Research Paper 8 1999-2000

Els Wynen
Economics, Commerce and Industrial Relations Group
23 November 1999

List of Acronyms

Major Issues

Introduction

What is genetic engineering?

A new technology: who gains?

Farmers

Box 1: some parameters of GE crops

Labelling and food safety

International trade obligations

Environmental impacts

Investors

Institutional arrangements

Summary and conclusions

Endnotes

List of Acronyms

AAA	Agrifood Alliance Australia
AAAS	Australian Association for the Advancement of Science
ACA	Australian Consumers' Association
AFFA	Department of Agriculture, Fisheries and Forestry Australia
ANZFA	ANZ Food Authority
ANZFA	Australia and New Zealand Food Authority
ANZFSC	Australia and New Zealand Food Standards Council
AQIS	Australian Quarantine and Inspection Service
Avcare	National Association of Crop Production and Animal Health
BMA	British Medical Association
Bt	Bacillus thuringiensis
DITAC	Department of Industry, Technology and Commerce
EU	European Union
FAO	Food and Agriculture Organization
GE	genetic engineering
GMAC	Genetic Manipulation Advisory Committee
GMO	genetically modified organism
GTAC	Gene Technology Advisory Committee
IOGTR	Interim Office of the Gene Technology Regulator
LMO	living modified organism
NFF	National Farmers' Federation
NFU	National Farmers' Union
NRA	National Registration Authority for Agricultural and Veterinary Chemicals
OFA	Organic Federation of Australia
OGTR	Office of the Genetic Technology Regulator
PHA	Public Health Association
RDMC	Recombinant DNA Monitoring Committee
SCARM	Standing Committee on Agriculture and Resource Management
SPSA	Sanitary and Phyto-Sanitary Agreement
TBTA	Technical Barriers to Trade Agreement
TGA	Therapeutic Goods Administration
WHO	World Health Organization
WTO	World Trade Organization

Major Issues

In May 1999 the Australian Government committed $17.5 million to the development of a new biotechnology strategy to '... ensure that Australia captures the benefit of this emerging technology'(1). Of this amount, $10 million was to be spent on measures such as the establishment of a senior Ministerial Council to manage the biotechnology agenda, development of a national biotechnology strategy and public awareness programs. Another $7.5 million went to the Health and Aged Care Department for the establishment of the Office of the Gene Technology Regulator by 1 July 2001.

At the time of these announcements, genetic engineering seemed the way ahead for agriculture in Australia, promising significant improvements in productivity. Inserting fish genes in plants to promote cold resistance is an oft quoted example of the remarkable potential of this technology. Advantages for the environment were heralded, through a reduction in pesticide use. Characteristics of this new technology have been mentioned as including a decrease in use of fertiliser, pesticide, labour and energy; lower input costs; higher yields; better food quality; better adaptation of crops to environmental requirements (drought, salt) and environmental possibilities (nitrogen fixing)(2). Many Australian farmers, however, have been reported as being somewhat reticent about involvement with genetically modified organisms (GMOs)(3), or still need to be convinced about its advantages(4). Fifty-five per cent of farmers favoured a five-year moratorium on GMO crops.(5) The farmers' hesitancy stems from uncertainty about the effect of returns to farming, uncertainty over marketing possibilities of the crop and liability towards other farmers if pollution occurs. Meanwhile a number of other controversies have surfaced, and these will need to be addressed if the technology is going to be able to reach its potential.

The opposition to GMOs in the European Union (EU) has intensified, culminating in a change of source of imports for some agricultural products (such as for some of the canola from Australia instead of from Canada), and refusal of some shipments (such as organic potato chips from the USA found to include genetically engineered (GE) material). Although the value of these goods is low in the overall scheme of things, it may be symptomatic of events to come. In the USA concerns have been at a much lower level with well over 25 per cent of the area of maize, soybeans, canola and cotton in 1999 under GE varieties, mainly incorporating herbicide resistance and insecticide traits. For soybeans this figure was even close to 60 per cent. More recently, however, with two of the leading maize buyers in the US decided not to be involved with non-EU-approved maize for the time being(6), a decrease in area under GE-crops seems likely.

Meanwhile, the Australia and New Zealand Food Standard Council (ANZFSC) had resolved to include genetically engineered products in the Food Standard Code, adopting mandatory labelling for GMO products, including those that are 'substantially equivalent', an issue of great importance. However, in October 1999 the actual inclusion in the Code was postponed under the direction of the Prime Minister. Also in other countries, such as the EU and Japan, food labelling of some sort has been or is in the process of being adopted. Compliance with these kinds of measures with World Trade Organisation (WTO) requirements has now come under scrutiny. However, the issue is far from clear and is bound to be high on the agenda of the next WTO Round starting in Seattle at the end of November 1999.

