GMO, biodiesel situations looming heavy on trade relations
News Nov 24, 2009
United States trade relations with the EU remain strained in late 2009 with soybeans and biodiesel being at the center of the controversy. Unapproved genetically modified crops are causing EU processors to source beans from nontraditional channels, and low-level biodiesel blend imports are prompting protectionist statements from the European biodiesel industry.
FEDIOL, the organization that represents the European seed and bean crushers, as well as meals, oils and fats processors, stated in October that the EU’s zero tolerance policy toward unapproved genetically modified (GM) crops “increase their warnings over the severity of the problem of scarce soybean supplies in the EU after agriculture ministers meeting yesterday again failed to take responsibility for dealing effectively with the issue. Without a clear and effective response—urgently—the problem will get far worse.”
John Dodson, Tennessee soybean farmer and former president of the American Soybean Association, said that importers and exporters do not want to take the chance of a “boatload of beans” being stopped at a port and losing the money of the delivery contract.
Since minute traces of U.S. approved genetically modified maize not yet authorized in the EU were discovered in consignments from the U.S. in August 2009, which breeched the EU’s policy of zero tolerance, around 180,000 tons of U.S. soybeans have been denied entry to the EU, FEDIOL said. “Whatever precautions are taken, it is not possible to guarantee the absence of minute levels of foreign materials, other than by ceasing the trade altogether, a problem the EU’s own Joint Research Centre has also recently identified in its report on the GM pipeline.”
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Three of the four GM corn events have been approved and the EU is likely to approve the last before the end of the year, Dodson told Biodiesel Magazine. “For those having to source non-GM soybeans from South America this time of year, the cost is significant,” Dodson said. “South America is about out of soybeans and the cost is greater because the shipping distance [from South America to Europe] is farther especially when compared to New Orleans and other U.S. ports on the East Coast.”
Natalie Lecocq, director general for FEDIOL, said in November that EU buyers have paid a premium price for soybeans from Latin America. EU members crush 30 million tons of oilseeds every year and comprise the second largest world market for vegetable oils after China. “It’s exactly right that soybeans from Latin America get scarce this time of year,” Lecocq said. “We hope that the MIR-604 corn is approved by the end of the year but there is a lengthy approval process that must be followed according to EU rules, which cannot be circumvented.”
With the current lack of alternatives and still no immediate action from the European Commission to propose a technical solution in the form of a so-called “low-level presence (LLP) threshold” for food and feed, this situation will leave Europe’s farmers, livestock producers and agricultural trade, “as well as food and feed processing industries, in an extremely precarious position, keeping the global competitiveness of the EU agricultural sector at risk,” FEDIOL said. “The threat of layoffs in the trade and processing industries of already vulnerable livestock farmers going out of business, and of consumers being hit through knock-on effects on choice, availability and price all still remain.”
FEDIOL further urged EU Health Commissioner Androulla Vassiliou to come forward urgently with a proposed technical solution on zero tolerance for food and feed. “Without it, the situation could prove explosive for the whole food and feed chain,” FEDIOL said.
In other trade imbroglios, the European Biodiesel Board said it suspects U.S. competitors are exporting a new blend to Europe to avoid EU tariffs that stopped millions of dollars in international fuel commerce.
The EU, the world’s biggest biodiesel market, imposed tariffs in March and five-year measures in July to counter the U.S.’ $1-per-gallon blender credit, which it says allow American producers to sell biodiesel in Europe under production costs. Biopetrol AG, the producer based in Zug, Switzerland, and other interests of Europe’s biodiesel industry have been aggressive in their statements regarding imports, not only from the U.S. but also South America and palm methyl esters from Asia.
“We are worried about trade that may undermine the effect of the duties,” Amandine Lacourt, spokesperson for EBB, told Bloomberg in early November. “It’s a matter of survival for European producers to have these measures in place given the market distortions caused by the U.S.”
EBB has consistently lobbied to widen the “anti-dumping” legislation that currently covers blends of B20 and above. According to the Office of the U.S. Trade representative, 140,000 tons (42 million gallons) of U.S. biodiesel in the form of blends not covered by the duties have entered the EU since April. Despite the controversy, Netherland’s Port of Rotterdam, where almost all biodiesel imports enter the EU before they are distributed, reported in October that it is increasing its methyl ester handling capacity.