Trade-related issues in the regulation of genetically modified organisms

This paper examines some of the trade-related aspects of the transatlantic conflict over agricultural biotechnology regulation. We first review the notion of 'regulatory protectionism' and the difficulties arising in its definition. We also discuss its economic rationale in the light of the strategic trade policy literature. Next, we turn to an empirical assessment of the trade effects of EU biotechnology regulations, verifying the evidence in support of US claims that those regulations have hurt US agricultural exports. Preliminary econometric results at a disaggregated level seem to indicate that there was no shock on US exports of corn seeds for planting in the years 1997-2000, but that there was a negative shock on other types of corn, suggesting that downstream traders and food retailers' private decisions not to purchase GM products were more important than cultivation bans in explaining any drop in US corn exports to the EU. Evidence for soybeans points to a price effect. The paper then turns to a comparison of GMO regulation in the US and EU, assessing the importance of trade vs. non-trade issues.