A main issue regarding labelling concerns 'substantial equivalence', a concept which originates from FAO/WHO deliberations in 1990. If indeed products of genetic engineering (GE) and non-GE are the same, as some supporters of GMOs maintain, there is no need to differentiate between the two products. However, many consumers do believe the two products are different, and consider that they have the right to know and to make their own choice. Environmentalists foresee as yet undiscovered or undisclosed, and possibly irreversible, problems in the environment through the release of organisms that have not been tested appropriately. They therefore want the precautionary principle applied and, failing this, want to be able to express their opinion and contribute to the solution by refraining from consuming GE goods, hence their support for labelling.

A third group of concerns relates to the market power this technology can confer on a small number of players. Action has been taken to prevent an undesirable concentration of power, as an anti-trust lawsuit is to be brought in the USA(7). It is possible that this may become a considerable issue in the future.

Social and legal changes tend to trail technological change. To serve the requirements of the new technology, the regulatory system in Australia is in need of adaptation. It can be argued that a system is required which could decide not only on laboratory research and GMO releases for research purposes (carried out by the Gene Manipulation Advisory Committee-GMAC-in the past), but also for commercial use (for example seed for farmers). To that end the Interim Office of the Gene Technology Regulator (IOGTR) was instituted, with GMAC transformed to GTAC-the Gene Technology Advisory Committee, now in an advisory role to the IOGTR. The Interim Office is in the process of setting up a more permanent system to be approved under a Bill to be introduced in April 2000.

Institutional changes are also needed on the consumer side. Other institutions important in this debate are ANZFSC and the ANZ Food Authority (ANZFA) mandated to oversee and enforce the Australia New Zealand Food Authority Act 1991, under which responsibility for food labelling resides(8). After the recent delay of the incorporation of labelling in the food standards on the grounds of expense, the members of ANZFSC have ordered a review of costs, among other things, and more action can be expected in the near future. The Australian Quarantine and Inspection Service (AQIS) and the National Registration Authority for Agricultural and Veterinary Chemicals (NRA) carry responsibility for compliance of imports and exports with domestic and overseas regulations, and for approving crops that express traits related to agricultural and veterinary chemicals, respectively.

Australia stands at the crossroads in its management of GMOs. Too cautious an approach may see it lose market opportunities and market share to competitors, if they have benefited from the new technology. On the other hand, a too liberal interpretation may see it out of step with some of its major markets, and raise concerns about as yet unknown food safety and environmental issues.

Introduction

In the 1980s interest in genetic engineering increased, especially from industry and scientists, and this interest accelerated to enthusiasm in the 1990s. While the use of the technology is going through a period of enormous growth, the level of controversy grows exponentially, albeit with a time lag. This controversy started mainly in European countries, but is presently becoming an issue also in the USA. Australia and Asian(9) countries are also involved as, apart from domestic protests, events abroad are of utmost importance in determining continued or new trading possibilities.

With the announcement of expenditure in the 1999-2000 budget of $17.5 million on issues related to GE, the Australian Government signalled its intention to move forward in accepting GE as a significant technology in agriculture. The policy issue became one of how best to manage the technology. As part of the management policy, the Interim Office of Gene Technology was set up as the regulator of genetically engineered products, both in the area of research and commercial releases into the environment(10). It is also to develop an institutional framework to accommodate the technology in the future.

In this paper the main issues related to genetic engineering in agriculture are examined, together with the Government's past involvement in the issues. This then leads to an examination of requirements for future Government involvement.

The first issue to be discussed is what GE actually is. Two features are identified: the speeding up of conventional breeding programs, and the recombination of genes in ways not possible with conventional breeding. The implications of this second use of the technology for agriculture are then discussed. Only issues related to agriculture are covered in this paper. Medical advances and other benefits are not addressed.

Clearly this new technology has enormous potential. Increased productivity is expected, both in terms of quantity and quality of products. For example, producing rice varieties with enhanced vitamin content may reduce the incidence of childhood blindness in some poor countries. If this was all, government would have a limited role to play in this area, as the market would sort out whether and to what extent this technology would be adopted. Government involvement could then be restricted to making sure that appropriate property rights are in place, and to the provision of seeding money to help overcome thresholds if deemed appropriate.

