning with peat lands,” he said.

With a cultivation area of 63,886 hectares, Duta Palma is a significant player in the palm industry. Duta Palma’s operation is managed by seven smaller companies: PT Eluan Mahkota, PT Johan Sentosa, PT Wana Jingga Timur, PT Cerenti Subur, PT Mekar Sari Alam Lestari, PT Aditya Palma Nusantara, and PT Duta Palma Nusantara.

According to RSPO, areas undergoing palm oil cultivation have grown by about 43 percent over the past two decades. Most of this new growth has occurred in Malaysia and Indonesia.

More information

Those located in the UK can access the documentary “Dying For a Biscuit” on the BBC’s website: http://www.bbc.co.uk/programmes/b00r4t3s

ICTSD Reporting; “Unilever drops major palm-oil producer,” THE INDEPENDENT, 22 February 2010; “Unilever stops buying palm oil from Indonesian planter,” REUTERS, 24 February 2010; “Setelah Kasus Sinar Mas, Unilever Blacklist CPO Duta Palma,” DETIK FINANCE, 25 February 2010; “Orangutan survival and the shopping trolley,” BBC, 22 February 2010.

Food security quickly emerged as a central issue at the meeting. Recent volatility in food prices, including major spikes in 2007 and 2008, have triggered riots in some poorer nations and panic-buying in wealthy states. Since the mid-1990s, the number of malnourished people in the world has increased to over one billion, or 15 percent of the world’s inhabitants, highlighting some of the key challenges of this century as the global population continues to rise. (The ministers’ communique from the meeting is available here.)

Also discussed at length were the impacts of climate change on food supply and the ways in which the nations most adversely affected are also those with the smallest ability to cope. Agriculture, while a contributor to climate change, also has an important role to play in the reduction of greenhouse gases through practices such as soil carbon sequestration.

Ministers addressed the need for an integrated approach to enhance food security, including poverty alleviation and economic development, as well as efforts to ensure adequate supply of safe and nutritious food. They recognised the important role of trade in reliably ensuring that food can move from places it can be adequately produced to locations where it is not. For this reason, they emphasised the important role of concluding the Doha Development Agenda - the WTO’s eight-year-old global trade talks - in a comprehensive manner.

One major area of disagreement occurred over the issue of rural projects, which the EU believes are central to an integrated, multi-functional approach to agriculture.  Some states, like Austria, whose agriculture minister Nikolaus Berlakovich co-chaired the meeting, called for enhanced government regulation. But New Zealand’s farm minister, David Carter, the other co-chair, advocated against government regulations and in favour of greater volumes of trade on liberalised markets.

Ministers reached the conclusion that future cooperation with countries outside of the OECD will be crucial in order to deal with the issues discussed. They noted the need for more dialogue with emerging economies, as well as collaboration with institutions and agencies like the G20, the WTO, and the UN’s Food and Agricultural Organization.

While last week’s meetings did not produce specific measures or policies to address the issues discussed, members agreed on the importance of monitoring progress in the decade ahead. The member states expect to reconvene at the OECD next no later than the middle of the decade to analyse results.

More information

The chairs’ summary of the meeting is available here.

ICTSD reporting; “OECD farmers look at volatility, innovation,” MONEY CONTROL.COM, 27 February 2010; “Communiqué from the Ministers - Meeting of the Committee for Agriculture at Ministerial Level,” OECD, 26 February 2010; “Summary of the Chairs - Meeting of the Committee for Agriculture at Ministerial Level,” 25-26 February 2010.

The two technical submissions complement a broader political proposal that was circulated at the end of January. The documents examine whether the special safeguard mechanism (SSM) should take into account seasonal variations in production and trade, and also whether a volume surge and price depression should occur simultaneously as a condition for imposing safeguard duties - both of which are key demands from exporters.

‘Seasonal’ trade

In their paper on ’seasonality’, the G-33 warn that a distinction must be made between ’seasonality in trade’ and ’seasonality in production’. While growing seasons may mean that production of certain products is skewed towards particular months of the year, these trends do not necessarily translate into increased international trade during those periods - for example, in the case of raw materials that are subsequently processed into non-perishable secondary products, and then traded throughout the year.

The group also argued that previous WTO mechanisms, such as the special agricultural safeguard’, or SSG, have looked at seasonality from an importers’ perspective. The SSG has been primarily used by developed countries to shield their domestic producers.

The G-33 paper reviews trade in cereals (rice, wheat, barley and corn); oilseeds (soybeans and soy pellets, meal and oil); ten different types of fruit; nine vegetable products; and sugar. Different products are characterised by widely differing production and trade patterns, the group concludes.

The document also looks at trade data from countries in both the southern and northern hemispheres (Argentina, Uruguay and the US). Because countries in both hemispheres also serve as import destinations, the group argues that no clear seasonality of trade emerges in many cases. “Exporters in general have diversified their markets and do not put “all their eggs in one basket,” the paper claims.

Even in a single country, for some products no clear seasonality pattern can be discerned, says the group. “For US wheat, large disparities in year-on-year data suggest that a pattern is not necessarily consistent across the years.”

While some products and product groups do show more marked seasonality at an individual country level, exports may still continue almost throughout the year - as in the case of US strawberry exports. In this case, the group asks, should strawberries be considered a seasonal product? If so, “should Argentina’s export data be used as a reference for the determination, or the US’s data?”

The group concludes that including the seasonality concept “in the SSM architecture would only add to its complexity without providing any additional value.”

“Cross-checks”

Exporters have long argued that a “cross-check” or link should be made between the presence of a volume surge and a price depression, on the basis that if import volumes are increasing but prices are not falling, there is continued demand from domestic consumers. The latest G-33 submission spells out the group’s reasons for rejecting this argument.

The G-33 looks at trends in wheat, rice and maize trade at the global level, and examines the extent to which these correlate with price movements over a 15-year period. “Movements in both import volumes and prices do not necessarily coincide,” the group concludes.

The paper also cites an ICTSD study showing that the availability of the SSM would be more than halved if the safeguard could only be used when a volume surges and price depression occurred simultaneously. The paper also reviewed work by the South Centre and the FAO that reached similar conclusions.

“A considerable time lag” can occur between an import surge and its impact on domestic prices and industry, the group argues - with such time lags being particularly acute in developing countries, due to “complex and thick layers of distribution chains and inadequate infrastructure.” The group warned that the proposed ‘cross-check’ would “unresponsive to practical needs.”

In addition, because many developing countries will in reality be unable to monitor real time price and volume data for all tariff lines all the time, the cross-check requirement would in effect make the SSM unworkable, the group observed. The poorest and smallest countries would also be the most affected by any such requirement.

Talks continue

The chair of the agriculture negotiations, Ambassador David Walker, is convening a small-group consultation on the SSM on Thursday. A follow-up meeting on Friday, open to all WTO members, is expected to share progress so far with the broader membership.

ICTSD reporting.