Discussion Paper
No. 0144
Scientific Revolution Meets Policy and the
Market:
Explaining Cross-National Differences in
Agricultural Biotechnology Regulation
Thomas Bernauer and Erika Meins
November 2001
Adelaide University
Adelaide 5005 Australia
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CIES DISCUSSION PAPER 0144
Scientific Revolution Meets Policy and the Market:
Explaining Cross-National Differences in Agricultural
Biotechnology Regulation
Thomas Bernauer and Erika Meins
Centre for International Economic Studies and
School of Economics
University of Adelaide
[email protected]
November 2001
Scientific Revolution Meets Policy and the Market:
Explaining Cross-National Differences in Agricultural
Biotechnology Regulation
Abstract
The development and marketing of agricultural biotechnology applications has
led to controversies over whether and how to regulate this new technology. In
response, the European Union has imposed severe restrictions on agricultural
biotechnology, particularly in terms of approval and labeling of genetically
modified organisms (GMOs) in food. In stark contrast, the United States
maintains a far more permissive approval policy and does not require labeling.
This article explains these differences in terms of the collective action capacity
of consumer and producer interests, as well as the institutional environment in
which regulation takes place. We find that the regulatory outcome in the EU can
be traced back to NGOs' increased collective action capacity, an institutional
environment favorable to NGO interests, and rifts in the producer coalition due
to differences in industrial structure and consumer and NGO opposition. U.S.
biotechnology politics is dominated by a strong and cohesive coalition of probiotech agricultural and up- and downstream producers. Low public concern and
high trust in regulatory authorities have made mobilization of NGOs in the U.S.
difficult and have resulted largely in their exclusion from the policy process.
Thomas Bernauer* and Erika Meins**
Swiss Federal Institute of Technology (ETH)
Center for International Studies
ETH-Zentrum - SEI
CH-8092 Zurich, Switzerland
Tel: +41-1-632-6774
Fax: +41-1-632-1946
[email protected]
[email protected]
http://www.ib.ethz.ch
* Thomas Bernauer is a Professor of International Relations at the Swiss Federal Institute of
Technology (ETH). **Erika Meins is a research associate at ETH’s Center for International
Studies and a doctoral candidate at the University of Zurich.
Introduction
The biotechnology policies of OECD countries are very similar in many ways.
Most countries promote their domestic biotech industry, for example through
government-funded research and subsidies or tax breaks for start-ups.
Regulation of the biotech sector is risk-based – it targets what scientific riskassessments identify as the highest risks to humans and the environment. And
patents or other forms of property rights protection secure most biotech
inventions.
These similarities notwithstanding, European countries and the United States
have reacted very differently to the increasing use of biotechnology in
agriculture. European countries have imposed severe restrictions on this new
technology, particularly in terms of approval and labeling of genetically
modified organisms (GMOs). The United States maintains a far more permissive
approval policy and does not require labeling of GM-foods. In this article, we
explain these differences in GMO approval and food labeling regulations
primarily in terms of variation in the collective action capacity of environmental
and consumer as well as producer interest groups. Moreover, we consider a twofold effect of institutions on regulatory outcomes.
Controversy over agricultural biotechnology
Since the mid-1990s, crops, foods, and food ingredients developed through
recombinant DNA technologies1 (commonly referred to as GM-seeds, GMcrops, or GM-foods2) have entered the markets of the United States and several
other industrialized countries on a massive scale. This has led to controversies
over whether and how to regulate this new technology.
Many consumer and environmental groups have voiced strong concerns over the
immediate and long-term effects of GMOs on human health. They have
highlighted environmental risks, such as the reduction of biological diversity,
out-crossing of superbugs, gene leakage, and agricultural sustainability of GMcrops. They have, moreover, raised broader social, ethical, religious, and
economic issues associated with biotechnology (Pauker 1999). Most European
consumer groups have opposed agricultural biotechnology ever since (in 1996)
GMOs entered their market. As a minimum, they have requested extensive
1
Fagan defines recombinant DNA techniques as involving „the isolation and subsequent introduction of discrete
DNA segments containing the gene(s) of interest into recipient (host) organisms. The DNA segments can come
from any organism (plants, animals, or microbes).” The application of this technique is commonly referred to as
genetic engineering and the products as genetically engineered or genetically modified products. See Fagan
1995.
2
The term genetically modified food is defined in this chapter as “foods and food ingredients which contain or
consist of genetically modified material or which are produced from, but do not contain, genetically modified
material” (Bredahl 1998: 252).
labeling of GM-products, appealing to consumer sovereignty and the right to
chose. U.S. environmental and consumer groups have, on average, become more
critical of GMOs only since the late 1990s.
Among the strongest proponents of agricultural biotechnology have been
agbiotech firms and export-oriented farmers in the United States. Their
economic stakes are substantial (EuropaBio 1999a). Worldwide, transgenic
crops increased from 1.7 million hectares in 1996 to 44.2 million hectares in
2000. In 2000, only four countries grew 99 percent of these crops: the United
States (30.3m hectares), Argentina (10m hectares), Canada (3m hectares), and
China (0.5m hectares).3 Agbiotech firms have invested heavily in research and
development of transgenic crops and have been determined to expand their 2.5
billion USD p.a. seed market for GM-soybeans, corn, cotton, and canola to cash
in on these investments (RAFI 2000, Kalaitzandonakes 1999, ISAAA 2001).
Empirical and theoretical puzzles
In addition to the obvious variation in regulatory outcomes, the comparison of
GMO regulations in the EU and the United States raises more intricate empirical
and theoretical puzzles.
Particularly in the 1960s and 1970s, U.S. environmental, health, and safety
regulations were extensively justified with the precautionary principle and were
(and still are) very restrictive. Examples include regulations on mercury, lead,
asbestos, or cyclamates. In Europe, in contrast, such risks were, at that time,
only regulated in a fairly liberal fashion. In regard to GMOs, we observe the
opposite tendency: stringent European regulations for agricultural biotechnology
and much more permissive U.S. regulations. Resembling the previous domestic
political debates in the United States over environmental, health, and safety
regulations, the EU’s regulatory politics in this area since the mid 1980s has
been highly politicized and marked by substantial distrust of scientists,
government, and industry (Vogel 2001).
The United States has, on average, adopted the strictest food labeling regulations
in the world. Not so in regard to GMOs. This absence of mandatory labeling is
prima facie surprising. The EU has, on average and compared to the United
States, adopted less stringent food labeling legislation, but has enacted much
stricter labeling standards for GM-foods. How can we account for these
seemingly contradictory patterns of regulatory policy?
The most popular political economy explanation of regulation holds that
concentrated interests dominate over diffused interests, and that regulatory
outcomes thus reflect the preferences of concentrated interests (Stigler 1971;
3
The remaining one percent was grown in Australia, Mexico, South Africa, Romania, Ukraine, Spain, Germany,
and France. Soybeans (58%), corn (12%), cotton (12%), and canola (7%, all 2000 figures) account for almost
100 percent of global GM-crop planting. The area sown to GM-seeds appears to have reached a plateau in
1999/2000, with weaker growth expected for the next few years. 73 percent of these crops were modified for
herbicide tolerance, 22 percent for insect resistance, and 5 percent for both. In 2000, 34 percent of soybeans
planted globally were genetically modified, 16 percent of cotton, 11 percent of canola, and 7 percent of corn.
Baron 2000). Because the world's agrochemical and agbiotech sectors are highly
concentrated4, we would expect permissive GMO policies - in accordance with
industry's preferences. The U.S. case - liberal approval regulations and absence
of mandatory labeling - seems to fit the model. Yet in the EU, the concentrated
and financially powerful agbiotech sector has been overwhelmed by a very
heterogeneous anti-GMO coalition. This development is particularly striking
because national and supranational regulators in Europe are widely assumed to
maintain close ties with the industries they regulate (Lemaux 1998). How can
the EU deviation from the outcome predicted by the conventional model be
explained?
The following part of the article outlines the theoretical argument that guides the
comparison of GMO regulations in the EU and the United States. We then
present the results of case studies on GMO regulations in the two political units.
In each case study we first describe regulatory outcomes. We then explain these
outcomes by focusing on the collective action capacity of consumer and
environmental as well as different types of producers groups. Finally, we
compare the results of the two case studies.
The analysis shows that the regulatory outcome in the EU can be traced back to
NGOs' increased collective action capacity, an institutional environment
favorable to NGO interests, and rifts in the producer coalition due to differences
in industrial structure and consumer and NGO opposition. U.S. biotechnology
politics is dominated by a strong and cohesive coalition of pro-biotech
agricultural and up- and downstream producers. Low public concern and high
trust in regulatory authorities have made mobilization of NGOs in the U.S.
difficult and have resulted largely in their exclusion from the policy process.
Theory
The conventional political economy explanation of regulation holds that
producer interests tend to dominate over consumer interests, and that regulations
more often than not reflect the preferences of producers (Baron 2000, Stigler
1971). Whenever consumers benefit from regulation (or the absence of
regulation, or deregulation), these benefits are usually coincidental (Richards
1999; Gormley 1986).
4
Only three firms account for almost 50 percent of the global agrochemical market (Syngenta, Aventis,
Monsanto). GM-seeds, which in 2000 made up around 10 percent of the world’s commercial seed market, are
produced almost exclusively by these firms. In 2000, four of the seven largest agrochemical firms in the world
were from Europe (Syngenta, 22% world market share; Aventis, 13%; BASF, 11%; Bayer, 7%), and three from
the United States (Pharmacia, 13%; DuPont, 8%; Dow, 7%). The total market share of the four European firms
was much larger than the total market share of U.S. firms. Concentration is even more pronounced in the
agbiotech market: in 1999, Monsanto’s seed traits accounted for 85 percent of the total world area covered with
GM-crops. See www.rafi.org.
Our analysis of cross-national variation in GMO regulations focuses on
explaining deviations from the regulatory outcome predicted by the
conventional model. Such deviation is most pronounced in the European Union.
In contrast, regulatory outcomes in the United States reflect the preferences of
producers (permissive approval practices, no mandatory labeling). To explain
deviations from the conventional model, we concentrate on the collective action
capacity of environmental/consumer and of producer interest groups. We also
explicitly take account of institutional factors. The explanation thus consists of
three elements:
Collective action capacity of environmental and consumer groups. Due to their
large and heterogeneous membership such groups are, in the conventional
model, assumed to face debilitating collective action problems. They find it
harder than producers to mobilize support for their activities and financial
resources, both of which are necessary to effectively exert political pressure
(notably, lobbying of regulators) and market pressure (notably, consumer
boycotts). We argue that, due to negative consumer perceptions of GMOs,
regulatory failures in other food issues, and institutional properties of the
regulatory process, the collective action capacity of European environmental and
consumer groups opposed to GMOs has been higher than the capacity of their
U.S. counterparts. As a result, European anti-GMO groups have been more
successful in influencing GMO regulations.
Collective action capacity of producers. We show that the collective action
capacity of pro-GMO producers has varied substantially between the EU and the
United States. We distinguish between upstream producers (agbiotech firms),
farmers, and downstream producers (wholesalers, retailers, food processors) to
show that differences in industrial structure, the degree of their access to
relevant institutions and the extent of NGO opposition to GMOs account for
variation in the collective action capacity of pro-GMO producers.
Institutions. When explaining regulatory outcomes in terms of interest group
politics, institutional structures and the interests of regulators have to be taken
into account. Regulatory agencies frequently have preferences of their own, as
well as some room of maneuver within which they can pursue their preferred
policies (March and Olsen 1996). Consequently, the distribution of authority
among regulatory agencies in regard to a specific issue may have an impact on
regulatory outcomes. Moreover, institutional structures may vary in the extent to
which they provide access to particular interest groups (Hall and Taylor 1996,
Caduff 2001). They may offer privileged access to some interest groups at the
expense of others, thus affecting political influence and ultimately regulatory
outcomes (Kitschelt 1986).
This explanatory framework contributes to theorizing on comparative
biotechnology policy in four ways. First, it goes beyond the most popular
explanation, which views regulatory differences as a direct result of variation in
public attitudes (Chen and McDermott 1998). Second, it departs from
explanations that concentrate on “unique” factors, such as political culture and
regulatory style (Vogel 2001, Vogel 1996, Jasanoff 1995, Echols 1998). Third, it
focuses on the analysis of causal hypotheses rather than the description of policy
networks (see e.g. Moore 2000a). Fourth, it provides an explanation for
empirical deviations from the conventional economic theory of regulation (see,
e.g., Baron 2000, Stigler 1971).