However, a less optimistic view is that there are down sides to genetically modified organisms (GMOs) which require governments to play a role. The main issues mentioned generally pertain to human health and effects on the environment. It is argued that, without government intervention, a higher than socially optimum uptake of the technology would take place. Most of the controversy relates to the degree of problems (actual and potential) and, in the absence of agreement between the parties about the severity of the problems, the right of consumers to make up their own mind and to choose through product differentiation (product labelling).

In addition, wider-ranging issues are coming to the fore, such as trade and investments in the area. Australian compliance with international requirements is scrutinised to determine whether Australia can implement certain regulations without international repercussions. The need for, and advisability of, public investment is touched upon.

The last part of the paper looks at institutions which have handled issues related to GE, and what kind of institutions are needed in the future. The nature of GE implies that some of the institutions on which we have relied in the past may need to be modified to better regulate the new technology.

What is genetic engineering?

The techniques of plant and animal breeding have long been used to modify characteristics of plants and animals. In agriculture, the focus has been mainly on increased productivity (higher yields with the use of similar inputs) or breeding for characteristics which customers were interested to buy (such as a change in taste, colour, smell). The conventional way of plant breeding usually occurs within species, for example, different varieties of wheat. Some interspecies crosses can be made with this technology, such as a cross between a donkey and horse resulting in a mule or ass, or between wheat and rye resulting in triticale.

Breeding methods of the past often required considerable time before the breeder arrived at the stage where the new product was ready for commercial sale. Stages of breeding include crossing of two individual specimens at time of maturity, harvesting the fruits of the next generation and selecting those that showed the desired characteristics. After a number of such generations, the seed is then multiplied on a large scale to produce enough for commercial activities. Time needed to arrive at this last stage depends on the type of crop or animal, influenced by the place of production. For example, the time factor is not nearly as important in annual crops, where seeds are produced within a few months of sowing, as with perennial crops that take several years to mature, such as fruit trees. Similar examples can be found in the animal world, with fast and slow breeding animals (for example, mice and cattle). In places where crops can be grown the whole year round (in greenhouses or the tropics) the time between the first crossing and the desired end-product can be shortened compared with less growth-promoting conditions.

GE takes this process to a different level. The US Office of Technology Assessment (1992) describes GE as:

The importance of GE is twofold. First of all, it has the capacity to speed up the process of combining characteristics from two different individuals, such as with conventional breeding. The gene from one specimen is mechanically inserted in a cell of the other, and a combination of characteristics can occur. Multiplication for commercial purposes can start immediately. This reduces the breeding time, enabling the production cost of this new product to decrease, and marketing to commence sooner, with a speedier recovery of costs.

Secondly, apart from speeding up the conventional process, GE can also accomplish combinations of organisms that have not been possible in the past. This enables not only changes in existing characteristics which were not possible with conventional breeding but came from the same species. With this new technology, also previously non-existing characteristics can be introduced to a particular plant or animal that originates from a different species, or even form of life (creating transgenic varieties). An oft-quoted example is inserting certain fish genes in plants to promote cold resistance. It is this aspect which is the most controversial.

A new technology: who gains?

As with all widespread productivity enhancement in agriculture, the benefits of GMOs accrue first of all, to the producers. If farmers cannot see their way to gain from the introduction of a new technology, it will not be adopted. For example, the acceptance of tractors on farms would never have happened if farmers had considered horses to be superior to tractors. The gains could be in relative terms, and adoption may occur on the grounds that non-adoption would leave farmers in one country behind developments in other countries, with resulting decreasing returns. This gain can be in the form of financial or non-financial gain (for example, less physical contact with pesticides as one source suggests(11)), or it can be in enticing the consumers to buy more, thereby making marketing easier. That does not mean that others cannot also gain from the invention, and this does happen both upstream and downstream. Upstream, those who invent the new technology may gain from selling it, and downstream the consumer may gain from higher quality or lower prices.

In what way the different parties will benefit depends on their responsiveness to changes in prices (responsiveness of supply and demand). For example, if farmers can produce apples for 10 per cent less of the cost with a GMO variety, part of that increased profit will go to the tree stock producer, as the farmer would be willing to pay more for the new variety. How much will go to the stock producer depends to a large extent on the production costs of the invention, on how much competition there is in the supply of the product, and on how much can be sold at different price levels. It is argued that, in the long run, most of the potential farm profits (left after paying for the input package) will go to the consumer, as farmers compete with one another to sell the product.

Agriculture does not operate in a vacuum, so there can be other gains and losses from farmers adopting a new technology. One is off-farm effects, generally identified as an environmental impact, which accrue to anybody not on the farm where the gains/cost originate. This can include other farms. Gains/costs can also accrue to consumers.

