Washington, DC
February, 2009
 USDA's
Role in the Export of Genetically Engineered Agricultural
Commodities
Source: Office of Inspector General, USDA
Report No: 50601-14-Te
Issued February 2009
Size: 1,938,230 bytes
http://www.usda.gov/oig/webdocs/50601-14-TE.pdf
Results in Brief
U.S. producers have adopted new
varieties of crops that have been genetically engineered (GE) to
possess traits that improve production, reduce costs, protect
the environment, and increase revenue. Over the last decade, GE
plantings in the United States have increased from 3.6 million
acres to 143 million acres. In 2007, American producers alone
accounted for 50 percent of GE plantings worldwide. Even as GE
varieties of common food crops such as corn and soybeans have
become increasingly important to the U.S. agricultural economy,
food commodities derived from GE plants face significant export
barriers in many markets, including the markets of major U.S.
trading partners such as the European Union (EU).
These trade barriers result from different regulatory approaches
to this new technology. Nations like those in the EU have argued
that governments should approach GE food commodities with
caution, treat them differently from non-GE food commodities,
and label these products so that consumers can distinguish
between them. For those who advocate this "precautionary
principle," governments should regulate GE food commodities,
even if there are no demonstrable grounds for concern.
The U.S. approach for regulating biotechnology products directs
that GE food products should continue to be regulated according
to their characteristics and unique features, not according to
their method of production. Thus, Animal and Plant Health
Inspection Service (APHIS) grants nonregulated status if the GE
organism poses no more of a plant pest risk than an equivalent
non-GE organism and the developer provides the information that
it believes is adequate to ensure that the product is safe and
complies with the relevant provisions of the Food, Drug, and
Cosmetic Act. Henceforth, that GE food product is subject to no
additional (or no different) regulatory processes.
In 2006, the United States, along with
Canada and Argentina, argued before the World Trade Organization
(WTO) 1 that the EU
had adopted a general moratorium on all new biotech products and
separate product-specific moratoria on each new biotech product.
The EU also did not implement its own regulations to allow for
review of biotech applications to take place. The WTO Panel
found that the EU had adopted a moratorium on the final approval
of biotech products and that the EU had presented no scientific
or regulatory justification for the moratorium. The WTO Panel
also identified "undue delays" regarding pending product
applications. Although the United States and the EU continue to
negotiate to remove trade barriers for these commodities, those
barriers are still in effect and still act to keep U.S. GE
agricultural commodities out of many EU markets.
Given these market conditions, the Office of Inspector General
(OIG) initiated this audit to assess the Department of
Agriculture‟s (USDA) role in promoting the export of GE
agricultural commodities. While producers and private companies
are the primary economic agents in a free market, they are at a
significant disadvantage when dealing with barriers that have
been imposed by foreign governments. The U.S. Government and
USDA have an important role to play in negotiating with other
nations to remove, resolve, or mitigate these barriers. USDA has
identified promoting the international competitiveness of
American agriculture as a strategic goal. USDA‟s 2006 Annual
Performance and Accountability Report stated that "[e]xpanding
global markets for agriculture products is critical for the
long-term economic health and prosperity of the domestic food
and agriculture sector." Congress also recognized the importance
of global trade in the 2002 Farm Bill and included provisions
specifically relating to agriculture biotechnology because of
its growing importance to trade. The 2002 Farm Bill required
USDA to develop a global marketing strategy and a biotechnology
and agricultural trade program designed to remove, resolve, or
mitigate barriers to the export of U.S. commodities. It also
required USDA to fund public education on the benefits of
agricultural biotechnology, as well as research into the effects
of biotechnology on the environment and how biotechnology can be
used in developing countries. The recently enacted 2008 Farm
Bill still required most of the 2002 Farm Bill provisions
dealing with biotechnology; however, it did repeal the
biotechnology and agricultural trade program and the program to
fund public education on the benefits of agricultural
biotechnology.
