Thirteen associations representing a broad cross-section of the U.S. agricultural export value chain recently wrote President Obama requesting his attention to “Chinese agricultural biotechnology policy and its impact on U.S. crop exports to China.” President Obama will be in China November 10-11 for the 25th anniversary meeting of the Asia Pacific Economic Cooperation (APEC) Leaders’ Summit. The letter writers, all members of the U.S. Biotech Crop Alliance, want these issues to be a top priority, which is reasonable since in 2013 U.S. exports of soybeans and products and corn and products to China totaled $17.5 billion.
APEC is an organization of 21 countries bordering on the Pacific Ocean or in East Asia. Major countries include the U.S., Canada, Mexico, Japan, China, Korea and Australia. Most of the members of the Trans-Pacific Partnership are also members of APEC. It seeks to promote free trade and economic cooperation throughout the Asia-Pacific region. It holds a series of special interest meetings throughout the year organized by the host country (China this year) to establish common understanding on complex policy issues.
China President Xi Jinping should be an attentive listener on the subject of biotechnology. About three-fourths of the vegetable oil consumed by the citizens of China comes from whole soybeans imported from the U.S. and South America or imported vegetable oil. Most of the soybeans and vegetable oils are biotech. China’s expanded pork and chicken production are the result of the protein meal from those imported soybeans. China would not be mostly self-sufficient in food and feed grains without freeing land from oilseed production by importing oilseed produced through biotechnology. When China does need to import corn, the U.S. is the world’s largest exporter of corn. The U.S. also exports distillers dried grains with solubles (DDGS) which is a co-product of corn ethanol production.
Two of the issues the U.S. industry is most concerned about are regulatory issues that other importing countries have been able to solve. The first is asynchronous government regulatory approval of new crop biotech events. Most importers of biotech crops start the approval process at the same time as the exporting country. Since there are few or no unknowns about creating biotech events or the regulatory process, both exporting and importing countries regulatory processes are completed at roughly the same time. By the time the exporting countries are ready to ship product, the importing countries are prepared to accept the product. Japan and Korea are APEC countries that have synchronized their regulatory process with the U.S. process and other importers.
China does not start its regulatory process until the exporting country completes its process. That guarantees that China’s regulatory process is two to four years behind the rest of the world. Any slowdown in movement of the Chinese regulatory process simply exacerbates the problem.
This leads to the second problem of the low-level presence (LLP) of biotech events that have been approved in other countries, but not in China. China officially has a zero tolerance for the LLP of an event that has been approved in the exporting country and most of the major importing countries. The modern bulk grain transportation system cannot meet the zero tolerance. The problem this year with the MIR 162 event in Chinese corn, DDGS and soybean imports from the U.S. would have been much less of a problem if a commercially-meaningful standard for LLP of unapproved events had been a part of Chinese import regulations.
The National Grain and Feed Association, one of the authors of the letter, in April of this year estimated up to $2.9 billion in economic losses had been sustained by the U.S. corn, DDGS and soybean industries because of the enforcement of the zero-tolerance policy on MIR 162 corn technology. The event is yet to be approved by China for import as food or feed.
According to the APEC website, APEC has had a High Level Policy Dialogue on Agricultural Biotechnology since 2002 in recognition of the importance placed on member economies’ work on the safe introduction of biotechnology products, and on obtaining public acceptance of these products. The Dialogue sees agricultural biotechnology as a revolutionary tool that is transforming agriculture. It has the potential to spur economic growth, increase productivity, reduce hunger and malnutrition, and lessen the environmental impact. Policy makers use the Dialogue to develop regulatory frameworks, facilitate technology transfer, encourage investment and strengthen public confidence regarding biotechnology in order to increase agricultural productivity and protect the environment. Work on low-level presence (LLP) was approved as one of the main components of the 2010-2012 work.
What the U.S. is asking China to do is what the other leading countries in APEC have doing voluntarily for years. Synchronizing the Chinese government approval processes with those of North and South American exporters and other East Asian importer is in China’s best interest. It buys 65 percent of the soybeans that are traded in world markets and will need larger supplies in the years ahead. Most of those are biotech soybeans; China is the beneficiary of the new technology. Reuters recently reported disheartening news that “the country has also suspended the import approval process for a genetically modified soybean variety, citing “low public acceptance” of GMO food.”
Reports in recent weeks indicate the Chinese government is taking a page from the APEC playbook for biotechnology policy by gaining public acceptance of the technology. China’s government is using a media campaign in support of biotech crops in response to negative publicity over the technology. Four billion acres of biotech crops have been harvested and used in the 19 years of commercialization. It has gone from a new idea to a conventional practice. China has to catch up quickly.
According to Department of Commerce data, agriculture was second largest category of goods export to China in 2013 at $18.9 billion, 15.5 percent of all U.S. goods exports. Transportation equipment was number one at $22.6 billion. President Obama should give agriculture the attention it deserves.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade &Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter |Truth About Trade & Technology on Facebook.