It seems reasonable to assume that those who consider that they will gain or lose most by adoption of the technology are those who have been most prominent in the debate on GE technology. They are many and varied, and can be gleaned from the submissions to the House of Representatives Standing Committee of Primary Industries and Regional Services on primary producer access to gene technology. They include members of the input industries, researchers, farmer organisations, environment groups, politicians and government bodies. One of the umbrella groups of farmers, input industries and researchers is the Agrifood Alliance Australia (AAA), which includes:

• National Farmers' Federation
• Avcare (National Association of Crop Production and Animal Health)
• Grains Research and Development Corporation
• Seed Industry Association of Australia
• Australian Biotechnology Association
• Cooperative Research Centres Association
• Pivot Limited.

Other players include the Australian Conservation Foundation (GeneEthics Network) and the Organic Federation of Australia (OFA). The Australian Consumers' Association (ACA) was heavily involved with the Concensus Conference 'Gene Technology in the Food Chain'(12), convened by the Australian Museum in March 1999, to try to bring together disparate points of view.

Farmers

At present it is far too early to estimate what the potential benefits of GMOs to farmers are likely to be. Most of the attention of the industry has been devoted to herbicide tolerance (in crops such as maize, soybeans, canola and cotton) and insecticide inclusion in crops. The inclusion of the natural pesticide Bacillus thuringiensis (Bt) in maize and cotton plants is designed to kill certain pests, such as Heliothis (the cotton boll worm). The target insects ingest lethal doses when eating the plant, thus avoiding the need for an insecticide application. In Australia, the only GMO which has been commercially available to farmers is Bt cotton.

One reason that farmers are interested in this technology is increased returns to farming. This can occur by a change in yields or input costs or a combination of the two. It is important, though, that knowledge about the change in one of those factors does not give an indication of the total effect. For example, a decrease in yield, resulting in lower gross returns does not disadvantage a farmer if the decrease in input cost (such as cost of seed and pesticide) compensates for this loss. Furthermore, a technique that permits a change in rotation may also be an advantage without any change in yields.

Yields and farm returns

Yield comparisons in the USA reviewed here are shown in Box 1.

The University of Wisconsin carried out a survey in eight states of Northern USA on Roundup Ready soybean (a variety tolerant to the herbicide Roundup). The survey shows decreases in comparison with the non-GMO crop at an average of seven per cent for the top variety, six per cent for the top five varieties, and five per cent for all varieties(13). Seed companies found similar figures in trials in southern Wisconsin and central and southern Minnesota. No net farm returns were calculated.

The US Department of Agriculture has published figures of its analysis of different crops, but warns that figures for yields and pesticide use from farm survey data, as they supply the data, are biased.(14) Yields of herbicide tolerant maize are shown as between -10 and +25 per cent different from non-GMO crops, measured in different states in the years 1996 to 1998. For soybeans the comparable figures were between -6 and +21 per cent, and for cotton between -12 and +19 per cent. The Bt crops showed a more positive picture, with maize varying between -2 and +30 per cent, and for cotton up to 26 per cent.

Iowa State University took the USDA's figures for Iowa and calculated farm returns for GE and non-GE crops. In 1998 just over 40 per cent of the area under soybeans were sown to GE varieties, which showed a 4 per cent decrease in yield(15). Bt maize in the same state and year yielded 9 per cent higher. Calculations of returns showed GE soybeans to have a marginally lower return to land and labour (US$357 as compared with US$360 per hectare for non-GE crops). Bt maize returned US$9.80 per hectare more than non-GE maize. For both GE crops seed was more expensive than for the conventional crop. This may illustrate the notion of input companies being able to capture some of the gain of the new technology, as mentioned above. Australian buyers of imported GE soybeans (farmers who use the product as input in their livestock operations) may have been other beneficiaries of the technology adopted by USA farmers by paying lower prices.(16) If this technology indeed does lower consumer prices, this has implications for soybean producers in Australia, both in connection with output prices of that product, and also of other crops that can be used as substitutes for soybeans, such as cereals.

Box 1: some parameters of GE crops

Commercial Bt cotton has been grown in Australia since 1996, when 30 000 hectares were under Ingard Australia's first GMO crop. In 1998 this had risen to 85 000 hectares, 16 per cent of the total area under the crop. For the last two years, yields have been similar or slightly lower than for the conventional varieties. In 1997-98 the returns from the GE varieties were rather variable, with approximately half of the growers receiving less than those with conventional cotton, and the rest more.(17) Despite this, at least some Australian cotton growers are eager to have access to the seed, as the Australian Cotton Industry Council is trying to persuade Monsanto (the company which is in the process of developing a two-gene resistant variety) to commercialise its new seed. However, as there is a 6 to 13 per cent yield drag in trials, Monsanto has decided not to release it at present.(18) In 1999 permission has been given for 30 per cent of the total area under cotton, or 130 000 hectares, to be grown in Bt cotton.(19) This is the maximum acreage allowed under NRA regulation, instituted to manage pest resistance problems.