Numerous USDA
agencies, public and private groups, and committees appointed by
the Secretary of Agriculture have discussed the impact of
agriculture biotechnology on American agriculture, the
environment, and trade since at least 2000 (see exhibit B).
Outside USDA, the Office of Science and Technology Policy
(OSTP),2 the Congressional Research
Service (CRS),3 and the Government Accountability Office (GAO)4
published papers and reports identifying the challenges
producers face when planting and exporting GE crops. They also
identified the specific challenges USDA must address to assist
producers in expanding trade opportunities (see Findings 1 and
2).
Despite these discussions, USDA has not developed a coordinated,
comprehensive strategy for addressing the various challenges to
the trade in agricultural commodities, including GE commodities,
and there is limited evidence that USDA has made measurable
progress in fulfilling the various biotechnology goals of the
2002 Farm Bill. USDA‟s research and public information
accomplishments relating to exporting these commodities are
limited, and are not targeted towards any specific goal or trade
challenge. We could not determine the progress made in, or the
effectiveness of, USDA‟s biotechnology trade-related activities
because USDA has not developed performance measures tied to any
specific goal or objective.5
Departmental officials responsible for providing leadership and
direction on biotechnology-related activities within USDA
advised that they have not developed such a strategy because
they believe that USDA should not be involved in controlling the
market and, instead, should focus on facilitating the operation
of the market. Department officials have argued that private
entities are more responsive to market conditions, and that
responding to the market should be left to them. Other
representatives of industry and Government we interviewed
disagreed and stated that a USDA strategy for promoting the
export of GE agricultural commodities is essential. We agree
that such a strategy should not be geared to controlling the
market, but, as the Department states, to facilitate trade
opportunities.
We found that market conditions for U.S. agricultural
commodities have varied significantly over the past several
years. Although the U.S trade balance in agricultural goods was
declining from 1996 to 2006, the weakening of the dollar, poor
harvests due to adverse weather conditions and strong demand in
the world economy have combined to strengthen U.S. agricultural
exports. In 2007 agricultural exports increased to $82.2 billion
and USDA is currently forecasting agricultural exports totaling
$114 billion in 2008. Even some nations formerly reluctant to
import U.S. GE commodities have found the increased demand and
shortage of supply a strong incentive to do so. However, the
market for these commodities has proved to be especially
volatile, and is subject to sudden shifts in demand, such as
when types of GE rice and corn not intended for human
consumption were found in the food supply.
Developing a coordinated,
comprehensive strategy for promoting the export of U.S. GE crops
should prove beneficial to U.S. producers in such volatile
market. As a recent release from USDA‟s Economic Research
Service noted, U.S. producers have adopted GE crops
"notwithstanding uncertainty about consumer acceptance." Given
that uncertainty, the Department has a responsibility to assist
producers by designing a strategy serving not only to soften
downturns in the market, but also to help increase exports when
market conditions are more favorable. Additionally, this
strategy should help the Department focus proactively on opening
markets to these types of commodities, instead of dealing
reactively with individual trade disputes as they arise.
1) In May 2003 the United States,
Canada, and Argentina filed a WTO case against the EU over its
illegal moratorium on approving agricultural biotech products
and EU member states‟ unjustified bans of previously approved
products.
2) OSTP, "Food and Agricultural Biotechnology Initiatives:
Strengthening Science-Based Regulation," May 3, 2000.
3) CRS, "U.S. Agricultural Biotechnology in Global Markets: An
Introduction," June 19, 2003.
4) GAO-01-727, "International Trade: Concerns Over Biotechnology
Challenge U.S. Agricultural Exports," June 2001.
5) The Government Performance and Results Act of 1993 is a
results-oriented process that requires the development of a
strategic plan, as well as annual reporting, and that sets
specific measurable targets of performance and a data-based
assessment of success.
Full report:
http://www.usda.gov/oig/webdocs/50601-14-TE.pdf
(Report No: 50601-14-Te, Issued February 2009, Size: 1,938,230
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