Environmental and Consumer Group Influence
The starting point of a theoretical answer to why regulatory outcomes may
deviate from the outcome predicted by Stigler’s (1971) producer dominance
argument can be derived from Olson’s ‘Logic of Collective Action’ (Olson
1965).5 Olson hypothesized that large (latent) groups are difficult to mobilize.
He claimed that such groups could only be mobilized through selective
incentives of an economic or social type.
We pick up at this point and assume that environmental and consumer interest
groups are aware of their collective action problem and thus focus largely on
issues that allow for maximum mobilization of membership and financial
resources. Issues that provoke public outrage are top candidates. Public outrage
is the fear or anger a risk induces in a relatively large part of a country’s
population. Its extent depends in part on specific characteristics of a given risk.
Public outrage is stronger the more the risk in question is perceived to be
involuntary, uncontrollable, or invisible, has a delayed or catastrophic effect, is
memorable, very uncertain, poorly understood, unfamiliar, unfairly distributed,
and a technological hazard (Groth 1994, Wohl 1998). Public outrage over risks
with these properties tends to be even stronger in cases where less risky
alternatives exist. Contextual factors like distrust of government agencies
regulating the risk determine the extent of public outrage as well.
Public outrage increases environmental/consumer groups’ capacity to influence
the regulatory process through politics and the market. The underlying logic is
the following. Consumer and environmental organizations are pressure groups
that offer a public good, i.e. consumer or environmental protection. Public
choice theory tells us that the production of public goods is plagued by a freerider problem: anyone can benefit from a public good promoted by a pressure
group without joining or in other ways actively supporting the group. In
addition, consumer or environmental groups involve large numbers of people,
5
Many authors have exposed the empirical flaws and theoretical deficiencies in Stigler’s (1971) producer
dominance argument (e.g. Meier 1988, Gormley 1986). In the absence of a parsimonious alternative, most
economists still subscribe to this model. See Baron 1995, Baron 2000). Political scientists have mostly rejected
Stigler’s model and have offered more complex, more descriptive, and less generalizable models (e.g.Gormley
1986, Héritier 1993).
which increases the free-rider problem and the heterogeneity of preferences.
Free-riding and heterogeneity of preferences reduce the organizational ability of
interest groups. Focusing on issues with a high public outrage potential enables
environmental/consumer groups to activate existing members, receive attention
by the media, attract more members, mobilize non-members (latent supporters
of a cause), and raise more funds (Frey and Kirchgässner 1994, Marwell and
Oliver 1993). It thus redistributes political influence from industry to
environmental and consumer groups. Once environmental/consumer groups
have overcome their collective action problem, their liability of large numbers
turns into an asset: by virtue of their large membership, they can exert
substantial political influence on vote-maximizing politicians and budget- or
political support-maximizing regulators since consumers are also voters.
The second effect of public outrage operates through the market. If public
outrage is strong enough to significantly raise environmental or consumer
groups’ collective action capacity they can take more effective action against
producers. They can, for example, boycott specific products, firms, or even
entire industries, and launch public campaigns aiming at tarnishing the image of
firms, industries, and products (Friedman 1991). Through such action,
environmental/consumer groups can bring about changes in producers’
preferences and behavior in the market place, with evident implications for
regulatory processes. Through these two effects public outrage can contribute to
regulatory outcomes that reflect consumer/environmental instead of industry
preferences.
Public outrage does not only vary across issues, but also across countries and
over time. The case studies below show that variation in public outrage across
the EU and the United States accounts in part for variation in the collective
action capacity of the respective environmental/consumer groups and their
influence on the regulatory process.
Producer Influence
The conventional political economy model of regulation holds that stricter
environmental or consumer protection standards will be enacted if producers can
benefit economically from the according regulation. Stricter regulation can yield
several types of benefits to producers.
First, protectionist rents. Environmental or consumer protection will tend
towards greater stringency particularly in areas where regulation can be
designed to shield import-competing domestic firms from foreign competition.
The assumption here is that producer demands for import-restricting regulation
are likely to attract more political support if justified in terms of protecting
public health, rather than in terms of protecting domestic firms. The latter is
more difficult to justify because it transfers wealth from domestic consumers to
domestic producers.6
Second, domestic economic rents. Similar to the argument on protectionist rents,
this argument assumes that firms’ interests are shaped by industrial structure and
that firms seek to improve their competitive position through regulation.
However, it differs from the above argument in several ways. In contrast to the
classical regulatory capture argument (Stigler 1971, Baron 2000), it does not
assume that there is a single industry with homogeneous interests within a given
country. Individual firms or groups of firms within a specific industry may
lobby for stricter or laxer, and for harmonized or particularistic regulations,
depending on industrial structure and competitive position. For example, some
large firms may lobby for stricter environmental or consumer regulations that
would be too costly for smaller firms to implement, while smaller firms within
the same industry and the same country oppose them (Foster 2001).
Situations in which firms lobby for more stringent environmental or consumer
regulations that have the “side-effect” of limiting market access by foreign or
other domestic producers can, in some cases, coincide with similar demands by
environmental or consumer groups. Such “strange bedfellow” coalitions tend to
drive environmental and consumer protection standards up. When explaining
regulatory outcomes in terms of producer interests we also need to take into
account different producer interests within the same issue area and the same
country.
Third, as proposed in the previous subsection, public outrage and associated
campaigns by environmental and consumer groups can influence interests on the
producer side very directly. Depending again on industrial structure and
competitive position, individual firms or groups of firms within a given industry
may decide to give in to such pressure and support or tolerate stricter
environmental or consumer regulations, or they may not. Some producers in a
given industry may be more sensitive to consumer pressure than other
producers, for example, because they have a valuable brand to protect.
GMO Policy of the European Union
6
Several authors have proposed a further differentiation of this argument by distinguishing between regulations
focusing on the quality of products and regulations focusing on production processes. They claim that product
regulations are easier to instrumentalize for protectionist purposes than process regulations. Consequently,
product regulations, on average, tend to be more stringent than process regulations and also vary more across
countries. In many empirical cases, including GMOs, a straightforward distinction of product and process
regulations is difficult. But the underlying argument of protectionist interests can be employed in a broader
fashion. See Murphy 1995, Scharpf 1998:92-98.
In this case study we first describe regulatory outcomes in the European Union.
We then explain the emergence of strict approval and labeling regulations in
terms of the collective action capacity of consumer and producer interests.
Regulations
At the outset of the regulatory process in the mid-1980s, authorities in the EU
and the United States were divided over whether to restrict or promote
biotechnology in agriculture, and over whether to regulate genetically modified
organisms (GMOs) predominantly in terms of products or production
processes.7 Regulating products implies that there is nothing inherently unique
in employing genetic modification techniques in agriculture, and that the
resulting products are essentially the same as products obtained through
conventional agricultural methods. Regulating production processes, on the
other hand, implies that genetic modification poses unique risks and must, as
such, be regulated. The latter approach has prevailed in the EU: the EU has
adopted a variety of regulations specifically for GMOs, emphasizing the
precautionary principle. As shown in the second case study, the United States
has embraced the product-oriented approach.
In 1990, the European Council adopted Directive 90/220 on the deliberate
release of genetically modified organisms into the environment.8 While this
directive was primarily designed to address environmental aspects of
biotechnology9, it was, until the Novel Foods Regulation was adopted in 1997
(see below), interpreted broadly to apply also to the approval of GM-food
products (Chen and McDermott 1998). Complicated decision-making
procedures10 implied, however, that imports of GM-seeds, field trials,
commercial planting of GM-crops11, and commercialization of GM food and
feed products were, de facto, subject to approval by each EU member state.12
7
The early years of biotech regulation in the EU are well described in Patterson 2000; and Cantley 1995.
Other EU legislation relevant to GMOs has, for example, focused on worker health and safety protection
(90/679 and 93/88), and the contained use of GMOs for commercial and research purposes. All EU legislation on
GMOs is available at www.europa.eu.int/eur-lex
9
Whereas part B of directive 90/220 regulates the release of such organisms into the environment for purposes
of research and development, part C covers the approval of GMOs or products containing GMOs for
commercialization in the EU.
10
According to directive 90/220, producers or importers of a GM-product first have to notify the national
authority of the EU country concerned and provide technical documentation and a full risk assessment. If the
national authority approves the GM-product, the request moves to the EU level, where the other 14 member
states are consulted. If there are no objections, the GM-product is approved for sale in the EU. If there is
opposition, the issue is dealt with by the EU’s Scientific Committee, the Commission, and the EU’s Regulatory
Committee. If there is still no agreement, the issue is decided by the Council of Ministers with qualified
majority.
11
GM-crops can be listed in a EU catalogue of common varieties that are approved for EU-wide planting. No
GM-crops have so far been listed in that catalogue.
12
www.transgen.de.
8
The limitations of the 1990 directive became apparent when the Competent
Authorities of the EU13 approved a British firm’s GM-canola (1995), a variety of
Bt-corn produced by Novartis (1996), and Monsanto’s Roundup Ready
soybeans (1996). Disputes among EU member countries over the conditions for
approval led to delays in the approval process, and to uneven implementation of
EU decisions. In particular, some EU countries imposed unilateral restrictions or
bans on GM-products that had been approved by the EU.
Since April 1998, there has been a de facto moratorium on new approvals.14
Only the United Kingdom, the Netherlands, and the EU Commission have
opposed a formal moratorium, all other member states have supported the
moratorium.15 Facing disarray in the approval process and the fact that several
GM-products had, by 1997, already been approved by the EU for
commercialization the European Union engaged in further efforts to harmonize
approval and labeling requirements for GMOs.
In 1997 the European Parliament and the Council adopted Regulation 258/97,
the Novel Foods Regulation, which also covers GM-foods. It installs approval
procedures in which importers or producers have to show that the food in
question is not detrimental to human health. Although the regulation does
require labeling if a genetic modification can be detected, virtually all enzymes,
vitamines, flavorings and other food additives were exempt from the regulation
(Jany and Greiner 1998, Gately 1997).
Regulation 258/97 as such was largely inoperable. It did not contain specifics on
implementation and it was left to individual member states to define thresholds,
testing methods, products subject to testing, and the content of labels. The
regulation did not apply to granted or pending approvals (Behrens et al. 1997).
Bt-corn and Roundup Ready soybeans, which had been approved by the EU in
1996, were thus not covered by 258/97. As noted before, the latter regulation
also excluded enzymes, vitamins, flavorings, and other food additives (e.g.
lecithin produced from GM soy). These gaps motivated some EU countries to
introduce their own labeling regulations, a development which risked inhibiting
the free flow of goods in the Community (Chege 1998).
To stop this trend, the Commission and the Council issued several additional
regulations. Regulations 1813/97 and 1139/98 require the labeling of food
products containing already approved GM-soybeans and GM-corn, but did not
close the other gaps (Robert-Koch-Institut 1999, Jany and Greiner 1998). In
January 2000, the Commission defined a standard (49/2000) by which labeling
is required if the product is at least 1 percent genetically modified. For such
products, the label „genetically modified“ is mandatory. Regulation 50/2000
13
Competent Authorities are defined as government officials in EU member countries who are responsible for
implementing EU regulations and representing their countries in EU negotiations and approval processes.
14
By April 1998, 16 GMOs had been approved by the EU, another 11 applications were pending, including four
that had been approved by EU scientific committees but were rejected by member states.
15
www.transgen.de.
extends the labeling requirement to food ingredients containing GM-additives
and flavorings if GMOs can be detected. Thus, a comprehensive labeling
scheme has been constructed in recent years.
In February 2001, the EU Council and the European Parliament reached a
compromise on revisions to Directive 220/90. These revisions include timelimits on approval (maximum 10 years), explicit procedures and schedules for
each stage of the approval process, public registers detailing the locations of
GMOs released for trial or commercialization, stricter guidelines for risk
assessment, the gradual elimination of antibiotic resistance markers in GMOs,
and calls for new and stricter legislation on traceability, liability, and labeling.