The National Farmers' Federation (NFF) has long been a proponent of access for Australian farmers to GMOs. Amongst other beneficial characteristics of this new technology, the NFF mentions a decrease in use of fertiliser, pesticide, labour and energy; lower input costs; higher yields; better food quality; better adaptation of crops to environmental requirements (drought, salt) and environmental possibilities (nitrogen fixing), although no evidence was provided to give weight to the list.(20) The NFF mentions a 10 to 20 per cent yield increase in herbicide tolerant canola in Canada (no reference provided).(21) No mention was made of changes in other inputs, so that the effect on net farm income is not clear.

Farmers' attitudes

Despite the NFF's enthusiasm, many farmers are recorded as reticent about involvement with GMOs,(22) or still in need to be convinced about its advantages.(23) Fifty-five per cent of farmers favoured a five-year moratorium on GMO crops(24). Issues of importance are demonstrated gains (not necessarily in decrease in costs of one or more inputs or in increased yields, but in net returns) and uncertainty over marketing possibilities of the crop and liability towards others.

In summary, no overwhelming financial advantage for farmers is yet apparent. In addition, some problems are starting to present themselves more clearly. One is the possible liability for contamination of other farmers' crops, an aspect not yet discussed extensively in the farming community. In some crops, such as canola which can pollinate plants further away then previously thought,(25) the problem is likely to be larger than in others, such as in cotton, which is a self-pollinator. Liability becomes especially important when contamination means loss of markets for other farmers.

Risks

Some countries have looked into the possibility of insurance against damage from GMOs. In Spain, companies which produce or plant GE crops will have to contribute to a fund intended to cover environmental accidents.(26) In Switzerland, the world's second largest insurance company mentions problems with risk assessment of GMOs, as risks of genetic engineering cannot be covered with classical liability insurance models.(27)

One group of farmers which can be disadvantaged by contamination is organic farmers.(28) At present, they could lose their organic certification if their crop were found to be polluted with GMOs, with obvious effects on their farm returns.(29) Some have already lost their market due to pollution from neighbouring fields.(30) In Canada, where the organic markets amounts to approximately $1 billion with 20 per cent annual growth rates, decrease of the EU canola market from 83 tonnes in 1994-95 to 20 tonnes in 1997-98 was attributed at least partly to uncertainty about the GE status of the crop.(31) In Switzerland, the Government recently denied permission for a field trial of GE maize, on the basis that it may contaminate organic crops.(32)

Conventional non-GMO farmers may also lose their market with GMO contamination. For example, in late 1998, NSW canola farmers sold the largest cargo ever to leave Australia (57 thousand tonnes valued at $26 million) to the EU. The reason for the sales from Australia, instead of from Canada, was reported to be that '...Australia is the only country to guarantee non-genetically modified canola'.(33) However, even without the commercialisation of GE canola in Australia, this market could be disrupted by the existence of field trials, as pollen from such fields can cause contamination in other fields.

In Canada, the National Farmers' Union (NFU) wants the federal government to make agricultural biotechnology companies financially responsible for what it calls the 'genetic pollution' of organic and traditional crops.(34)

In 1998 the USA lost a 70 million bushel maize market in the EU(35) and complained about the cost to maize farmers due to the EU refusal to import GMO maize, estimated at US$200 million for that year.(36) In 1998 more than half of the soybeans and almost as much maize was grown from GE seed.(37) But the American Corn Growers Association expects that a considerably lower acreage will be grown under GE maize in 2000. Four reasons cited include loss of export(38) and domestic markets; questions over cross pollination, testing and certification; concern over grain-elevator insistence on segregation; and premiums being offered for GE-free crops. It expects that non-GE seed shortage is a real possibility, and mentions that '...Congressional oversight hearings involving the seed companies should be held to determine the availability of non-GMO seed'.

The decision of Archer Daniels Midland(39), one of the biggest US agribusinesses and a leading maize processor, to not buy or trade any GMO maize which had not been approved by the European Union is bound to put pressure on farmers to return to non-GE varieties. A. E. Staley, the US maize processing subsidiary of Britain's Tate and Lyle, has taken a similar decision. This means that two of the leading maize buyers in the US have decided not to be involved with non-EU-approved maize, at least in the short run.

