By Cassandra Garrison
March 8 (Reuters) – The United States has requested formal consultations with Mexico under the USMCA free trade agreement over the Latin American country’s plans to restrict imports of GM corn.
The two North American countries will move closer to a full-fledged trade dispute under the USMCA treaty if they fail to reach a resolution during talks, which Mexico says will last a month.
WHAT DOES MEXICO’S DECREE ON TRANSGENIC CORN SAY?
Mexico issued a presidential decree on genetically modified (GM) corn in late 2020, saying it would ban GM grains from the Mexican diet and end the use of the herbicide glyphosate by January 31, 2024. The rhetoric of the decree questioned the Mexican demand. for maize imports.
President Andrés Manuel López Obrador said GM seeds can contaminate varieties native to Mexico and questioned their impact on human health.
The Mexican government changed the decree in February, under pressure from the United States – its main trading partner – so that it would not hamper US corn exports of nearly 17 million tonnes a year.
The new executive order removed the deadline for vetoing GM corn for animal feed and industrial use, which accounts for by far the largest portion of its U.S. corn purchases.
The new plan only bans GM corn used for pasta or tortillas, but leaves the door open to gradually replace GM corn for animal feed and industrial use in the future.
The transition period to phase out glyphosate has also been extended to March 31, 2024.
The country’s health regulator is now responsible for licensing the use of GM corn for animal feed or for industrial purposes for human consumption, he said.
WHAT IS THE UNITED STATES OPPOSING?
US officials have criticized Mexico’s plans for lacking scientific validation and warn that a restriction on its GM corn could lead to a full trade dispute under the USMCA.
Powerful U.S. agriculture industry lobbies have called on Washington to take action against Mexico, citing significant economic disruption for U.S. farmers even with the amended order.
Biotech industry groups representing companies such as Bayer AG and Corteva Inc. have also spoken out against Mexico’s order, saying biotech products are key to improving food security and mitigating the impact of climate change on agricultural production.
Some industry experts have said they fear Mexico’s restriction on GM corn, if successful, could set a precedent, prompting other countries to adopt a similar approach and disrupting global corn trade.
They argue that if biotechnology is restricted, production will fall and food prices will rise, at a time when the world’s population continues to grow.
HOW ARE US CORN EXPORTS AFFECTED?
U.S. corn exports to Mexico have been valued at around $5 billion, according to the United States Department of Agriculture (USDA).
Corn for human consumption represents about 21% of Mexican imports into the United States, according to a representative of the National Association of Corn Producers, citing data from the US Grain Council.
USDA data shows that over the past five years, 4% of all Mexican grain imports were white corn, which is primarily used for human consumption.
Most yellow corn is used to feed livestock, but about 16% of yellow corn exported to Mexico is eaten by humans rather than livestock, according to Grains Council data.
Industry experts still have doubts about the volume of U.S. corn exports that will be affected by the Mexican executive order, due to the way it is drafted.
WHAT ARE THE NEXT STEPS ?
The United States and Mexico will begin technical consultations and will have one month to reach a resolution, López Obrador said March 7.
If the two countries fail to agree, the matter will be referred to a dispute settlement panel under the USMCA, the president added.
A dispute resolution panel could ultimately lead to retaliatory US tariffs if a solution is not found.
The U.S. Trade Representative said his country exported $28 billion in agricultural products to Mexico in 2022 and bought about $43 billion worth of Mexican agricultural products.
(Reporting by Cassandra Garrison in Chicago. Additional reporting by Tom Polansek in Chicago and Leah Douglas in Washington. Editing in Spanish by Marion Giraldo)