These regulatory reforms, a large part of which are still at the stage of proposals
and plans, are to cover the entire production chain of all foods and feeds
produced with biotechnology, even if no GMOs are detectable in the final
product.
In July 2001, the Commission proposed a new law specifically for GM-food and
feed. The draft proposal includes significantly more restrictive requirements for
the approval of GM-food and for labeling. The draft proposes extensive safety
assessments for all products without the application of the principle of
substantial equivalence. It also foresees the extension of labeling to all products
produced by biotechnology even if not traceable in the end product.16
In summary, the European Union has moved from a situation of no regulation of
agricultural biotechnology in the mid-1980s to very stringent regulations on the
approval of GM-crops and GM-foods, and to increasingly stringent and
harmonized labeling requirements. As a result, very few GM-crops and GMfoods have been approved for commercialization, the number of field trials has
remained low, and virtually no GM-crops are commercially grown in the EU.
Moreover, there are extremely few labeled GM-products on the European
market.
Explanation
While some analysts had already in the early- to mid-1990s warned of growing
opposition to agricultural biotechnology (Frewer 1997), no one anticipated the
coming upheaval that would virtually shut down the EU’s market for GM-crops
and GM-foods. Ex post, the strong trend towards stricter GMO regulations in the
EU can be explained in terms of an increasingly broad and influential anti-GMO
coalition. This coalition includes environmental and consumer groups, some
farmers, many downstream producers, and important parts of the EU’s
regulatory institutions.
16
www.transgen.de.
Environmental and consumer interests
The theoretical argument holds that environmental/consumer groups under
certain circumstances exert influence through the market in a way that affects
consumption behavior and thus ultimately also producers, e.g. by launching
campaigns or organizing boycotts against specific producers or industries. Their
influence can also operate through the political process in terms of lobbying of
policy-makers and voter support for specific policy-makers and their policies.
The latter is discussed in this subsection. Market pressure is examined in the
subsection on producers.
Greenpeace and Friends of the Earth Europe (FOE), the largest environmental
interest groups in Europe, have made GMOs one of their top priorities since the
end of the 1980s and have ever since invested heavily in campaigns. The same
applies to the European Bureau of Consumers’ Unions (BEUC), a Brusselsbased federation of independent national consumer organizations from all EU
and other European countries. While BEUC has lobbied mainly for stricter
labeling of GM-foods, Greenpeace and FOE have taken stronger anti-GMO
positions. All three groups, as well as many other environmental/consumer
groups in Europe17 have persistently and sharply exposed and criticized
inadequacies in the EU’s GMO regulations and their implementation (BEUC
1999; Egdell and Thomson 1999).
Benefiting from latent public skepticism about technological innovation in
agriculture, various food scandals particularly in the 1990s, and low public trust
in regulatory agencies, NGOs were able to provoke a public outcry over the
EU’s authorization of Roundup Ready soybeans in May 1996 and Bt-corn in
December 1996. This outcry over the imminent placing of GM-food on shelves
in supermarkets helped NGOs to mobilize their membership and the wider
public against GMOs and to launch major anti-GMO campaigns against
producers. Thus, the 1996 authorizations acted as a trigger for NGOs anti-GMO
campaigns. Comparisons of survey data across time show that consumer
acceptance of biotechnology in the EU was lower than in the United States even
before 1996 (Hoban 1997), and declined substantially in the second half of the
1990s (Eurobarometer 2000). Attitudes appear to be driven by moral
considerations, fears about unforeseen health and environmental risks, and the
perception of GM-products as „unnatural“ (Eurobarometer 2000). Most
European consumers view the GMO issue in health and safety terms rather than
in terms of progress in science and technology, and general views on GM-foods
are predominantly negative.
Though NGOs were not at the negotiating table when GMO regulations were
designed and adopted, one can spot their influence at several key points in the
17
See Young 1997, for a more generic analysis of consumer and environmental groups at the EU level.
regulatory process. In the second half of the 1980s, the EU’s Directorate General
for Environment, Consumer Protection, and Nuclear Safety (DG XI) emerged as
the leading agency for the regulation of GMOs. DG XI, whose „constituency“
includes environmental/consumer NGOs, was mainly responsible for
establishing the process-orientation of the EU’s GMO policy, which is reflected
in Directive 90/220. DG XI’s role as „chef de file“ for that directive opened an
important door for environmental/consumer NGO influence on the EU’s
regulatory policy, not least because most regulatory activity is initiated by the
Commission.18 The leading role of DG XI and the influence of NGOs were in
large measure responsible for moving the EU’s GMO policy from a system of
monitored self-regulation towards process-oriented regulations grounded in the
precautionary principle and following the model of Danish and German policies
(Patterson 2000).
The opportunities for environmental/consumer groups to influence the EU’s
regulatory policy increased further when the 1986 Single European Act, the
1993 Maastricht treaty, and the 1997 Amsterdam Agreement strengthened the
European Parliament (EP). The EP, eager to ascertain de facto its formally
expanding authority, has been particularly open to NGO influence (Biliouri
1999, Barling 1995, Young 1997). Motivated in large part by NGO lobbying,
the EP has repeatedly and successfully challenged proposals by the European
Commission and the Council of Ministers that would have led to a relaxation of
approval and labeling regulations (see Barling 1995: 469, Patterson 2000,
Behrens, Meyer-Stumborg, and Simonis 1997, Jany and Greiner 1998).
Similarly, the NGO-led public outcry over the Commission’s approval of GMsoy and GM-corn in 1996 and its initial decision not to require labeling of these
products strengthened the position of DG XI within the Commission. Strong
opposition by environmental/consumer groups combined with resistance on the
part of downstream producers (see below) enabled DG XI to make a more
stringent technical adaptation to Directive 90/220 in June 1997. This adaptation
required mandatory labeling for all "live" GMOs (e.g. cereals) but does not
apply to products that may contain GMOs or GMO derivatives.
NGO campaigns have influenced the regulatory process also in more indirect
but important ways by contributing to a „ratcheting up“ effect. In 1986-1998, for
example, they motivated some EU countries to introduce mandatory labeling for
GM-soy and GM-corn in the absence of EU-wide legislation.19 They have also
contributed to preventing the marketing of EU approved GMOs in several EU
countries.20 Such differences in regulatory responses by individual EU countries
18
The Novel Foods Regulation, for example, was discussed in an „Expert Working Group“ (member states
only), the Foodstuff Advisory Committee (agricultural interests – COPA, retailers – EuroCommerce, producers –
CIAA, consumers – BEUC, and trade interests), and the Consumer Consultative Committee (Behrens, MeyerStumborg, and Simonis 1997).
19
For example, Denmark required full disclosure of any GMO ingredient, whereas the United Kingdom did not
require labeling of substantially equivalent foods.
20
For example, Austria, Italy, and Luxembourg invoked the safeguard clause in 90/220 to ban the import of Bt
corn into their countries. In another case, the French government first prohibited the cultivation of Bt-corn,
have been perceived by the Commission and other EU bodies as constraints on
the free movement of goods in the EU’s internal market. Like in other EU policy
areas, EU-wide harmonization of regulations has been the obvious response to
this problem. Member countries with more stringent regulations have, not least
because of strong NGO and general domestic consumer opposition, not been
willing to relax their policies. Even in cases where such regulations are
incompatible with EU-legislation, the Commission has been very reluctant to
challenge them, for example through the European Court of Justice. The only
feasible solution has thus been harmonization at levels of stringency supported
by more GMO-adverse countries.
Producers
Persistently negative public perceptions of GMOs and concerted anti-GMO
campaigns by NGOs have created a rift in the coalition of up- and downstream
producers and farmers. Some farm interest groups and downstream producers
started supporting more stringent GMO regulations while agbiotech firms
maintained their opposition until the late 1990s. Towards the end of the 1990s
upstream producers too gave up their resistance and began to accept mandatory
labeling.
Upstream Producers. Concerned about growing cross-national differences in
regulation, the agrochemical, pharmaceutical, and food industries in the EU
argued already in the mid-1980s that there was a need for EU-wide regulation of
biotechnology (Patterson 2000: 329). Surprisingly though, such statements were,
in the early phases of the policy process, not accompanied by more concrete
initiatives.
Greenwood/Ronit and Patterson provide the following explanations (Greenwood
and Ronit 1995). First, European firms were accustomed to organizing along
product but not production process lines. Thus they did initially not regard
themselves as biotech firms with a common interest. Second, the large number
of medium or small firms that had only recently entered the biotech field,
combined with substantial economic competition among these firms, made
collective action difficult. Third, the industry was concerned that organizing
along process lines would invite regulators even more to install process-oriented
regulations (horizontal regulations in the EU’s terminology). Finally, the
industry overestimated the influence of DG III, DG VI, and DG XII, which
opposed process-oriented (horizontal) regulation of GMOs and had previously
succeeded in excluding a wide range of products from drafts of Directive
220/90. Only in June 1989, when agbiotech firms finally realized that the tide
was moving against them, did they create a Senior Advisory Group for
although it had been approved by the EU. In 1998, it approved the planting of Bt corn, but under opposition from
Greenpeace and other NGOs reversed its decision.
Biotechnology (SAGB).21 Moreover, upstream producers expected GMO
regulations to promote biotechnology as originally intended by the Commission.
Directive 90/220, however, has put the EU on a trajectory where GMOregulations have in effect installed floor standards for environmental and
consumer protection.
The above explanation focusing on the timing of the industry’s political
organization accounts rather well for why upstream producers were not able to
prevent Directive 90/220. It does not explain, however, why upstream producers
have not been able to reverse the regulatory trajectory initiated in 1990.
Although the subsequent regulatory developments can in part be explained by
the path dependency of the EU's regulatory system, this explanation is too vague
to account for why over and over again regulations were adopted that were
contrary to the industry's interest. The theoretical argument outlined above
provides the missing link.
Market concentration in the agbiotech sector is rather high in Europe. There are
only a small number of large firms and these have concentrated on medical
rather than agricultural applications (Assouline 1996, Chen and McDermott
1998). The conventional economic theory of regulation suggests that this
concentration should bolster European upstream producers’ collective action
capacity and translate into successful lobbying for less restrictive GMO
regulations. However, the evidence disconfirms this proposition.
Activists from Greenpeace and FOE, as well as many smaller groups, have
engaged in a large number of media-effective anti-GMO activities, for example
uprooting of GM-crop fields, attempts to prevent the unloading of ships carrying
U.S. GM-crops, and campaigns against leading agbiotech firms.22 Persistently
negative public perceptions of GMOs and campaigns by NGOs have neutralized
virtually every attempt by European biotech firms and EuropaBio, the European
Association of Bioindustries, to lobby for a relaxation of approval regulations
and to prevent the introduction of mandatory labeling (Jasanoff 1999).
NGO campaigns against large agbiotech firms have been particularly effective
in inflicting reputation costs on upstream producers. These campaigns have
turned large agbiotech firms into a highly visible target onto which the wider
public has been able to project GMO-related fears, but also more diffuse fears
about globalization, technological innovation, and U.S. dominance over Europe.
With slogans such as “Monsanto is trying to force-feed Frankensteinfood to
Europeans”, activist groups have portrayed GMOs as a risk imposed on
Europeans by American firms. The United States has inadvertently helped such
campaigns by trying to pressure the EU into lifting its ban on growth hormones
used in beef production (Caduff 2001). Similar to the growth hormones case,
21
Smaller biotech firms coordinated their efforts through the European Secretariat of National Bio-Industry
Associations (ESNB). In September 1996, SAGB and ESNBA merged.
22
See, e.g., www.greenpeace.org, www.foe.org; The Economist 1999, February 20:75-77, 1999, June 19:15-16.
U.S. pressure on the EU to relax its restrictions on GMOs has been widely
perceived in Europe as an effort to impose, for commercial reasons and against
the will of Europe’s consumers, a new and risky agricultural technology. Social
science research on risk suggests that people are more willing to accept risks
imposed by nature, but are likely to be more upset when forced to take manmade risks (Harlander 1991, Covello et al. 1991).
Monsanto, Novartis, Rhone-Poulenc, AgrEvo/Aventis, Zeneca, and other
agbiotech firms have found it extremely difficult to defend against this
onslaught.23 Most European biotech firms as well as EuropaBio eventually
changed their position and have reluctantly supported mandatory labeling.24
Permissive approval regulations and no mandatory labeling would have been
their preferred outcome. But in view of strong consumer concerns over GMOs,
stern opposition by NGOs, and increasingly heterogeneous regulatory responses
by individual EU countries, stricter and harmonized labeling regulations
appeared to be the only way of protecting agbiotech interests.