In the long run, the marketing question is whether consumers are willing to buy GE food, and if so, at what price. But even if consumers are convinced that the two products are similar, not warranting differentiation in marketing or price, farmers are not likely to gain substantially from the introduction of the technology, given the flow-on effects to other groups (input suppliers and consumers). The question is then more what farmers overseas do with the technology. Australian farmers would be disadvantaged only if overseas competitors are able to use the technology, produce commodities more cheaply and affect world prices. Although some farmers may gain at present from adopting the new technology, it seems that many perceive that their gain, if any, may not be worth the risk of losing their (short-term?) markets or being liable for other farmers' losses.

Labelling and food safety

Consumers

Although GMO products have been, and still are, sold through traditional marketing channels, consumer protests have made a number of food manufacturers and retail outlets react. For example, in the UK companies such as Unilever(40) and Nestle(41) have restricted the availability of GE products. Retailers such as Iceland, Asda, Sainsbury and Waitrose decided to drop GMO products early this year, and Tesco, UK's largest food retailer, expected that its own-label products would be largely GMO-free by the end of 1999.(42) Also in Australia some companies have removed GMO ingredients from a number of their key products.(43)

One way of differentiating between GMO and non-GMO products is through labelling. Labelling can occur in many forms, such as mandatory, voluntary and on the use or non-use of GMOs, with or without a qualifier. Each has advantages and disadvantages, often for different players. The decision, which form to adopt, affects not only the cost of the product but also influences sales.(44)

In Australia, the Australia New Zealand Food Standards Council accepted mandatory labelling of GE products at its December 1998 meeting (see below). This would enable consumers to choose between products, and is advocated by consumers (ACA), organic farmers (OFA) and environmental groups. Others, however, are less enthusiastic about this policy, such as a number of members of the Agrifood Alliance Australia, the Australian Food and Grocery Council and the NSW Farmers Association. Labelling requires segregation throughout the marketing chain, involving costs of debatable magnitude.(45)

Labelling, which enables consumers to differentiate between products, has gained popularity in other countries. Japan has announced that mandatory labelling will be required for GE products made from maize and soybeans, and this is expected to be finalised in April 2000. GE products of which the origin cannot be detected with present technology and products not directly consumed by humans will be exempt. This would exclude products such as soy oil and soy sauce, and animal feed.(46)

More recently, the EU has decided to make food labelling mandatory for all food with a higher than 1 per cent GE content.(47) Individual EU member countries may have additional legislation. For example, in the UK all food establishments (restaurants, pubs, etc.) must tell customers which foods contain GMOs.(48)

Although the USA and Canada have been opposed to labelling in the past, pressure has been rising to consider labelling. For example, Canada was recently reported as considering voluntary labels on GE food.(49)

'Substantial equivalence'

Most of the discussion about the food safety aspects of GMOs is centred on the concept of 'substantial equivalence'.(50) This was first framed by the UN Food and Agriculture Organization (FAO) and the World Health Organization (WHO) in 1990. A number of food characteristics are taken as indicating the substance of the product (such as nutrients, allergens and natural toxins). If a GMO product is similar in those aspects to a non-GMO product, then the GMO product is classified as 'substantially equivalent', implying that no special arrangements need to be made to accept the product for domestic consumption or import.

Some argue, however, that this measuring method neglects to deal with the possibility of unexpected novel toxins and allergens, as can occur with GMOs(51), and that this means that GMOs should be tested like any new products. In pharmaceuticals that are produced via GE, pre-clinical tests in animals need to be carried out to assess acute toxicity, followed by extensive clinical trials in human volunteers.

The British Medical Association (BMA), for one, recommends a moratorium on the commercial planting of GMO crops. It:

It expands on this viewpoint by mentioning the need for more research on allergenicity (due to the technology combining characteristics of different species) and possible toxicity. The BMA finds the use of antibiotic marker genes (used to be able to trace other gene transfers) completely unacceptable, as that will bring forward resistance to antibiotics in human disease strains.

In August 1999 the Australian Medical Association (AMA) and the Public Health Association (PHA), together with the ACA called on the Government to adopt mandatory labelling of GMOs, as:

Australian situation

In July 1998, ANZFSC accepted ANZFA's recommendation to adopt a standard to regulate GE food into the Food Standards Code. The standard was incorporated into the Food Standards Code, and came into effect on 13 May 1999 as Standard A18. It makes the sale of any GE food illegal, unless approved by ANZFSC. Approval depends on whether the product is 'substantially equivalent' to existing products with regard to nutritional quality, composition, allergenicity, or end use. If the product is significantly different then there is a provision for mandatory labelling.

