EXCERPTS: In a state of agitation, US economics officer Robert Cekuta invited his German counterpart, Rainer Wend, to a meeting at the embassy in Berlin last week. It was an unusual move, but Cekuta was extremely worried... Cekuta explained to Wend that his country now faces "an enormous economic loss," and left no doubt that the step could strain the relations between the EU and the US enormously.

...In addition to the ban on feed, the US faces recalls, actions for liability and above all enormous damage to the image of US corn. A similar accident with genetic corn from Starlink cost the US economy over a billion dollars in 2001. The subsequent costs could be much higher this time, especially if until-now lethargic US consumers begin to question the safety of genetically modified varieties of grain.
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Stalking Genetically Modified Corn
By Wolfgang Reuter
Spiegel Online, April 18 2005
http://service.spiegel.de/cache/international/0,1518,351921,00.html

[image caption: Europe is skeptical about the safety of US corn.]

Since last Friday, the EU has banned the import of US corn feed. The new embargo has further strained a trade relationship already tense over genetically modified food, Airbus subsidies, and the weapons embargo against China.

In a state of agitation, US economics officer Robert Cekuta invited his German counterpart, Rainer Wend, to a meeting at the embassy in Berlin last week. It was an unusual move, but Cekuta was extremely worried. The Germans, he complained to Wend -- who is the chairman of economics committee in the Bundestag and a trusted advisor to economics minister Wolfgang Clement -- worked behind the scenes on a European import ban on corn from the US. Cekuta explained to Wend that his country now faces "an enormous economic loss," and left no doubt that the step could strain the relations between the EU and the US enormously.

Towards the close of last week, other US diplomats also tried once more to avoid the threatened embargo. According to a worker at the consumer protection ministry, "they called regularly every half hour." Even EU authorities were in constant contact with US envoys in Brussels. But the telephone and backroom diplomacy didn't help. On Friday of last week, the EU commission decided against the interests of the superpower -- and put the ban on some imports of corn feed into effect.

From now on, the EU will require an analytical report from an accredited lab for all corn imports from the US. The report must unequivocally guarantee that the contents do not include any Bt10 corn, a genetically modified corn variant from the Swiss company Syngenta. The plant has a gene that makes it resistant to the antibiotic Ampicillin -- and is not certified in either the US or Europe. The fear is that if humans consume animals who have been fed with the corn, they could develop immunities to antibiotics.

Between 2001 and 2004, Syngenta released about 700 tons of the illegal seeds into the US market by mistake, enough to produce about 150,000 tons of corn. In the US, the exact source of an agricultural product can't be traced. A certificate from the producers stating that any given shipment doesn't contain Bt10 is thus simply not possible.

Green environmental politicians, above all consumer protection minister Renate Kuenast, feel that this confirms their skepticism over genetic engineering and are up in arms about what Kuenast calls the "unbelievable sloppiness" of mixing genetically modified corn in with other variants.

Chief among the products hit by the quasi-embargo is corn gluten feed, of which approximately 4 million tons are sent to the EU every year. The sales loss might amount to nearly $350 million. Other countries, above all Japan, are now considering whether they will follow the draconian EU measures as well.

In addition to the ban on feed, the US faces recalls, actions for liability and above all enormous damage to the image of US corn. A similar accident with genetic corn from Starlink cost the US economy over a billion dollars in 2001. The subsequent costs could be much higher this time, especially if until-now lethargic US consumers begin to question the safety of genetically modified varieties of grain.

The nonchalant behavior of the Americans infuriated the environmental protection authorities in Brussels and Berlin more than anything else. The US Department of Agriculture knew about the illegal Bt10-infused corn since December 2004. Officials remained silent though, until the science magazine "Nature" reported the incident at the end of March.

On the same day, Stan Cohen of the US Embassy informed EU authorities in Brussels about the Bt10, where he played down the incident consciously. The still upbeat Cohen wrote at the time that he hoped "the recent report of a technical breach of US laws won't lead to a disturbance of US feed imports to the EU."

A Failed Compromise

Corn is big business in the US, and Washington is accordingly alarmed over the new ban.

The efforts of the Economic Ministry to reach a compromise on corn imports fell apart last Thursday. The specialist from the various EU member-states had already met on Wednesday and established the EU line, unanimously pushing for the corn feed import ban. Even the Chancellor's office, despite all threats to the contrary, in the end stood behind the ban.

Since the US produces approximately 300 million tons of corn annually, with a sales value of over $30 billion, Washington is accordingly alarmed over the ban. In the economic ministry in Berlin, high-ranking officials therefore fear a new trade war with the US. Certainly, the current issues between the two trade partners are already enough to put a lot of strain on their relationship:

The US wants to prevent the planned French subsidies of approximately a billion euro for the Airbus A 350. They have threatened proceedings before the World Trade Organization.

The US has already made proceedings against the rigid rules of the EU concerning genetically modified food. Their complaint is at present at the arbitral tribunal of the WTO.

The Americans feel the current considerations to waive the weapons embargo against China are a provocation.

The tensions all have a long history. Boeing head Harry Stonecipher complained a few months ago during his visit to Germany that his company has "now collected two years of data" proving that Airbus has violated the subsidy agreement that the EU and the US signed in 1992. Stonecipher has meanwhile been sacked, but the rumblings about the subsidies continue. And Pfizer head Hank McKinnell, speaking during the world economic forum in February, said this of Germany's price limits on medicine: "You prefer your own companies," and he brought the issue up with Federal Chancellor Gerhard Schroeder as well.

US Republican Senator Richard Lugar openly warned the Europeans a few weeks ago about "dramatic consequences" should American soldiers ever be killed by European weapons from China. In the worst case, Congress could ban the export of US high-tech equipment to the EU.

"The situation is markedly tense," is how one government official described the current state of affairs. "Everyone is waiting for what stage of escalation is going to come next."

Until the ban, the threats on both sides confined themselves to pithy remarks. Escalation of commercial disputes has always been prevented so far between the two trade partners, even if only at the last minute. But not this time. "Though whether the Europeans did themselves a favor in adopting this hard stance," says Wend, "is extremely questionable, in view of the already-strained relationship."