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More on EU Ban of $450 Million in Annual Corn-Based Animal Feed Imports from US

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E.U. Votes Ban on U.S. Corn Gluten

By Raf Casert Associated Press Saturday, April 16, 2005

BRUSSELS, April 15 -- European Union nations voted Friday to ban U.S.
shipments of suspect corn gluten animal feed unless they are assured that
the imports are free of unauthorized genetically modified corn.

The vote could affect millions of dollars' worth of corn gluten exports. The
dispute centers on a batch of Bt10 genetically modified corn that Swiss
agrochemicals company Syngenta AG inadvertently sold in the United States
and exported to Europe without approval.

"This is a targeted measure which is necessary to uphold E.U. law, maintain
consumer confidence and ensure that the unauthorized GMO Bt10 cannot enter
the E.U. Imports of maize products which are certified as free of Bt10 will
be able to continue," said E.U. Health and Consumer Protection Commissioner
Markos Kyprianou.

The ban will effectively shut out all imports of U.S. corn gluten, since
there is currently no effective way of testing for Bt10, which has not been
approved by U.S. or European regulators. E.U. spokesman Philip Tod said
Syngenta was working to develop and validate such a test, but they could not
say when it would be ready for use.

Michael Mack, chief operating officer of Syngenta Seeds, said it would
quickly have a workable test for the E.U.

"We will make operational within a matter of days a valid test method to
detect for Bt10," Mack said. Such a test would still need further approval
from E.U. authorities. It was not immediately clear how long such approval
would take.

U.S. shipments of corn gluten feed to the E.U. totaled 347 million euros
($450 million) last year.

The United States said the ban was exaggerated.

"We view the E.U.'s decision to impose a certification requirement on U.S.
corn gluten due to the possible, low-level presence of Bt10 corn to be an
overreaction," said Edward Kemp, spokesman for the U.S. mission to the E.U.

"U.S. regulatory authorities have determined there are no hazards to health,
safety or the environment related to Bt10," Kemp said. "There is no reason
to expect any negative impact from the small amounts of Bt10 corn that may
have entered the E.U."

The ban is to come into force early next week, pending approval by the
E.U.'s head office.

Environmental campaigners welcomed the move. "Europe now has a de facto ban
on the import of many U.S. animal feeds," said Friends of the Earth
spokesman Adrian Bebb.

However, Greenpeace said stricter controls are needed to prevent more cases
of unauthorized biotech imports.

"Europe is currently helpless to defend itself from contamination by GMOs
that are suspected to harm human health and the environment," said Christoph
Then, genetic engineering expert for the group.

"As long as E.U. authorities have no means to test imports for all the GMOs
being released in the U.S. and elsewhere, it must say 'no entry' to the E.U.
for any food, feed or seeds that are at risk of contamination," he said.

The E.U. said it is in continuous contact with U.S. authorities on the
issue, but its decision to ban suspect corn gluten imports further strains
trans-Atlantic trade relations.

Syngenta said last week it has reached a settlement with the U.S. government
over the inadvertent sale to farmers of Bt10.

The company said in a written statement that under the settlement reached
with U.S. authorities, it would pay a fine of $375,000 and teach its
employees the importance of complying with all rules.

However, the E.U. has been annoyed that U.S. authorities allowed the export
of Bt10 to Europe after it was mixed up with an authorized biotech Syngenta
maize labeled Bt11.

About 1,000 tons of animal feed containing the corn are thought to have
entered the E.U. since 2001. The E.U.'s head office earlier had said some
food products, including flour and oil may also have been imported, but its
statement Friday said that, "according to current information from the U.S.
authorities and the European food industry, food products in the E.U. are
not affected."

Nevertheless, the case has underscored European concerns about biotech
foods, coming shortly after the E.U. relaxed restrictions on genetically
modified organisms.

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Stalking Genetically Modified Corn

By Wolfgang Reuter

SPIEGEL ONLINE April 18, 2005, 03:11 PM

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, United States 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 German parliament, 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 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 source 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, April 15, the
European 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 it is not certified in either
the US or Europe. The fear is that if humans consume animals that 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, led by 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 (see interview
below).

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, including 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
as well as enormous damage to the reputation of US corn. A similar accident
with Starlink brand genetic corn 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

The efforts of the Economics Ministry to reach a compromise on corn imports
fell apart last Thursday. The specialists 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 office of German Chancellor
Gerhard Schroeder, 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 Economics 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 ?1
billion for the Airbus A350 aircraft. They have threatened proceedings
before the World Trade Organization.

* The US has already initiated proceedings against the rigid rules of the
EU concerning genetically modified food. Their complaint is currently 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
Davos in February, said this of Germany's price limits on medicine: "You
give preference to 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
Chinese equipped with European weapons. In the worst case scenario, 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."

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