In December 1998 Australian and New Zealand Food Standards Council (ANZFSC) directed the Australian and New Zealand Food Authority (ANZFA) to draft an amendment to the Food Standard Code which would require labelling also of GE products considered to be 'substantially equivalent'. ANZFA conducted a public consultation in May and June 1999, but progress was slow. At its August meeting, ANZFSC requested an inter-governmental task force to help amend the Code.

Just before the next ANZFSC meeting in October 1999, the Australian Prime Minister was reported as having '...placed on hold' this inclusion.(54) Controversy raged over the costs of the scheme, with wildly disparate estimates (between $150 million and $3 billion)(55), and few having had the chance to consider them closely. The ANZFSC confirmed its commitment to mandatory labelling of GE foods at the meeting, and

This will be considered at their next meeting, early in 2000.(56)

Meanwhile, controversy sprang up around another issue. Due to the changes in the Code, any GE food already sold in Australia and New Zealand would have to be registered by ANZFA by the time that Standard A18 became binding in May 1999. By the end of March, only seven applications had been received, and ANZFSC decided to amend Standard A18 in a fashion which made it possible for GE foods to be accepted by May 1999 on different grounds than originally intended. These amendments included applications to be received within one month (by the end of April); the food to be lawfully on the market overseas and be considered safe by an overseas regulatory agency; and ANZFA must not have any indication that the food was unsafe. Thirteen more applications were received before the end of April and those, together with the first seven, fulfilled the new requirements and were allowed to continue sale in Australia and New Zealand. Assessments of these applications are currently taking place.(57)

Consumers' concern

There is evidence to support the view that consumers are concerned about GMOs. ANZFA's website provides details of a public consultation on the issue of GMO labelling. The results show that 91 per cent of submissions were in favour of labelling, even for those products with 'the same properties as conventional food' (that is, 'substantially equivalent')(58). A CSIRO survey, which included the issue of labelling GMOs, showed significant interest of consumers in labelling in general. 36 per cent rated labelling of GMOs as very important, and only 7 per cent as not important at all. ANZFA is opposed to mandatory labelling of products which it considers 'substantially equivalent'.

Information

Many of the organisations concerned with the new technology, government and private, consider information campaigns as of major importance to overcome the consumers' doubts on GE. However, in March 1999 the Australian Museum convened the Consensus Conference to try and arrive at a 'citizens consensus' about the future of genetic engineering in Australia(59). The outcome was a position of considerable caution on the part of the participants. For example, one of the recommendations was that no new GMOs were to be released, unless several requirements were fulfilled, one of which was labelling of all GMOs. It seems therefore somewhat doubtful that an information campaign alone will convince people to accept GE products.

International trade obligations

The mandatory labelling issue raises the question whether it is compliant with international trade obligations. The NFF has postulated that '...mandatory labelling requirements for GM foods may be a breach of Australia's obligations under the World Trade Organisation' [sic](60) The Australian Food Council has expressed a similar sentiment in the past.(61) The arguments are complicated and experts do not agree upon the issues.

In 1995 the World Trade Organization (WTO) was established with Australia along with some 134 other nations as members. It was set up for the purpose of facilitating free trade between countries. The background to this issue is the recognition, internationally, that countries have used all kinds of non-trade issues, such as the potentially detrimental effect of imports on the domestic environment (health of flora and fauna) as a pretext for import restrictions. Some essential features of the WTO are:

• sovereignty and consistency: every country has the right to determine its own product standards, but they need to be consistent across products
• most favoured nation equivalence: imports from all countries need to be treated in a similar way. For example, with the exception of ratified regional trade agreements, tariffs on imports cannot differentiate between country of origin.

In other words, the principle of sovereignty allows each country to decide on their acceptable level of risk regarding product quality, with requirements of consistency across products. Members are allowed to apply similar standards to imports as they do to their own producers, but must treat 'like products' in the same way, irrespective of source. It is the aim that product standards are harmonised over time. This would occur via the Codex Alimentarius Commission, established in 1962 under the FAO/WHO food standards program. The Codex Alimentarius Committee has reached no agreement on GE food labelling after five years of discussion and the talks are still at the initial stage.(62)

Some new multilateral trade agreements (such as the Sanitary and Phyto-Sanitary (SPS) Agreement, and the Technical Barriers to Trade (TBT) Agreement were signed at the end of the Uruguay Round establishing the WTO. These recognised the importance of the environment and the precautionary principle in relation to trade.

