GMOs, food safety and the environment: what role for trade policy and the WTO?

Abstract

Current debates about genetically modified organisms (GMOs) in agriculture reveal substantial differences in perception of the associated risks and benefits. Genetically modified crop varieties promise benefits to both farmers and consumers, and can lower damage to the natural environment, for example by reducing pesticide use. But some other environmental issues, together with food safety and ethical concerns with the production and use of GMOs, are being raised as potential negative aspects of GMOs. Hence the recent Biosafety Protocol with its endorsement of the use of the precautionary principle. However, if that Protocol were to encourage discriminatory trade barriers or import bans, or even just long delays in approving the use of imported GM seeds, it may be at odds with countries' obligations under the World Trade Organization. The first part of this paper provides a brief overview of the trade policy issues at stake here. The distributional consequences of adopting GMO technology in agriculture within and between countries, and of proposed trade-related policy responses, cannot be determined a priori. Hence the need for empirical modelling of the economic effects of GMO adoption. The second part of the paper illustrates how such policy or consumer responses can alter significantly the potential size of the global GMO dividend and its distribution. This is done using a well-received empirical model of the global economy (GTAP) to quantify the effects on production, prices, trade patterns and national economic welfare of certain countries' farmers adopting GM maize and soybean crops without and with trade policy or consumer responses in Western Europe (where opposition to GMOs is most vocal). Keywords: biotechnology, globalization, trade in agriculture, GTAP modelling JEL codes: Q16, Q17, Q18, O33