EU prepares for bruising WTO ruling in biotech case

BRUSSELS (Reuters) - Europe may suffer a bruising next month when a world trade panel delivers its long-awaited verdict on whether the EU's six-year blockade on biotech crops and foods was tantamount to a protectionist trade barrier.

In 2004, the European Union ended that blockade by allowing imports of a canned sweetcorn engineered by Swiss agrochemicals giant Syngenta. It was the bloc's first new approval of a genetically modified (GMO) crop product since October 1998. Despite the move, the EU may still lose out in a landmark case filed at the World Trade Organization (WTO) by major GMO crop growers Argentina, Canada and the United States, which say its de facto ban hurt their trade and was not based on science.

The WTO verdict in the biotech case, now delayed several times, is being keenly watched by all sides in the long-running row. Due in the first week of February, the confidential ruling will comprise several hundreds of pages. It is bound to leak.

While most observers say the WTO is unlikely to issue a clear-cut condemnation of EU policy, it may well criticize areas like the string of national bans on specific GMO products in several EU countries: a particular annoyance for the three complainants and cited in their original 2003 complaint.

Already, rumors are flying in industry and green circles that the EU could come off worst in the ruling.

"There'll be winners and losers on both sides, although some people suggest the EU will be the bigger loser," one biotech industry official said. "The market is not operating properly and the EU institutions have not implemented their own law."

"The EU is going to be bruised. It might be a moral victory for industry but that's about it," said Adrian Bebb, GMO campaigner at Friends of the Earth. "It's fairly obvious that they (WTO) will come out against the national bans."

Europe's shoppers are known for their wariness toward GMO products, often dubbed as "Frankenstein foods", with opposition polled at slightly more than 70 percent.

This is a stark contrast to the United States, the world's largest grower of GMO crops, where they are far more widely accepted. U.S. farmers say the EU biotech stance cost them some $300 million a year in lost sales while the ban was in effect.

EU COMPLIANCE

A key question for the EU, if it does face an adverse WTO ruling, is what it could do to satisfy the three complainants. The European Commission, which administers and instigates legislation for the EU-25, says the EU has put in place tough but fair laws since 1998 to ensure a smooth approvals process.

The trouble is, EU governments can never agree among themselves on biotech crops. So the Commission eventually uses a legal approvals process that kicks in when EU ministers are unable to reach a majority view on a GMO after three months. "All our legislation is in place and works well. The challenge isn't against our legislation -- we will continue to deal (with applications) on a case-by-case basis on their own merits," one Commission official told Reuters.

"This (WTO) panel wasn't against the integrity of our system as such, it was against the moratorium that we had," he said. "Whatever happens, this will not affect our legislative set-up."

ON THE FENCE

The Commission processes applications from biotech companies that want to import and market their GMO products across the 25-country bloc. Approvals are given for 10 years, usually for the imported GMO to be processed into food and animal feed.

However, the idea of growing GMO crops is far more sensitive and only a handful of "live" GMOs have won EU approval for cultivation, mostly in the run-up to the 1998-2004 moratorium.

The EU has a plethora of GMO laws to regulate applications and approvals, with strict and complex requirements for scientific opinion and risk assessment of all new products.

A small group of EU countries is implacably opposed to any new GMO approvals and always vote against -- and they are offset by a hard core of countries that are always in favor. The rest sit on the fence and only occasionally vary their view.

That balance of power could change with the WTO verdict.

"If you get an adverse WTO ruling on the substance of the EU process, then you've got a major problem," one EU diplomat said.

"If it says that the way the EU is applying its process is flawed, then you put political pressure on those member states to change their voting pattern," he said. "They'd have to start producing some