Agricultural Producers. Assuming large economies of scale in GM-crop
farming, which would give U.S. farms a comparative advantage vis-à-vis on
average smaller European farms, some analysts predicted fierce opposition by
EU farm interests to the introduction of GMOs (Chen and McDermott 1998,
Lynch and Vogel 2000). From this assumption, they have jumped to the
conclusion that EU restrictions on GMOs are the result of an „unholy alliance“
between protectionist farm interests and environmental/consumer groups. The
evidence does not support this argument.
Farm interest groups in the EU, most notably the European Farmers’
Coordination, have until the late 1990s repeatedly expressed concerns about
GM-crops, but have not actively lobbied regulators to impose restrictions. The
absence of substantial opposition by key European farm interest groups was
largely due to the fact that there was no direct economic competition between
imported GM-crops and European farm produce.
Imports of soybeans and corn from the United States have, since the mid-1990s,
declined, in large part due to regulatory restrictions. However, imports of these
crops from other non-EU countries as well as total EU imports of soybeans and,
to a lesser extent, also corn have increased at the same time (ACGA 2000,
Feedstuffs 1999).25 The EU is largely self-sufficient in corn, whereas EU
production of soybeans amounts to less than 10 percent of domestic
23
Monsanto, for example, invested more than two million U.S.D in a campaign in the United Kingdom and
France, only to find out that negative opinions about GMO increased from 44 to 51% in that time-period
(Financial Times 1997, October 23: 3; Wall Street Journal 1999, May 11: A1, A10; New York Times 2001,
January 25 and Business Week, June 12, 2000 for analyses of the Monsanto case).
24
EuropaBio, for example, stated that it “[...] supports the right of the consumer to choose food products with or
without GM (genetically modified) ingredients. Consumer choice must be supported by appropriate transparent
legislation, i.e. clear guidelines and criteria for labelling” (EuropaBio 1999b).
25
For example, between 1996 and 1999, the EU’s soybean imports rose from 14.3 million MT to 16.6 million
MT. In that same time-period, the EU’s corn imports rose from 9.6 million MT to 11 million MT (Dann 2000).
consumption. Because most of the corn and soy consumed in the EU is used for
animal feed, premiums for imported non-GM-soy and, to a much lesser extent,
corn may even have imposed costs on EU farmers. In other words, the EU’s
GMO-regulations have, de facto, not improved the competitive position of EU
farmers vis-a-vis their U.S. counterparts.
More active support by EU farm interest groups since the late 1990s for more
restrictive GMO regulations stems primarily from general concerns about
disturbances in European food markets. These problems have resulted from the
BSE and other food safety crises (Egdell and Thomson 1999, Cummins 1998),
but also from more general problems associated with food surpluses and
massive restructuring and concentration processes in European agriculture. In
this context, support for stringent GMO-regulations, and in some cases even
explicit support by farmers for anti-GMO campaigns by NGOs, must been
viewed as part of an overall effort to reduce consumer concerns and stabilize
markets by means of stricter food safety regulations across the board (Vos
2000). Anti-GMO views among EU farmers have also been fueled by
Monsanto’s strategy of market entry – notably its purchase of seed companies
and the introduction of the “terminator” gene – and the imposition of trade
measures by the U.S. against EU agricultural products in the trade conflict over
growth hormones.
Increasingly negative views on GMOs among farmers in the EU have been
reinforced by cases in several EU countries where fields were accidentally
planted with GMO-contaminated crops.26 NGOs and farmers have accused
governments of being incapable of ascertaining that imported seeds are GMOfree. More generally, and similar to the BSE crisis, these cases have reinforced
the view among consumers and also farmers that governments have lost control
in food safety matters. In most of these cases, GMO-contaminated crops were
destroyed and farmers were compensated by the respective government, an
implicit acknowledgement of their problems in controlling seed imports.
Although opposition to GMOs by EU farmers has so far clearly not been
motivated by protectionist rent-seeking, it seems likely that this motivation will
arise once other GM-products with more direct competitive effects on EU
farmers enter the world market on a larger scale (e.g. wheat, rice, fruit, fish,
meat). European farmers thus seem to be set on a trajectory towards greater
opposition to GMOs. If in future the competitiveness issue dominates over the
issue of consumer confidence, stricter labeling regulations will not solve the
problem for EU farmers. In that case, farmers will lobby more strongly for an
outright ban on GM-crops and GM-foods.
26
In May 2000, for example, it became public that 4'700 hectares of canola from GM-contaminated seeds
imported from Canada had been planted in the United Kingdom. See Financial Times 2000, May 29: 6; ENDS
Environment Daily 2000, May 29; New York Times 2000, May 19.
Downstream Producers. Food processors, wholesalers, and retailers in the EU
initially tried to resist demands for mandatory labeling. Since 1996, however,
they have adjusted swiftly to the demands of environmental/consumer groups.27
While most downstream producers have, in principle, not opposed GMproducts, they have given in to market pressure and have accepted demands for
segregation, tracing, and labeling.
The first to adjust were large food processors worried about their valuable
brands. In 1997, Nestlé, a Swiss company that was initially opposed to GM-food
labeling, began to label its GM-products in Europe voluntarily (European Report
1997, Food Labeling News 1998a).28 Unilever, a company based in the
Netherlands and the United Kingdom, that used around 7.5 percent of all
soybeans imported into the EU, did the same in 1998 (Food Labeling News
1998a). At that point in time, Nestlé was the world’s largest food processor,
Unilever the third largest (RAFI Communique 1998). Both firms justified
labeling with consumers’ right to know but emphasized that GM-foods did not
pose any health risks. Many other food processors have followed these examples
since.
Similar to what we observed for upstream producers, changes in the positions of
food processors have also been prompted by concerns over increasing
differences in the regulatory policies of individual EU countries. These
differences threatened to reduce the advantages of large food processors in terms
of their economies of scale. Concerns of this nature have also been expressed by
the Confederation of Food and Drink Industries (CIAA), the most important
association of the food and drink industry in the EU (Egdell and Thomson 1999:
124).29 Food processors have thus come to prefer stricter but uniform labeling
and approval regulations over permissive regulations.
The downstream industry’s strategy of differentiating products along GMO/nonGMO lines and stopping the anti-GMO trend half way by accepting labeling has
largely failed. Even before official labeling regulations were adopted
downstream producers started labeling a variety of GM-foods. Market analysts
note that these labels did apparently not deter consumers. However, NGOs then
singled out labeled products, such as Nestlé’s „butterfinger“, for massive public
campaigns. In response, retailers and wholesalers withdrew these products and
producers upstream reduced or halted their production of these foods. Pressure
on downstream producers has grown further due to the increasing amount of
testing for undeclared GMOs by NGOs and public authorities that has gone hand
in hand with increasingly precise and decreasingly costly testing methods
(Millstone 2000). In the end, downstream producers’ support for labeling
27
See, e.g. the statements by the European Confederation of the Food and Drink Industries (CIAA) at
www.ciaa.be. The policies of food manufacturers and retailers are compiled at www.greenpeace.org.
28
Nestlé stated that “although in our opinion there is no justification for such labelling in terms of either health
or scientific concerns, we recognize consumers’ desire for such information and therefore, although we are not
legally required to do so, we will indicate whether a product contains genetically-engineered ingredients.”
29
www.ciaa.be; www.transgen.de.
produced a „Catch-22“ situation: if they labeled a GM-product, they were
attacked by NGOs and were forced to withdraw the product; if they did not label
a GM-product, they risked NGO campaigns plus legal action for violation of EU
or national regulations. Thus, under fierce pressure from NGOs labeled GMfoods have gradually disappeared from the market.30
Conclusion
Until the mid-1980s, the biotechnology policy of the European Union was very
similar to that of other OECD countries. Contrary to the U.S., however, the EU
has adopted and implemented a series of increasingly stringent approval and
labeling regulations since 1990. As a result, very few GMOs have been
approved by the EU for marketing as food or feed, virtually none for
commercial planting, and the number of labeled GM-food products on the
market has approached zero.
The theoretical framework outlined above helps in accounting for this trend.
Benefiting from growing consumer concerns over agricultural biotechnology,
food safety problems in the EU, and low public trust in regulatory authorities,
European environmental/consumer groups were able to effectively mobilize
their supporters and the wider public. They were thus able to launch powerful
campaigns against upstream and downstream producers. These campaigns have
also transformed the GMO issue into one of „high saliency“ and (in the eyes of
the wider public) „low complexity“ – which usually produces „hearing room“
patterns of policy-making (Gormley 1986). This hearing room pattern,
combined with the multi-level nature of EU policy-making, has opened the door
for NGO influence. NGOs have thus been able to influence directly not only the
behavior of producers (market pressure), but also regulatory decision-making,
predominantly via the European Parliament and the Commission’s DG XI.
Public concerns over GM-foods in combination with NGO campaigns have
divided producers, thus reducing their collective action capacity in ways not
anticipated by conventional economic theories of regulation. Large upstream
producers, such as Monsanto and Novartis, became prime targets of NGO action
and were never able to put up effective resistance.
Farmers, concerned primarily about major disturbances in European food
markets, have increasingly turned against GMOs. Their opposition is likely to
grow further if GM-products with direct effects on their competitive position
appear on the EU’s market. Because labeling can not solve their competitiveness
30
Since 2000, many large food processors, wholesalers, and retailers in the EU have moved even further against
GMOs by restricting their meat supply to animals raised on non-GMO feed. Even McDonalds UK and major
retailers in the United Kingdom, so far the EU country with the most GMO friendly policy, have changed sides,
making it ever more likely that European markets are definitively turning against GMOs (Organic Newsline
2001, February 1).
problem, European farmers are likely to become increasingly strong advocates
of a general ban on GMOs.
Downstream producers embraced labeling due to public risk aversion and
increasing NGO pressure. This change in the producer coalition exposed GMfoods to even more pressure by NGOs and forced downstream producers to
desert the market for labeled GM-foods. The resulting cost implications for
downstream producers vary across GM-products. While substitutes for GM-corn
have been easy to find, premiums for non-GM soy have risen because very few
countries supply the world market for soy. Most of these countries are major
producers of GM-soy. Nonetheless, given their low collective action capacity
due to their large number and very diverse interests, strong NGO opposition and
public risk aversion, downstream producers are unlikely to reverse their position
and try and re-establish a market for GM-foods.
The combination of low public acceptance of GM-foods, NGO pressure,
growing opposition against GMOs among farmers, strong incentives of
downstream producers to withdraw from the market for labeled GM-foods, and
institutional inertia in EU policy-making make a reversal of the regulatory trend
against GMOs in the European Union very unlikely. On the contrary, mandatory
labeling is a solution for those consumer concerns that center on information
asymmetry, but not a solution for consumer concerns centered on risk shielding.
Moreover, compulsory labeling does not solve problems of agricultural excess
capacity and inferior competitiveness of European farmers on a global scale.
Mandatory labeling may thus be only an intermediary step on the way to
complete closure of the EU’s market to GMOs.
GMO Policy of the United States
Regulations
In the early to mid-1980s different parts of the U.S. government, in particular
EPA, USDA, and FDA, struggled for regulatory authority in biotechnology
policy. Similar to Europe, they were divided over whether to restrict or promote
this new technology, and whether to adopt a product- or process-oriented
approach to regulation. The White House Office of Science and Technology
Policy (OSTP), USDA, and FDA preferred the promotion of biotechnology and
a product-approach, whereas EPA advocated the development of new risk
assessment procedures for GMOs and process-based regulation (Jasanoff 1995).
In 1984, responding to increasing criticism, notably by industry, of lacking
coordination in biotech policy, the Executive Office of the U.S. President
created a Cabinet Council Working Group with representatives from fifteen
agencies. By taking this step, the Reagan administration prevented a takeover of
regulatory authority by the EPA31, more active involvement of the U.S.
Congress, and more public scrutiny of the regulatory process in general (Holla
1995).
