New NAFTA Furthers U.S. Push To Set Global Rules On Ag Biotech

The U.S., Canada and Mexico collectively addressed agricultural biotechnology like genetically modified organisms for the first time in the new NAFTA deal, agreeing to language that experts see as a major step in America's effort to export its biotech model across the globe.

The inclusion of the chapter is designed to set a standard for future trade deals and send a message to other U.S. trading partners, like the European Union and China, which U.S. seed and pesticide manufacturers have criticized for having an unpredictable regulatory approach, said Andy LaVigne, president and CEO of the American Seed Trade Association.

"We've always talked about this topic and agreed what transparency is, but it's not followed by some countries. This will be looked at in future agreements," said LaVigne, whose organization represents hundreds of companies that specialize in plant breeding and GE seed development, such as Scott Seed Co. and Corteva Agriscience, a division of DowDupont. "We talk about science-based policy-making, but in some countries it is influenced by the public. That doesn't help companies, farmers or our economy."

The provisions are not expected to change agricultural trade in North America, where the U.S. and Canada are industry leaders in biotechnology development. Genetically engineered crops generally aren't contentious issues among the three trading partners.

Groups representing biotech companies and agribusiness contend the provisions in the U.S.-Mexico-Canada Agreement, or USMCA, are aimed at making trade in GE products more predictable and ensuring that disputes can be resolved more quickly, while also protecting billions of dollars in biotech industry investments in research and development.

Critics argue the language — if adopted in future trade agreements — would make it more difficult for countries to regulate GE crops and block shipments of varieties that haven't been approved. More broadly, they say it could further entrench corporate control of new seed varieties and pesticides and limit farmers' options in the marketplace.

"The goal of these provisions is to reduce trade friction at all costs," said Patrick Woodall, research director and senior policy advocate at Food & Water Watch, a food safety and environmental group that opposes GMO crops' built-in reliance on pesticides. "So the extent to which countries have restrictions on the cultivation, importation and labeling of biotech crops could be more easily challenged by the U.S. as illegal trade barriers."

The Trump administration, which last year pulled the U.S. out of the Trans-Pacific Partnership, a 12-nation trade deal that also addressed agricultural biotechnology, touted the new NAFTA deal for encouraging transparency, information exchange and timely reviews of new products. The administration also highlighted how it supports innovations like gene editing — a more precise way of manipulating an organism's DNA that doesn't involve inserting foreign genes, as is the case with GMOs. The language in the USMCA is binding, unlike in the TPP.

But the more controversial aspect of the new language deals with "low-level presence" — when a country detects in shipments trace amounts of a GE crop that it hasn't approved.

The USMCA, which faces a long road to congressional approval, directs countries to adopt policies for managing a so-called LLP occurrence "without unnecessary delay." Countries are to consider relevant risk and safety assessments, but are not mandated to authorize the product.

Dr. Alan McHugh, a biotechnology specialist and geneticist at University of California, Riverside, who helped the U.S. and Canada develop regulations for GE crops, said it is beneficial to have a clear process in place to resolve an LLP incident that doesn't involve completely blocking shipments of grain. Alternatives can be negotiated, such as downgrading the quality or charging a lower price.

"We've been shipping grain back and forth for many years," McHugh said. "Sometimes there are problems, but when you turn around a freighter of corn from a port, everyone loses. Asian authorities have detected low-level presence ... in the dust remaining in the hold of the ship. American farmers, shippers and importers lose over perfectly safe grain."

Corn case provides a warning

The example of a recent class-action suit involving GMO corn seems to have loomed large over the formulation of the biotech chapter. The litigation was rooted in approvals that did not take place at the same time, and not a specific LLP incident.

Syngenta last year reached at $1.5 billion settlement with farmers, grain handlers and ethanol plants, who pursued litigation after China began blocking shipments of U.S. corn. Plaintiffs argued that Syngenta negligently commercialized a variety of GMO seeds, which had been approved in the U.S., before they were authorized in China, an important export market for U.S. corn. China later approved the technology, but the blocked shipments, causing prices for U.S. corn to plummet.

Steven Suppan, a policy analyst at the Institute for Agriculture and Trade Policy who has long criticized NAFTA and agribusiness, likened the low-level presence section to a "get out of jail free card" for biotechnology companies due to its broad language.

"It's designed to keep companies out of legal jeopardy, so governments assume the burden of demonstrating that unauthorized products pose a risk to consumers," Suppan told POLITICO. He said the new trade agreement doesn't quantify any threshold for LLP occurrences, or define the type of methodologies that should be used for detection.

The Biotechnology Innovation Organization, which bills itself as the world's largest trade group representing biotech companies, countered Suppan's argument by saying that the agreement allows the flexibility needed for countries to tailor LLP policies to their particular regulatory framework. The group noted in a statement that an LLP policy is "only a bridge to a full authorization to help facilitate trade for a product that has already been approved in one or more countries. This agreement does nothing to limit a company's legal liability to ensure its products have necessary authorizations."

Another section of the ag biotech chapter directs Mexico to join the latest iteration of the International Union for the Protection of New Varieties of Plants. The intergovernmental organization, known by the acronym UPOV, codifies intellectual property for plant breeders; it has more than 70 member nations worldwide.

Critics of the organization argue it favors agribusiness interests over the needs of individual farmers. They say farmers will be increasingly dependent on expensive biotech seeds and inputs, with fewer options available.

LaVigne, of the American Seed Trade Association, disagreed with that characterization. He said UPOV promotes innovation in the plant breeding community by providing basic IP protections for a period of time so companies can recoup the large costs associated with research and development. It includes an exemption allowing breeders to exchange germplasm — living genetic resources such as seeds or tissues that are maintained for breeding purposes — so they can do further research, though only those with the IP rights can commercialize a new product, he said.

"Until companies and breeders have confidence in Mexico's IP system, that it is transparent, they won't make investments because of concerns about what will happen to their technology," LaVigne said. "A number of groups around the world think farmers will get fewer varieties. But in reality, it gives breeders small, medium and large the certainty to bring new varieties to market."

Whether the USMCA deal charts a course for how other countries treat agricultural biotechnology remains to be seen, but it sets up a competition between the U.S. and the European Union over what the standard will be.

The Trump administration's recognition of "21st century innovations" like gene editing is a particular source of tension, said Rob Paarlberg, a professor of public policy at the Harvard Kennedy School who specializes in food and agriculture.

"The U.S., even before the Trump administration, signaled its intention to treat gene-edited crops not as GMOs, because it wasn't a transgenic strategy. There is no foreign DNA," he said.

Other countries, including Canada and Sweden, have followed America's lead, and the research community hoped the EU would do the same, Paarlberg said. But the European Court of Justice in July ruled that the new technology should be treated like GMOs, and therefore be subject to stringent regulations.

"The flash-point will be in EU imports of gene-edited crops from the U.S.," Paarlberg said. "It will also have implications for African countries that export crops to Europe. Gene-edited crops are being developed, including sweet potatoes. If the EU insists on labeling and tracing, African countries might not plant those crops for fear of losing a market."