TCS Daily

Growth in the Balance

By Alan Oxley - May 15, 2003 12:00 AM

Bob Zoellick, the US Special Trade Representative, has launched a challenge under WTO rules against the EU ban on imports of GMOs. The ban is a blatant breach of international trade rules. There is concern that a challenge might widen the divide with France and Germany.

The GMO ban must be addressed in its own context. It is time to draw the line in the sand. This is not yet another schism between America and France and Germany. It is fight between those who want growth and those who do not. This is a fight the Bush administration must take on and lead.

The schism over Iraq will heal in time, although the relationships between Paris, Bonn and Washington may never be the same. It is simply part of the process of Europe adjusting to a more powerful and more prosperous America which has been going on for a century.

A more profound schism is slowly emerging. It doesn't divide Europe and the US, it divides part of Europe from the rest of the world: it divides those who want growth from those who do not. The wedge in this divide is an issue and it is Green. It is over how to protect the environment. The EU ban on GMOs is just a small part.

A wave of regulation is rolling across Europe. It is forcing producers to collect and recycle packaging, cease use of heavy metals, reduce use of chemicals, abate greenhouse gases, as well as avoid use of GMOs. Levels of tolerance of toxicity for products are being set which are much higher than in the US and other advanced economies. It is intensifying.

Every society has the right to improve its environment. But few societies want to be Green at any cost. But this philosophy underpins new regulation in the EU. Brussels has decreed that environmental regulation in future will be based on the "Precautionary Principle". In Brussels, this means a "no risk" philosophy. So GMOs can be banned, not because there is scientific evidence they are harmful, but because an official somewhere rules there is an unevaluated risk. Since the advent of technology we have managed risk. "No risk" measures are anti-science, anti-technology and anti-growth.

European producers are increasingly being obliged to meet the cost of the environmental impact for the whole life of products. It has started with cars, electrical and electronic equipment. The European Commission plans that everything produced and consumed in the EU will be regulated in this way. This approach flattens growth and produces poor environmental results. It is indirect regulation of the sources of pollution. Direct regulation is always more effective.

Under this regime of control, a Green inspectorate will regulate the EU. It will have wide regulatory discretion and will apply Green philosophies. Here is the second rub. Green parties throughout Europe are interventionist, anti-free market and anti-growth. The result is that clear preference in the EU is regulation by command and control.

Why should this bother the Bush administration and the rest of the world? Because not content to pursue environmental goals in Europe at any cost, it is clear goal of European Green parties and now the EU to leverage access to the markets of the EU with demands that countries trading into the EU adopt EU environmental standards.

You want to export corn or canola to the EU? Only if it is produced according to EU environmental standards. Brussels has already carried its command and control objectives into the WTO. It is an institution which promotes free markets, not controlled markets. WTO rules don't permit controls on trade to protect health and safety of people, plants and animals unless they can be scientifically justified. WTO rules let consumers decide if they want GMO products or not. The Brussels inspectorate does not want that. No wonder Green groups like Greenpeace and the World Wide Fund for Nature are leading the anti-WTO campaign of the anti-globalization movement and are using funds from the EU to do so.

Much greater interests than those of producers of GMO grain in North America are at stake here. The pathways to prosperity for the world are on the block. Developing countries can't erase poverty and lift living standards without growth. If they are forced to adopt EU environmental standards in order to trade into the EU, they will not have growth. Expensive and sophisticated European environmental standards do not work in the Third World.

The benefits of GMO technology are also denied. Varieties of rice that can lift exponentially nutritional standards in the developing world are not to be deployed if the EU has its way. Misinformation about GMOs, cheerfully propagated by Greenpeace, lead the leaders of Zambia and Zimbabwe last year to reject completely safe food aid because it had GMOs while their people were starving from famine. It is little wonder that Argentina and Egypt have joined the United States in the WTO challenge.

European Greens are not only opposed to economic growth, they are disinterested in the welfare of people in the developing world. Under the influence of Greens, the EU has carried this anti-humanitarian value into the WTO. Its condition for launching the Doha Round was that environment had to be on the table. It has now staked its position. Unless countries can restrict imports if they are not produced and processed according to EU environmental standards, the EU will not agree to further trade liberalization. The first big losers will be the developing countries.

But so will the rest of the world, including business in Europe. Brussels wants WTO sanction for the regulatory blanket with which it is suffocating business in Europe and it wants the right to throw the same blanket over its trading partners.

The challenge to EU trade restrictions on GMOs evens up the stakes for the contest over trade and environment issues in the WTO. But there is a bigger issue. It is maintaining an open system of global trade based on clear rules and sound science because of the fundamental importance of it to global economic growth. The challenge is in the interests of everybody, including people and business in Europe, who believe that you can both improve the environment and still have growth.

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