In 1986, this working group issued a Coordinated Framework for the Regulation
of Biotechnology. The Coordinated Framework firmly established the productorientation of U.S. biotech policy and denied the necessity of new legislation
specifically for GMOs. It locked in the prevailing assumption that commercial
biotechnology should not be viewed as posing special risks for human health
and the environment. It assigned the primary responsibility for regulation to
EPA, USDA, and FDA, and established principles for coordination and
cooperation among these authorities (Jasanoff 1995: 314).
Transportation, growing (including field testing), and propagation of GM-crops
are governed by the Animal and Plant Health Inspection Service (APHIS) of the
USDA under the Federal Plant Pest Act. If a GM-plant is not intended for
human consumption and is not modified to contain a pesticide the USDA is the
leading agency. Pest-resistant GM-crops on the other hand fall under the
authority of the EPA under the Federal Insecticide, Fungicide and Rodenticide
Act and the Toxic Substances Control Act. They are subject to a rather strict
testing regime, where producers must submit testing data to the EPA. The FDA
has regulatory authority for GM-foods, food additives, processing aids, and
biotech medical products. It also has primary responsibility for labeling.32 Of the
three agencies FDA has had the greatest influence on U.S. biotech policy
because most biotech products on the U.S. market have been health care or food
products (Chen and McDermott 1998, Moore 2000a). The FDA’s approval
procedure is based on consultations with producers and includes the submission
of (not officially published) summaries of tests.
Both the USDA and the FDA have, throughout the 1990s, relaxed their GMO
approval policies. In 1993, the APHIS introduced a notification (instead of
permit) procedure for six transgenic crops (corn, soybean, cotton, tomato,
potato, and tobacco).33 In 1997, it extended this notification policy to the
majority of GM-crop varieties grown and used in the United States and greatly
simplified notification procedures for imports, release into the environment, and
transportation of GMOs.34 It has, moreover, removed an increasing number of
GM-plants from its oversight. In 1994, in accordance with its 1992
31
In 1984, the EPA had proposed to regulate biotechnology under the Federal Insecticide, Fungicide and
Rodenticide Act and the Toxic Substances Control Act.
32
With the exception of meat and poultry products (governed by the USDA).
33
These crops were chosen because they had undergone the most extensive field-testing, and because none of
these crops had wild relatives in the United States.
34
As a result of this relaxation of approval practices the number of field releases increased from 8 in 1987 to
1105 in 1998 (Lemaux 1998).
interpretation of the Federal Food, Drug, and Cosmetic Act35, FDA installed a
simplified approval procedure for GM-foods, starting with Calgene’s FLAVR
SAVRTM tomato.36 Under this procedure, applications for approval of GM-foods
do not have to undergo a comprehensive scientific review since GM-foods are
considered to be „generally recognized as safe“ (GRAS) (FDA 1994). In
essence, this system allows biotech firms to decide on their own whether a GMproduct is safe. The FDA is only consulted.
This strong product-orientation is also reflected in U.S. policy on labeling. GMfoods are subject to the same labeling requirements that are applied by the FDA
to all foods on the U.S. market (Caswell 1998: 23-24). Labeling is only
mandatory if a particular GM-food is no longer substantially equivalent to the
corresponding conventional food in terms of composition, nutrition, or safety.37
In 1992, the FDA ruled that if any of the most common allergens (milk, eggs,
wheat, fish, crustacea, tree nuts and legumes, especially peanuts and soybeans)
are added to food via biotechnology, the producer must either provide scientific
evidence that the allergen is not present in the new food or label the product.
Such products are subject to additional safety testing. The label does not have to
indicate that the food was produced with biotechnology. It must only state that a
potential allergen has been added to the food (FDA 1994). The vast majority of
GM-foods on the U.S. market thus do not require labeling.
The EPA has favored a more process-oriented approach to GMO regulation than
the FDA and the USDA (Jasanoff 1995: 316-317). In late 1994, it proposed a set
of regulations for GM-plants designed to resist pests, treating such plants as if
they were pesticides. Due to opposition from other parts of the U.S. government,
industry, and scientists, the proposed rules were not adopted (Lemaux 1998). In
1999, more intense public debate and NGO involvement in GMO issues was
triggered by a research report suggesting that a particular variety of Bt-corn
caused harm not only to pests (notably the corn borer), but also Monarch
35
Federal Register, May 29, 1992. In its 1992 policy statement, i.e. its interpretation of the U.S. Federal Food,
Drug, and Cosmetic Act in regard to foods derived from new plant varieties, FDA stated that it would require
GM-foods to meet the same rigorous standards as all other foods. It also announced that it would treat substances
intentionally added to food through genetic engineering as food additives if they were significantly different in
structure, function, or amount from substances currently in the food. (FDA 1994) The FDA thus ignored a 1991
proposal by the Environmental Defense Fund (now Environmental Defense) to apply the Food Additives
Amendment to the Food, Drug, and Cosmetic Act to all biotech foods. Thus, technically, the FDA does not
consider new genes and their protein products to be food additives. If regulated as food additives, such products
would fall under section 409 of the Food, Drug and Cosmetic Act, which would force the FDA to use pre-market
approval processes. In that case, producers would bear the responsibility (and costs) of evaluating the new
products’ safety (Krimsky and Wrubel 1996).
36
The FLAVR SAVRTM tomato is designed to remain on the vine longer before being picked (it softens slower).
In 1994, Calgene, the producer of the tomato, engaged in consultations with the FDA’s Center for Food Safety
and Applied Nutrition (CFSAN). Based on an evaluation of the data provided by Calgene, FDA determined that
the tomato had not been significantly altered compared to other varieties of tomato. It was thus declared as safe
as any other commonly consumed tomato. (Krimsky and Wrubel 1996; Martineau 2001:24-29)
37
For example: Higher than normal levels of lycopene, which can lower the risk of cancer or heart disease,
would imply a change in composition. Higher levels of vitamin C would imply a change in nutritional value. The
presence of a protein from peanuts in GM-food might imply the presence of a peanut allergen, and thus a change
in safety.
butterfly larvae.38 In response, the EPA has reexamined whether to subject
certain GM-crops to pesticide regulations. In January 2000, it asked farmers
using Bt-corn to plant buffer zones with conventional corn to protect the
Monarch butterfly.39 However, continuing opposition has thus far prevented the
establishment of process-oriented GMO regulations beyond such ad hoc
measures.
In parallel to increased public attention to the environmental consequences of
GMOs a more intense public debate on labeling of GM-foods has developed.
Opinion polls suggest that around 80 to 90 percent of U.S. respondents favor
mandatory labeling of GM-foods (Bonior 1999, Center for Science in the Public
Interest 1998, NCBE 1999). Although recent surveys affirm this result they also
found that the majority does not feel strongly about labeling. Since 1999 several
political initiatives have been launched to introduce mandatory labeling.40
Moreover, NGOs have initiated a variety of lawsuits41 to bolster requests for
mandatory labeling.
The FDA has, so far, remained largely immune to this pressure. In January
2001, it reaffirmed its product-oriented approach and submitted two proposals
intended to strengthen its regulatory oversight.42 First, it proposed to make
hitherto voluntary consultation between GMO-producers and the FDA in the
approval process mandatory (Chen and McDermott 1998: 532).43 This new
measure would not, however, substantially change the FDA’s permissive
approval policy: all GM-foods or feeds marketed in the United States have
already gone through the voluntary consultation program installed in 1994.44
Second, the FDA proposed guidelines for voluntary labeling of GM-/non-GM
foods, similar to the policy currently applied to organic and kosher foods.45
38
Nature 1999, May.
New York Times 2000, January 17.
40
Two bills on labeling of GM-foods, and two bills on safety testing were introduced in the U.S. Senate and the
House in 1999 and 2000.
41
A compilation of past and ongoing legal action on GMO issues is maintained by the Center for Food Safety
(www.centerforfoodsafety.org). Most lawsuits have been launched against the FDA, EPA, and individual biotech
companies. So far, the FDA’s policy on GMOs has been fully protected by the courts (see, e.g.,
www.centerforfoodsafety.org, October 3, 2000; New York Times, October 4, 2000).
42
In November and December 1999, the FDA held public hearings on whether or not GMOs should be defined
as food additives, which would require mandatory labeling, and on whether or not more stringent testing
procedures should be required to ensure consumer safety. (FDA 2000; Neegaard 1999) An influential study by
the National Academy of Science, published in May 2000, supported in principle the FDA’s product-focus.
However, it proposed three additional measures: long-term studies on risks posed by the consumption of GMfoods containing substances other than those already on the market; the adoption of the EPA’s 1994 proposal for
regulations on pest resistant GM-plants; regulation of GM-crops designed to resist viruses. The January 2001
FDA proposal reflects the proposals of the NAS rather than the results of the FDA’s public hearings.
43
If formally adopted, food or feed developers will have to notify the FDA at least 120 days before a GM-food
or animal feed is marketed. They will also have to provide information demonstrating that the product is as safe
as its conventional counterpart. This measure would transform the existing voluntary consultation procedure into
a mandatory and more transparent one.
44
GM foods on the U.S. market are tracked, for example, by the Union of Concerned Scientists
(www.ucsusa.org).
45
www.fda.gov.
39
In summary, U.S. regulatory policy on GMOs has focused almost exclusively on
products. It has operated within pre-existing legislation and generally assumes
that genetic engineering per se does not pose a particular risk that requires
specific regulation of this production method. Approval of new GM-crops and
GM-foods by the USDA and the FDA respectively has been relatively swift and
uncomplicated. The EPA has, on several occasions, proposed process-oriented
regulations for pest-resistant GM-crops, but these proposals have not been
adopted. The majority of U.S. consumers favor mandatory labeling of GMfoods, though consumer preferences in this regard appear to be rather weak.
NGOs have taken legal action in pursuit of this cause, and two bills on labeling
have been introduced in Congress. So far, the FDA has not given in to these
demands. It has maintained its permissive approval and no-labeling policy.
Explanation
In this section we account for the lax GMO approval regulations and the absence
of mandatory labeling of GM-foods in the United States in terms of the
theoretical argument outlined above. Permissive regulations have been installed
and sustained in the United States under the influence of a broad and cohesive
pro-GMO coalition. This coalition comprises the large majority of upstream and
downstream producers as well as farmers. Anti-GMO lobbying on the part of
environmental and consumer groups has remained rather weak.
Environmental and Consumer Groups
Only since the late 1990s have U.S. environmental/consumer groups lobbied on
a larger scale for mandatory labeling of GM-foods and stricter environmental
and health risk assessment in the approval process (Moore 2000b).46 This timelag, compared to the EU, is surprising, notably because it is hard to explain in
terms of lesser openness of the U.S. regulatory system. The U.S. approval
process provides several public intervention points47 and allows for just as much
access by NGOs as the approval process in the EU.
In comparison to Europe, the proportion of U.S. NGOs not fundamentally
opposed to GMOs is much larger. Consumers Union, for example, the largest
U.S. consumer interest group, has advocated mandatory labeling but has not
questioned the safety of agricultural biotechnology as such (Moore 2000a,
Moore 2000b). The same holds for the Environmental Defense Fund (EDF) and
46
Turning points are marked by the cloning of a sheep in 1997 and the discovery in 1999 that Bt-corn may not
kill not only pests but also the Monarch Butterfly (Nature 1999, May). The latter quickly became a symbol for
the environmental risks associated with GM-crops.
47
These include the Biosafety Committee review according to U.S. National Institutes of Health Guidelines;
USDA determination of non-regulatory status (permission to grow, test, and use for traditional crop breeding
without further U.S.DA action); EPA experimental use permit approval; EPA determination of food tolerance or
exemption from tolerance; EPA product registration; FDA review process. (See www.consumeralert.org:
Regulation of Agricultural Biotechnology in the United States: How the Process Works)
the Union of Concerned Scientists (UCS), both of which are among the few
NGOs active in biotech issues already since the mid-1980s (Moore 2000b). The
Center for Science in the Public Interest, another important U.S. consumer
NGO, has been largely supportive of GMOs.48 In contrast to Europe, most NGO
activity on GMOs in the United States has consisted of lobbying of policymakers on the basis of scientific arguments, and lawsuits against regulatory
agencies and individual biotech firms. Fundamental opposition to GMOs has
remained in the realm of smaller and more radical NGOs.49 Compared to
Europe, more „hands-on“ NGO activity, such as demonstrations or destruction
of GM-crops, has remained relatively rare. As discussed in the European case
study, U.S. consumers view GM-foods more favorably than European
consumers.50 Public support for all applications of biotechnology has remained
at rather high levels over time.51
Nonetheless, as reported above, a majority of U.S. consumers appear to support
mandatory labeling and NGO activity concerning the labeling issue has
increased. Both developments combined have, in the late 1990s, begun to
influence regulatory policy and the behavior of producers. We discuss the
former at this point and examine the latter in the subsection on producers.
