Two events of great future consequence

by Morton Sosland
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September of 2003 has been made memorable for the world grain industry by two history-making events. One was the breakdown on September 14 of World Trade Organization negotiations at Cancun, Mexico, where disagreements about liberalizing agricultural trade loomed as a, if not the, major point of contention. The other event of enduring significance came on September 11 — already a date etched in memory by the New York-Washington assaults of September 11, 2001 — and this year made significant by being the start date for the Cartagena Protocol on Biosafety. Both events signal developments that are not just historical for having happened, but also for their long-term implications for the direction of global grain trade.

It probably would be foolhardy to denote one of these happenings as having greater consequence than the other. At the same time, the temptation exists to speculate about the long-term consequences of such powerful developments, even though they are strikingly different in their potential globe-circling impacts.

Looking at the Cartagena Protocol, any assessment must recognize that it was drafted several years earlier at a global conference under auspices of the United Nations Environment Program called to address ways of preventing the unintended spread of modified organisms. The Protocol has been agreed to by most of the principal grain trading nations, both importers and exporters. Yet, non-participants include the United States, Russia and Japan, creating a separate set of problems, since the Protocol mainly affects movement of genetically-modified grains into countries, rather than affecting their exportation. The Protocol defines itself as "seeking to protect biological diversity from the potential risks posed by living modified organisms resulting from modern biotechnology." This protection is implemented by a poorly-defined procedure requiring that countries into which grain is shipped be provided with information about shipments. A Biosafety Clearing-House is established "to facilitate the exchange of information and to assist in implementation of the Protocol."

Grain exporters and importers are being helped to conform with the Protocol’s informational requirements by the International Grains Trade Coalition, which was established for this purpose. The Coalition, from headquarters in Canada, guides shippers of genetically-modified grain into countries that have ratified the Protocol by suggesting documentation language. It has warned of the consequences of failing to comply on shipments that "may contain" living organisms into ratifying countries. It also has pointed out that additional regulations are likely from a conference next February in Malaysia.

While dealing with such documentation imposes a costly burden on export trade in grain, the Protocol also causes worry for how its eventual use may erect a barrier to trade in modified grain. That would be a terrible mistake in light of the huge promise of biotechnology. Limiting movement in this way could be just as disastrous as not lowering trade barriers addressed by ministers meeting in Cancun, Mexico. While it appears that disagreements between developing and developed nations over opening western markets to agricultural imports from the poor nations were not the central issue, replaced by arguments over investment and government procurement, close examination shows that farm trade, mainly in grain and cotton, provided the pivotal disagreement. The so-called Group of 21 developing nations walked out at Cancun because of the perceived failure of the U.S. and E.U. to make the concessions the smaller countries wanted on opening of markets, as well as an end to export subsidies.

It’s very likely that the Doha Round negotiating deadline of Jan. 1, 2005, will not now be met. Yet, few, including anti-trade activists, believe the Cancun collapse writes finis to theses talks. "We could have all gained here and now we have all lost," said Pascal Lamy, E.U. trade commissioner. Robert B. Zoellick, the U.S. negotiator, criticized the "harsh rhetoric" ruling in Mexico, but voiced optimism on resumption of negotiations, and an eventual successful outcome. In both the Cartagena Protocol and the Doha Round, the die was cast in September, setting a course that will have a profound impact on the grain industry’s future.