The North American free trade agreement USMCA is crunching: The USA is taking action against the Mexican import ban on genetically modified US corn. In the end there could be punitive tariffs. Is there a trade dispute?
Corn -Harvest in the United States (here in the state of Iowa)
The trade conflict between the USA and Mexico is coming to a head. The US government's Joe Biden said on Monday it would take the first steps to challenge Mexico's ban on imports of genetically modified corn from the United States. In concrete terms, this means technical consultations at government level.
The point of contention is Mexico's plan to gradually phase out the use of genetically modified maize and the herbicide glyphosate by 2024. The US government believes that Mexico's decreed restrictions, which apply only to corn intended for human consumption, are not based on scientific evidence.
It's a billion-dollar business in which many large transnational corporations are involved. Mexico imported nearly $6 billion worth of corn last year. The country is the second largest market after China for corn from the US, where mostly genetically modified corn is grown.
< p>Mexico points to 59 endemic corn varieties that could ensure the food supply for the population
Will there be punitive tariffs?
“Mexico's policies threaten to disrupt billions of dollars in agricultural trade and will nip in the bud the innovations needed to address the climate crisis and food security challenges,” United States Trade Representative Katherine Tai said in a statement. “We hope these consultations will be productive as we continue to work with Mexico to resolve these issues.”
The consultations are the first step in a process that could lead to the US filing a formal lawsuit against Mexico. The parties must meet within 30 days to discuss the matter. If no agreement is reached, the United States may seek separate dispute resolution under the USMCA (US, Mexico, Canada) North American Free Trade Agreement.
Should this procedure also fail, US tariffs on Mexican products would be conceivable. Five months ago, the White House called for consultations; back then to settle differences over Mexico's energy policy, which limits the participation of private companies. A solution is still not in sight.
Hard fronts
The US National Corn Growers Association described the impending import ban on GM corn as “catastrophic” for both US corn producers and Mexican consumers and as a violation of the principles of the free trade agreement. Genetically modified maize is safe for human consumption.
Mexico's President Andrés Manuel López Obrador, on the other hand, justified the ban on the use of genetically modified maize for human consumption primarily with health risks. There is “no individual, group-specific or economic interest,” he said.
The proposed solution is not enough for the USA
The Mexican government had tried to accommodate Washington. On February 13, she clarified a previous decree from the end of 2020 and relaxed the restrictions. The government said it would allow imports of genetically modified corn for animal feed and industrial uses, but not for human consumption. Since Mexico produces enough of the white corn used in tortillas and dough, the restrictions imposed “would have no effect on trade or imports”.
The new decree is also strictly limited to corn; so that other agricultural products such as rapeseed, soybeans or cotton are no longer covered by the regulation. The new decree is also intended to reduce the use of the herbicide glyphosate, the most commonly used plant toxin worldwide. It sets a transition period for the implementation of the planned measures until March 31, 2024.
The government wants the national dish, tortillas, to continue to be made from genetically modified corn
Satisfactory solution sought
Washington, but that's still going too far. About 90 percent of the corn grown in the United States is genetically engineered to be resistant to herbicides and insects. Glyphosate products are sprayed onto fields, killing weeds and leaving resistant plants unharmed.
In turn, supporters of the Mexican ban fear that importing GM corn would threaten native species as the varieties could cross-pollinate. Washington sees no scientific evidence for this and is now starting consultations.
Mexico's Ministry of Economic Affairs objects. “As the Ministry has repeatedly stated, the aim of the decree is to ensure that tortillas are made from native corn, thus ensuring the conservation of the biodiversity of the country's more than 64 varieties of corn, 59 of which are endemic,” it said in a statement on Monday.
“The Economy Ministry, together with the Federal Commission for Health Risk Protection (Cofepris) and other relevant agencies, will coordinate the Mexican state's position in order to reach a mutually satisfactory solution find.” It will rely on data and evidence to show that the ban has no impact on trade and is in line with the trade agreement.