Biotech policy in the United States has, until very recently, been shaped almost
entirely by the scientific community, industry, and the three U.S. government
agencies responsible for regulation (USDA, FDA, EPA) (Moore 2000b). NGOs
have, for example, not been substantially involved in the development of the
FDA’s approval and labeling policy for GMOs. While NGOs began to lobby for
mandatory labeling and stricter environmental risk assessment already in the late
1990s, NGO activity has been boosted by the StarLink problem, which emerged
in September 2000.
Because StarLink corn contains a protein (Cry9C) that may cause allergic
reactions it had been approved by the EPA only for animal feed, but not for
48
www.cspi.org.
E.g. Jeremy Rifkin from the Foundation on Economic Trends.
50
Only three percent of respondents mentioned biotechnology or GM-foods when asked what food safety issues
they were most concerned about. No one mentioned biotechnology or GM-foods when asked what, over the past
few months, they had been avoiding or eating less of. Only five percent stated that, during the past few months,
they had done something or taken any action because of concerns over GM-foods. (GMA 2000).
51
General consumer acceptance of plant biotechnology has remained approximately constant and high compared
to Europe: survey results from 1992, 1994, and 1998 show constant support from 70 percent of surveyed
Americans (Hoban 1998: 4). Survey results reported in Priest (Priest 2000) and Hoban/Miller (Hoban and Miller
1998) show that between 1998 and 2000 support for human genetic screening increased from 70 to 84 percent,
for new human medicines it declined from 80 to 79 percent, for insect protected crops it increased from 66 to 71
percent, for improved foods it increased from 58 to 60 percent (percentage of respondents agreeing that the
respective application should be encouraged). The percentage of respondents stating that particular biotech
applications were unacceptable was 21 percent for human medicines, 27 for insect protected crops, 37 for lower
fat foods, 39 for disease resistant animals, and 57 for faster growing fish. See also the Wirthlin Worldwide
survey on food biotechnology, www.ificinfo.health.org. Surveys reported in Nature Biotechnology, Vol.18, Sept.
2000:939-942 and a compilation of various survey results by the Center for Food Safety
(www.centerforfoodsafety.org) suggest slightly eroding consumer support for GM-foods and declining trust in
U.S. regulators.
49
human consumption. In September 2000, consumer groups detected traces of
StarLink corn in foods. StarLink was subsequently found in over three hundred
brand-name products. The ensuing controversy exposed weaknesses in the U.S.
regulatory system, in particular the inability of producers to effectively
segregate crops in the U.S. grain handling system.52 It also exposed as
ineffective the EPA’s 1999 request to farmers to plant non-GMO buffer crops
around GM-crops.53 Recalling products, testing activity, buybacks, and other
measures have cost upstream producers, farmers, and downstream producers
millions of dollars.54
Environmental and consumer NGOs, for example Greenpeace, Friends of the
Earth, the Organic Consumers Association, the Genetically Engineered Food
Alert, the Pesticide Action Network, Sustain, and the Center for Food Safety, 55
seized the opportunity arising from the StarLink controversy to attack U.S.
regulatory policy on GMOs. Most of these groups have also criticized the
FDA’s January 2001 proposal on notification and voluntary labeling. They have
requested more rigorous safety and toxicological testing for all food additives
and an end to what they have called the FDA’s „no labeling, not safety testing“
policy.56 In support of their criticism, NGOs have alleged that, in several cases,
including the FDA’s 1994 decision on the FLAVR SAVRTM tomato,
controversial scientific evidence was ignored.57
It is unlikely, though, that these campaigns will be more effective in bringing
about a fundamental change in regulatory policy than earlier efforts by
environmental/consumer groups. As indicated in its 2001 proposal, the FDA has
stuck firmly to its permissive approval and product-oriented labeling policy.
In light of the evidence discussed in this section, it appears that substantial
public support for GMOs and the broad and cohesive pro-GMO coalition
comprising producers and government agencies have made U.S.
environmental/consumer groups very reluctant to campaign against GMOs.
While the interaction effects of public risk perceptions and NGO campaigns are
difficult to assess, the evidence provided by the StarLink controversy suggests
that NGOs are willing to invest heavily in anti-GMO campaigns only when they
52
Fortune 2001. „The Gene Food Segregation Fantasy“, February 19; New York Times, October 14 and
December 11, 2000.
53
The primary reason for this failure is said to be incomplete control by Aventis and Garst (the key distributor of
the seeds) over seed companies, farmers, and downstream producers. Some analysts suspect that Aventis
speculated on the approval of StarLink for human consumption – its application was pending – and thus did not
fully control segregation. (Fortune, February 19, 2001)
54
Aventis licensed the StarLink technology to 11 seed companies. Garst Seed Co., located in Iowa, was by far
the largest. Approximately 315’000 acres were grown with StarLink seeds by around 2’070 farmers. Around
nine million bushels had entered commercial channels when the recall began. New York Times, October 14,
2000; Houston Chronicle, October 22, 2000; BioDemocracy News 2001, March , 2000, November; Washington
Post, March 1, 2001:A01.
55
See, e.g., BioDemocracy News, Issue 32, March 2001 (www.organicconsumers.org); Washington Post,
November 26, 2000:B02; New York Times, July 19, 2000; www.organicconsumers.org, May 25, 2000;
BioDemocracy News 27, May 2000.
56
Washington Post, February 13.
57
New York Times, December 11, 2000; Los Angeles Times, January 7, 2001.
perceive a substantial public outrage potential or when public aversion is already
high. Thus the main strategy of NGOs has focused on legal measures and market
pressure.58 The future of GM-crops and GM-food in the United States is thus
likely to be decided in the market rather than through the regulatory process.
The outcome will ultimately depend on downstream producer and farmer
reactions to consumer pressure and, in the case of farmers, also productivity
gains that can be achieved through agricultural biotechnology.
Producers
In contrast to Europe, producers in the United States have been able to form and
maintain a coherent and well-organized pro-GMO coalition, including upstream
and downstream producers and export-oriented farmers. Big agbiotech firms
have been the leaders in this coalition. The latter have cooperated closely with
regulators in what can be termed a “boardroom“ structure (Gormley 1986) of
biotech policy making (Holla 1995, Moore 2000b). Only since 1999 has this
system become somewhat more open to influence by the U.S. Congress and
environmental/consumer groups.
Upstream Producers. Spurred by large-scale government funding, a well
functioning venture capital market, and strong cooperation between industry and
universities the U.S. biotech industry has developed into the world’s largest.59
To recuperate its enormous R&D investments, the U.S. biotech industry needs
biotech-friendly regulations.
The large majority of upstream producers in the United States are organized in a
single association, the Biotechnology Industry Organization (BIO).60 In addition,
large biotech firms such as AgrEvo, DuPont, and Pharmacia (which includes
Monsanto) have also individually become involved in the regulatory process
(Moore 2000b). BIO and its members have persistently supported permissive
approval regulations and have strongly opposed mandatory labeling, thus
backing the FDA’s regulatory policy (Caswell 2000).
Homogenous preferences of its membership, substantial scientific expertise, and
strong financial and other support from large biotech firms (e.g. AgrEvo,
Monsanto, Pioneer Hi-Bred, Zeneca Plant Sciences, Calgene, Novartis) have
equipped BIO with a large collective action capacity (Moore 2000b, Epstein
1996). For example, to enhance consumer acceptance of GM-products seven
large biotech companies and BIO formed the Council for Biotechnology
Information. They plan to invest around 50 million USD per year, and possibly
58
E.g., BioDemocracy News 32, March 2001 (www.purefood.org); Organic Consumers Association, April 28,
September 21, 2000.
59
For an overview of firms in the agribusiness sector, see Agribusiness Examiner 2001, Supplement, Issue 1,
January 15. See also Lehne and Roozendaal 1995, Bijman 1995.
60
In addition, plant biotechnology companies are also represented by the American Seed Trade Association
(ASTA).
up to 250 million USD over three to five years for building public support for
biotech foods.61
In addition, BIO maintains close relationships with the FDA and other U.S.
regulatory agencies. A large part of BIO’s staff consists of former government
officials. Many observers have pointed to this „revolving door“ policy in which
employees move back and forth between the FDA, the EPA, and biotech
companies (Moore 2000a, IATP Food Safety & Health 1999). Industry views of
biotechnology, notably in regard to economic competitiveness and pressure for
fast commercialization to recoup R&D costs, have thus quickly found their way
to U.S. biotech regulators (Moore 2000a). This situation can, in Gormley’s
terms, by characterized as „boardroom“ policy-making (Gormley 1986). This
pattern of policy-making is the most susceptible to regulatory capture by
industry. Indeed, Henry Miller, a former FDA official and vocal supporter of
agbiotech, stated that „in this area, the U.S. government agencies have done
exactly what big agribusiness has asked them to do and told them to do“.62
Public opposition to GM-foods in the United States since the late 1990s, to the
limited extent it exists, has, so far, affected the cohesion of upstream producers
only at the margin. Most notably, it has (in addition to a variety of other factors)
encouraged several large upstream producers (e.g. Novartis, AstraZeneca,
Pharmacia, Aventis) to divest the agbiotech parts of their firms. It has, therefore,
also contributed to a divergence of interests between large firms engaged in
agricultural biotechnology and those, often smaller, firms engaged in medical
biotechnology – with the latter blaming the former (notably Monsanto and
Aventis) for negatively affecting the overall biotechnology market.63
Agricultural Producers. U.S. farmers have adopted the new technology at an
almost breathtaking pace. The first GM-crops were planted in 1995/96. By the
year 2000, the percent of acreage planted with GM-crops had grown to around
20 percent for corn and more than 50 percent for soybeans (Carpenter and
Gianessi 2001: 3). For 2001, the USDA predicts further growth for soybeans
(from 54 to 63 percent) and cotton (from 61 to 64 percent), but not for GMcorn.64
These crops are genetically modified to be more resistant to insects and/or
herbicides. In principle, the benefits of GM-crops include increased yield, lower
production costs, easier management, and reduced pesticide use (Carpenter and
Gianessi 2001, Baker 1999).65 The extent of benefits associated with the
61
Reuters, July 6, 2000; www.whybiotech.com.
See New York Times 2001, January 25.
63
The Economist, November 18, 2000: 95, November 14, 2000: 93. In 2000, Burrill’s index of medical biotech
firms rose by more than 50 percent, whereas agbiotech firms experienced a fall of more than 10 percent
(Economist, 2000, November 4: 93; Business Week, November 6, 2000).
64
www.transgen.de.
65
Insect resistant Bt corn varieties have enabled farmers to control the European Corn Borer, an insect pest that
is hard to control through pesticides. Benefits include primarily increased yields and slightly reduced insecticide
use. Insect resistant Bt cotton varieties control the three most destructive pests (tobacco budworm, cotton
62
currently grown GM-crops remains contested, however, and seems to vary
substantially across crop varieties. For example, Carpenter/Gianessi (2001)
estimate aggregate gains in net revenues in 1999 of 35 million USD for Bt corn,
99m USD for Bt cotton, and 216m USD for RR soybeans. A survey of GM-crop
performance by the USDA, on the other hand, indicated that yields from biotech
crops were not consistently higher than yields from conventional crops (Foster
2001, Fernandez-Cornejo 1999). The USDA data suggest some gains for cotton.
GM-soybeans, on the other hand, were neither associated with increased yields
nor with reduced pesticide/insecticide use.
The benefits for farmers also depend on farm size. Due to economies of scale
large farms are likely to profit more from GM-crops. Indeed, the available data
suggest that middle to large-size industrialized farms have embraced
biotechnology more rapidly than other farms (Carpenter and Gianessi 2001,
Baker 1999). We thus expect the former to favor permissive approval
regulations, oppose mandatory labeling66, and support U.S. trade policies that
open world markets to GM-products. Smaller family farms, for which GM-crops
have been less beneficial, would benefit from regulations that impose costs on
larger producers. We thus expect owners of smaller farms to favor stricter
approval regulations and mandatory labeling. These differences in preferences,
driven by variation in industrial structure, should be most pronounced in the
case of corn and soybeans, which account for the largest share of GM-crops.
In accordance with our expectations, the American Farm Bureau Federation
(AFBF), the largest U.S. farm organization, which is dominated by large
agricultural producers, has fully supported the FDA’s approval and labeling
policy (Moore 2000b). The National Family Farm Coalition (NFFC) on the
other hand, a network of grassroots organizations working on family farm issues
has criticized U.S. approval policy for GMOs. The NFFC also call for
mandatory labeling, claiming that “consumers in the U.S. and around the globe
have the right to know whether their food is genetically engineered” (NFFC
1999, Moore 2000b).
The American Soybean Association (ASA) and the National Corn Growers
Association (NCGA) represent export-oriented producers with a large stake in
GM-crops. Because producers of GM-soybeans and GM-corn are more exportdependent than other members of AFBF, ASA and NCGA have adopted even
stronger pro-GMO and anti-labeling positions. Predictably also, concerns of
ASA over problems of consumer acceptance and regulatory restrictions in other
countries have been stronger than concerns of NCGA since U.S. soy producers
bollworm, and pink bollworm). Benefits include reduced pesticide use and increased yields. Herbicide resistant
Bt cotton allows farmers to use a broader spectrum of herbicides with smaller crop injury. Insect and virus
resistant potato varieties have been used to reduce insecticide use. The introduction of a highly effective
conventional insecticide and problems of marketing GM-potatoes have limited their adoption. Herbicide tolerant
soybeans allow for more effective weed control at lower cost.
66
Opposition to labeling is motivated by the costs of segregating GM- and non-GM-crops, and by the risk of
GM-products being stigmatized through labels.
are more dependent on export markets than U.S. corn producers: in 1996, 37
percent of U.S. produced soybeans or soybean products were exported,
compared to 19 percent of U.S. produced corn (Moore 2000b). Facing the
inevitable, the ASA and the NCGA have been negotiating with the EU and EU
member states separately to preserve U.S. exports to Europe through effective
segregation and labeling. Nonetheless, both associations remain strong
supporters of permissive approval policy and oppose mandatory labeling in the
United States (Food Labeling News 1998b, NCGA 2000). The U.S. Grains
Council, which develops export markets for U.S. crops, has adopted very similar
positions (U.S. Grains Council 2000).
The American Corn Growers Association (ACGA) represents smaller family
farms. In contrast to the ASA and NCGA, it has recommended stricter approval
policies and mandatory labeling of all GM-foods, both domestic and foreign „to
fulfill the consumer’s right to know what foods they and their children eat”
(FDA 1999).67
Farm size and export-orientation thus account rather well for positions with
regard to approval and labeling policy. Interest groups representing
predominantly larger and export-oriented farmers oppose stricter approval
policy and mandatory labeling. Most groups representing smaller farmers
oriented towards the domestic U.S. market have not fundamentally opposed
GM-foods, but have lobbied for stricter approval regulations and mandatory
labeling of GM-foods.
Diverging interests due to differences in industrial structure, but also the
fragmentation of the U.S. agricultural association system more generally, have
limited the collective action capacity of farmers. More than 200 interest groups
are involved in agricultural policy issues (Moore 2000b). They specialize in
different issues (general commodity associations, single commodity
associations, and other specialized associations), and their general policies are
marked by substantial ideological differences. U.S. GMO regulations have been
congruent with the preferences of groups representing larger and export-oriented
farm interests largely because these groups have been able to align themselves
with biotech firms and food industry associations (Moore 2000b). Smaller
farmers producing for the domestic market and favoring stricter approval
regulations and mandatory labeling have only recently gained some more
influence in alliance with environmental and consumer groups.
Existing calculations of economic benefits from GM-crops ignore the influence
of consumer acceptance, which has had a growing impact on the rate of adoption
of GM-crops by U.S. farmers. Consumer opposition to GMOs in the EU, Japan,
and other countries has increased, and so has the stringency of approval and
67
ACGA, together with consumer and environmental organizations such as the Center for Food Safety,
Consumers Union, Friends of the Earth, and the Institute for Agriculture and Trade Policy, has also signed the
1999 letter to the FDA by 49 Congressmen requesting mandatory labeling (Mendelson 1999).
labeling regulations outside the United States. As a result, demand for non-GM
corn and non-GM soybeans has grown and U.S. soy and corn exports to
countries with stricter regulations have suffered.68 In addition to this general
trend, the StarLink controversy has led to a collapse of major export markets for
U.S. corn, such as Japan, Korea, and Europe. As the scandal broke, Japan cut its
U.S. corn purchases by 50%, Korea, the second largest U.S. corn export market,
banned imports of U.S. corn entirely.69 In part due to high costs of segregation
and identity preservation, export-oriented U.S. farmers have responded only
very slowly to changing public risk perceptions.70
Whether U.S. farmers will, in the medium to long term, engage or desert the
market for GM-crops depends largely on the behavior of downstream producers.
It also depends on whether U.S. farmers continue to believe that GM-crops, and
GM-soybeans in particular, create a narrow margin of profitability that keeps
them afloat. GM-soybeans are the key issue in this regard, because they are the
most important GM-crop exported to Europe. Foster, for example, notes that,
apart from questions related to the economic benefits of GM-soybeans, GMsoybean production in the United States has been supported by massive
subsidies. He claims that in the year 2000 38 percent of net receipts by U.S.
soybean farmers were government subsidies. Thus, U.S. production of GMsoybeans may have grown not because of greater profitability, but due to
subsidies.71
Downstream Producers. Until the late 1990s, U.S. downstream producers
encountered very little consumer opposition to GM-foods, which started
appearing on the U.S. market on a massive scale in the mid-1990s. They have
not benefited much from the first generation of GMOs, which involves modified
input rather than output traits. But large downstream producers in particular
have expected greater benefits from the second generation of GMOs, due to
output traits such as enhanced nutritional qualities.72
68
U.S. corn exports to Europe decreased from 2 million tons in marketing year 1997/98 to 137,000 tons in 1999,
while in the same time-period soybean exports dropped from 11 million tons to 6 million tons (ACGA 2000,
Feedstuffs 1999). In comparison, U.S. wheat exports to the EU increased in that time-period. Whereas 27 percent
of all U.S. soybean meal exports went to the EU in the 1997/98 marketing year, the EU only accounted for 7
percent of all U.S. soybean meal exports a year later (Feedstuffs 1999). The value of U.S. exports decreased by
almost half (from 2.1 bU.S.D to 1.1 bU.S.D) between 1996 and 1999 (Dann 2000). In parallel to this
development, Brazilian non-GM soy exports to the EU increased from 10.1 million tons in 1996 to 15.1 million
tons in 1998 (Dann 2000).
69
www.isaaa.org; www.rafi.org; www.acga.org. An informal survey among 400 U.S. farmers in January 2000
indicated that GM soy crops would drop by 15 percent and GM corn crops would drop by 22-24 percent in 2000.
This result was backed up by a U.S. Department of Agriculture survey indicating that GM corn crops would
decrease by 20% and soybeans by 6 percent in 2000 (Dann 2000).
70
For example: a survey among 100 Midwest grain elevators, conducted in September 1999, found that only 8
percent of the elevators were segregating non-GM soybeans and only 11 percent were segregating non-GM corn
(Feedstuffs 1999).
71
Communication with James Foster, June 3, 2001.
72
Second-generation GM-foods are expected to have decreased allergenicity, lower fat content, and improved
freshness and taste. Some biotech foods might also deliver medicines, e.g. vaccines or compounds that help
prevent cancer (www.bio.org).
The vast majority of large downstream producers have thus supported the
FDA’s permissive approval and no-labeling policy, arguing that labeling would
stigmatize their products and brands, and that it would be costly to implement.
Grocery Manufacturers of America (GMA) and The National Food Processors
Association (NFPA), the two largest associations of the U.S. food processing
industry, have been the most influential representatives of large downstream
producer interests. GMA represents primarily processors of branded foods,
NFPA represents firms that process and package fruits, vegetables, meat, fish,
specialty food, and beverage products (Moore 2000b, FDA 1999).73
In contrast, many smaller, specialized food processors and retailers, notably
those in the organic food business, have supported stricter approval and labeling
regulations. In their lobbying efforts, they have frequently associated themselves
with consumer NGOs, for example, Consumers Union, the Center for Food
Safety, or the Alliance for Bio-Integrity.
In response to growing consumer concerns in the United States over GM-foods
GMA and NFPA have, since the late 1990s, sought to reverse that trend through
intensified lobbying of policy-makers and public campaigns.74 Pro-GM-food
manufacturers and retailers have also founded the Alliance for Better Foods
(ABF), which so far has invested several dozen million USD in public relations
activities and election campaign contributions (Dann 2000).
These efforts by downstream producers have been somewhat weakened by
defections from the pro-GMO coalition of several large and many smaller U.S.
food processors, retailers, and wholesalers. In spring 1999, for example,
Greenpeace sent letters to major baby food companies, asking if they had taken
any steps to ensure that they were not using GM-ingredients. In response,
Gerber and Heinz, two large baby food producers, switched to non-GMingredients.75 Firms such as McDonalds, McCain Foods, Frito-Lay, IAMS pet
foods, Whole Foods Market, Wild Oats Markets, Seagram, and a range of others
have also reduced or eliminated GM-foods from their U.S. business in response
to NGO campaigns.76
The StarLink problem has led to another wave of defections. Archer Daniels
Midland, for example, which purchases around 30 percent of all corn, soybeans,
and wheat in the United States announced that it expected U.S. farmers and
grain elevators to start separating and segregating GM- and non-GM crops.
Other large processors such as ConAgra and Cargill have initiated measures to
segregate GM-crops from non-GM crops as a consequence of the StarLink
scandal.77 These changes in downstream producer behavior have, however, not
73
www.gma.org; www.nfpa.org.
Washington Post, August 15, 1999; www.sustain.org/biotech/news.
75
Wall Street Journal, July 30, 1999.
76
New York Times 2000, June 3: 1, 25.
7777
Fortune 2001, February 19; Reuters, November 27, 2000; www.cropchoice.com, September 29, 2000;
www.innovasure.com.
74
yet led firms to actively challenge the government's biotechnology policy. Only
a significant increase of consumer pressure on the food market might result in a
change of downstream producers' position.
Conclusion
Permissive approval practices and the absence of mandatory labeling in the
United States can be accounted for in terms of the collective action capacity of
consumers and producers. Low public concern about GM-foods and high public
trust in regulatory authorities and scientists have made it very difficult for NGOs
to mobilize their members and other latent supporters on GMO issues. Most
U.S. environmental/consumer groups have become active on GMO issues much
later than their European counterparts. Moreover, most U.S. NGOs have not
fundamentally opposed GMOs, but have requested stricter approval regulations
and mandatory labeling. They have relied mostly on the lobbying of policymakers and legal action against regulatory agencies and agbiotech firms, rather
than on the more activist strategies favored by many of their European
counterparts.
Agricultural biotechnology has been supported by a relatively homogeneous,
well-organized, and well-funded coalition of upstream producers, exportoriented farmers and their commodity associations, and downstream producers.
Upstream producers in particular have enjoyed privileged access to U.S.
regulatory agencies, notably the FDA.
Somewhat elevated public concern over GMOs since the late 1990s, and the
StarLink controversy in particular, have produced several faultlines in the proGMO coalition. First, several large biotech firms have divested their agbiotech
branches and interests between firms engaged in medical and firms engaged in
agricultural biotechnology have begun to diverge. Second, some large and many
small downstream producers have moved towards GMO-free products and
labeling, weakening the pro-GMO campaigns of downstream producer groups
and dividing downstream producers as a whole. Third, the StarLink crisis has
led to conflicts between farmers and upstream producers over damages and their
compensation.
Whether these rifts could eventually lead to a disintegration of the producer
coalition in the United States remains an open question. If they do, and if such
disintegration coincides with a complete closure of European and Asian markets
to U.S. GM-crops, many downstream producers and farmers in the United States
are likely to desert the market for GM-crops. Technical difficulties and high
costs of segregating and preserving the identity of conventional crops
throughout the food chain as well as labeling products may, under the
circumstances mentioned, contribute to this tendency.
Comparison
In this final section we compare the results of the case studies on the European
Union and the United States along the lines set by the theoretical argument
focusing on the collective action capacity of consumer and producer interests.
Regulatory outcomes in the European Union and the United States
In the mid-1980s, the starting point of the analysis, the biotechnology policies of
the EU and the United States were very similar. At the end of the 1980s, they
began to diverge. From 1990 on, the EU has concentrated on process-oriented
regulations and has adopted more stringent approval and labeling standards than
the United States. As a consequence, very few GMOs have been approved for
commercialization in the EU, commercial planting of GM-crops is almost nonexistent in EU countries, and the number of field trials is far lower than in the
United States. The number of labeled GM-products on the EU market has
approached zero as producers have chosen to give up rather than label GMfoods. The EU’s market for GMOs has thus shrunk to (an also declining market
for) GM food ingredients and animal feed below the threshold for mandatory
labeling.
U.S. regulatory policy has, in the 1990s, moved into a more permissive
direction. Regulators have taken the position that GM-foods and feeds are
generally safe as long as the application of biotechnology does not lead to
substantially different properties of food or feed products. Following this
product-oriented policy, the FDA and the USDA have, through an informal
notification procedure and without pre-market risk-assessments, approved most
industry requests for field-testing and commercialization of GMOs. Producers
may voluntarily label GM-foods but are not obliged to do so. More than 50 GMproducts are on the U.S. market, thousands of field tests have been authorized,
and GM-crop acreage increased dramatically from 1996 to 2000.
Influence of Environmental and Consumer Groups
Conventional theories of regulation predict that environmental and consumer
groups, because of their large and heterogeneous membership, experience
greater problems than producers in mobilizing supporters and influencing public
policy. We found, however, that the collective action capacity of environmental
and consumer groups has varied substantially across the EU and the United
States. This variation can be traced back to differences in public perceptions of
agricultural biotechnology, consumer trust in regulatory authorities, and
differences in access to policy-making processes.
In the EU, negative public perceptions of agricultural biotechnology and low
trust in regulators (mostly the result of major food safety crises) have facilitated
strong and sustained NGO engagement in the issue, particularly since the mid1990s. NGOs were thus able to apply strong market pressure by launching
powerful campaigns against upstream and downstream producers. These
campaigns have also transformed the GMO issue into one of „high saliency“ and
(in the eyes of the wider public) „low complexity“ – which tends to produce a
„hearing room“ pattern of policy-making. The latter pattern is conducive to
public interest group participation. In addition, the multi-level nature of EU
policy-making and especially the involvement of the European Parliament have
opened the door to strong NGO influence on policy-decisions.
In the United States, relatively positive consumer perceptions of agricultural
biotechnology and high trust in regulators and scientists (mostly due to the
absence of larger food safety crises) have made it difficult for NGOs to mobilize
their supporters on the GMO issue and influence producers and policy-makers.
NGO influence on policy-making in this area has also been constrained by
limited institutional access: most important decisions have been taken by one
independent agency, the FDA, which contrasts quite substantially with the multilayered decision-making system of the EU. As a result, U.S. environmental and
consumer groups have become involved in agbiotech issues much later than
their European counterparts. NGO activity on a larger scale began only in the
late 1990s. At that time, public opinion on GMOs turned somewhat more
negative and the StarLink controversy emerged. In contrast to their European
counterparts, most U.S. NGOs have lobbied for stricter approval procedures and
mandatory labeling rather than a ban on GMOs. So far the FDA and the USDA
have remained largely immune to this pressure.
Influence of Producers
While conventional theories of regulation tend to regard producers as a
homogenous interest group, we distinguished upstream producers (agbiotech
firms), producers (farmers), and downstream producers (wholesalers, retailers,
food processors). We hypothesized that differences in industrial structure and the
extent of NGO opposition to GMOs account for variation in the collective action
capacity of pro-GMO producers.
In the EU, negative consumer perceptions of GM-foods and NGO campaigns
have divided producers and have thus diminished the collective action capacity
of pro-GMO interests. Large upstream producers, such as Monsanto and
Novartis, became major targets of NGO campaigns and have remained on the
defensive. EU farmers, which throughout the 1990s and beyond have suffered
from major disturbances and restructuring in European food markets, have
become increasingly opposed to GMOs. This opposition is bound to grow
further, especially if GM-products with stronger competitive effects on EU farm
produce enter the EU market. NGO pressure and negative public risk
perceptions have driven downstream producers into supporting mandatory
labeling and stricter approval standards. While most downstream producers
expected that labeling might stop the anti-GMO trend half way, the unintended
effect was exposure of labeled GM-foods to even greater consumer and NGO
pressure. As a result, downstream producers have deserted the market for
labeled GM-foods, hoping that the consumer backlash will not spread to
thousands of processed foods in the EU that contain GMOs below the threshold
for mandatory labeling.
U.S. policy has, from the very beginning, been supported by a homogeneous,
well-organized, and well-funded coalition of export-oriented farmers,
commodity associations, the upstream industry, and downstream producers.
These producer interests have enjoyed privileged access to U.S. regulatory
agencies, notably the FDA. U.S. policy-making in this area has thus been
marked by a „board-room“ pattern, the opposite of the „hearing-room“ that has
prevailed in the EU.
The most serious challenge to U.S. GMO-policy so far has emanated from
somewhat increasing public concerns about agricultural biotechnology since the
late 1990s, and the StarLink controversy, which broke out in fall 2000. In part
motivated by these developments as well as the backlash in Europe and
elsewhere, several large biotech firms have divested their agbiotech divisions,
thus contributing to growing differences of interest between medical and
agricultural biotech firms. Increased consumer and NGO pressure has
encouraged some downstream producers to move towards GMO-free products
and voluntary labeling. This development has weakened pro-GMO campaigns
by up- and downstream producer groups. The StarLink controversy has also led
to conflicts between farmers and upstream producers over damages and
compensation. It appears unlikely, however, that these differences among
producers will grow to the extent observed in the EU.
In summary, the empirical observations reported in the two case studies are
largely congruent with the theoretical argument. GMO regulations tend towards
greater stringency when: first, the collective action capacity of
environmental/consumer interests is high – the latter resulting from negative
public perceptions of the technology concerned, low public trust in regulators,
and privileged access of public interest groups to the policy-making process;
second, the collective action potential of producer interests is low due to
heterogeneous interests resulting from industrial structure and market pressure
exerted by public interest groups.
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Bernauer, Thomas and Erika Meins, “Scientific Revolution Meets Policy and the
Market: Explaining Cross-National Differences in Agricultural Biotechnology
Regulation” November 2001.
Anderson, Kym, David Norman and Glyn Wittwer, “Globalization and the World’s
Wine Markets: Overview”, November 2001
Busse, Matthias, “Do Labour Standards Affect Comparative Advantage? Evidence for
Labour-Intensive Goods”, November 2001.
0141
Stringer, Randy and Glyn Wittwer, “Grapes, Wine and Water: Modelling Water Policy
Reforms in Australia”, November 2001.
0140
Damania, Richard , Randy Stringer, K. Ullas Karanth, and Brad Stith, “The
Economics of Protecting Tiger Populations: Linking Household Behaviour to
Poaching and Prey Depletion”, November 2001.
Damania, Richard and Erwin H. Bulte, “The Economics of Captive Breeding and
Endangered Species Conservation”, October 2001.
0139
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James, Jennifer S and Julian M Alston, “Taxes and Quality: A Market-Level Analysis”,
October 2001.
0137
Rajan, Ramkishen, “Adopting an appropriate exchange rate regime: fixed or
floating?”, October 2001. (Paper prepared for Malaysian Economic Outlook 2001,
organized by the Malaysian Institute for Economic Research, Kuala Lumpur,
Malaysia).
0136
Anderson, Kym, Dimarana, Betina, Francois, Joseph, Hertel, Tom, Hoekman,
Bernard, and Martin, Will, “The Cost of Rich (and Poor) Country Protection to
Developing Countries”, September 2001. (Forthcoming in Journal of African
Economies, 2002.)
0135
Rajan, Ramkishen and Chung-Hua Shen, “Are Crisis-Devaluations contractionary?”,
September 2001.
0134
Shapiro, Perry and Petchey, Jeffrey “Internationally Mobile Factors of Production and
Economic Policy in an Integrated Regional Union of States”, August 2001.
0133
Rajan, Ramkishen and Graham Bird, Still the Weakest Link: the Domestic Financial
System and Post-1998 Recovery in East Asia”, July 2001. (Since published in
Development Policy Review 19 (3), 355-66, 2001
0132
Rajan, Ramkishen and Bird, Graham, “Banks, Maturity Mismatches and Liquidity
Crises: a Simple Model”, July 2001.
0131
Montreevat, Sakulrat and Rajan, Ramkishen, “Financial Crisis, Bank Restructuring
and Foreign Bank Entry: an Analytic Case Study of Thailand”, June 2001.
0130
Francois, Joseph F. “Factor Mobility, Economic Integration and the Location of
Industry”, June 2001.
0129
Francois, Joseph F. “Flexible Estimation and Inference Within General Equilibrium
Systems”, June 2001.
0128
Rajan, Ramkishen S., "Revisiting the Case for a Tobin Tax Post Asian Crisis: a
Financial Safeguard or Financial Bonanza?" June 2001. (Paper prepared for
presentation at a United Nations Meeting on Resource Mobilisation for Development,
New York, June 25-26, 2001.)
Rajan, Ramkishen S. and Graham Bird, "Regional Arrangements for Providing
Liquidity in a Financial Crisis: Developments in Asia", June 2001.
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Anderson, Kym and Shunli Yao, "China, GMOs, and World Trade in Agricultural and
Textile Products", June 2001. (Paper prepared for the Fourth Annual Conference on
Global Economic Analysis, Purdue University, West Lafayette 27-29 June 2001.)
0125
Anderson, Kym, "The Globalization (and Regionalization) of Wine", June 2001.
(Paper for the National Academies Forum’s Symposium on Food and Drink in
Australia: Where Are We Today? Adelaide, 5-6 July 2001.) (Forthcoming in
Australian Agribusiness Review 2002.)
0124
Rajan, Ramkishen S., "On the Road to Recovery? International Capital Flows and
Domestic Financial Reforms in East Asia", May 2001.
0123
Chunlai, Chen, and Christopher Findlay., "Patterns of Domestic Grain Flows and
Regional Comparative Advantage in Grain Production in China", April 2001.
0122
Rajan, Ramkishen S., Rahul Sen and Reza Siregar, "Singapore and the New
Regionalism: Bilateral Economic Relations with Japan and the US", May 2001.
0121
Anderson, Kym, Glyn Wittwer and Nick Berger, "A Model of the World Wine Market",
May 2001. (Forthcoming in Economic Modelling, 2002)
0120
Barnes, Michelle, and Shiguang Ma, "Market Efficiency or not? The Behaviour of
China’s Stock Prices in Response to the Announcement of Bonus Issues," April 2001.
Ma, Shiguang, and Michelle Barnes, "Are China’s Stock Markets Really Weak-form
Efficient?" April 2001.
Stringer, Randy, "How Important are the 'Non-traditional' Economic Roles of
Agriculture in Development?" April 2001.
Bird, Graham, and Ramkishen S. Rajan, "Economic Globalization: How Far and How
Much Further?" April 2001. (Since published in World Economics 2(3) 1-18: 2001.)
Damania, Richard, "Environmental Controls with Corrupt Bureaucrats," April 2001.
Whitley, John, "The Gains and Losses from Agricultural Concentration," April 2001.
Damania, Richard, and E. Barbier, "Lobbying, Trade and Renewable Resource
Harvesting," April 2001.
Anderson, Kym, " Economy-wide Dimensions of Trade Policy and Reform," April
2001. (Forthcoming in Handbook on Developing Countries and the Next Round of
WTO Negotiations, Washington DC: World Bank, 2002.)
Tyers, Rod, "European Unemployment and the Asian Emergence: Insights from the
Elemental Trade Model," March 2001. (Forthcoming in The World Economy, Vol. 24,
2001.)
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