The SPS Agreement allows factors such as health consideration for people, flora and fauna to be taken into account when determining import restrictions, but they must be scientifically justifiable and consistent across products. For example, the WTO recently ruled that Australia cannot prohibit imports of salmon because of fear of disease for local fish production, and at the same time allow the import of herring used as bait, and ornamental finfish that can also transmit the same diseases(63). The precautionary principle can be used, implying that, if no scientific risk assessment is available, decisions can still be made to restrict import on grounds of possible risk. However, efforts need to be made to obtain evidence within a reasonable time.(64)

The TBT Agreement complements the SPS Agreement, and regulates the setting of technical standards, including product and process standards.

With these rules it seems, at first sight, that there should not be problems for a country to introduce labelling legislation for certain kinds of food, and expecting importers to keep to the labelling requirements. However, opinions are divided on this issue. Some argue that, because differentiating between import sources on the basis of differences in production processes (as opposed to products) is not allowed, enforcing labelling for GMOs would be unlawful under the WTO rules'.(65), (66) The argument is that, if a product is deemed to be 'substantially equivalent', forcing producers to show from which seed the crop is produced is unlawful. That is, the difference in the two products is considered to be one of process, not of product. The WTO has established that discrimination on the ground of process is illegal, such as in the case of tuna caught in dolphin-safe nets. Others opine that, as tests can establish a difference between GMOs and non-GMOs (that is, between the two products), '...it is hardly surprising that commentators are predicting that biotechnology will provide stimulating debate in the forthcoming WTO negotiations'.(67)

This last source also proposes that, since the GMO issue is one of consumer choice and not of consumer safety (which would have brought it under the SPS Agreement), the issue is likely to be judged under the TBT Agreement, which could allow the inclusion of processes as a basis of differences.(68) However, at present this remains a contentious issue.

The above should give a good indication that, at present, questions about compliance of labelling GMOs with WTO rules are not easy to answer. The EU will insist that the consumer has the right to know, and that mandatory labelling schemes are allowed.(69) The USA is expected to argue the case that mandatory labelling is contrary to WTO rules.

The WTO itself provides some information on the topic, basically sounding positive about environmental labelling programs, but concluding that:

The Biosafety Protocol on Transboundary Movements of Living Modified Organisms is currently being negotiated under the Convention on Biological Diversity. Its stated aim is to govern the movement across country borders of 'living modified organisms (LMOs) .... that may have an adverse effect on the conservation and sustainable use of biological diversity.'

The Biosafety Protocol, if ratified, could have significant impact on the international trade and transport of live LMOs, although its emphasis is the impact of such GMOs on biodiversity. Negotiations on the Protocol broke down in Cartegena, Columbia in February 1999 and are due to recommence in Montreal, Canada at the end of January 2000.

Environmental impacts

Many claims are made about the environmental effects of GMOs, ranging from positive to negative.

The main positive environmental effects of GE emphasised to date are that this technology facilitates a reduction in the need for pesticides in farming. Examples are Roundup Ready soybeans, and Bt maize and Bt cotton. It should be noted that these effects are not really positive in the strict sense of the word, but they alleviate the negative effects of agriculture as presently practised by most farmers in Australia. And it should be borne in mind that, if the aim of the technology is to decrease pesticide use on farms, other production methods are available.(71)

Although, at face value, pesticide reduction is likely with this new technology, it is important to examine each case carefully. For example, Roundup Ready soybean is said to need less herbicide, as the decision about spraying can be taken after the time of planting. At that time it would be clear whether the growing conditions warrant expenditure on this input. If adverse conditions occur, such as droughts or floods, frequently experienced by Australian farmers, herbicide use can be postponed or cancelled. Some data support this argument, although it is mainly a mixed picture. The USDA's data show that less pesticides were required at three out of five locations with herbicide-resistant soybeans, and at one out of two locations where cotton was grown. For insecticides, the relevant figures are one out of one location for Bt maize, and two out of three for Bt cotton(72). The Iowa study based on the USDA data reports 30 per cent reductions in pesticide costs for the GE soybeans, and 22 per cent for Bt maize.(73) Others point out that herbicide use is more complicated, and that a reduction in total use with the introduction of herbicide resistant crops is not so clear-cut.(74) One of the reasons is that, once the farmer plants herbicide-resistant crops, the main technology used against weeds is then likely to be the use of herbicides, instead of a combination of methods including herbicide use, crop rotations, cultivation or cover crops.

Over time a number of negative effects have been pointed out. Problems for farmers who have decided not to use GE crops have been mentioned above, especially for crops that are cross-pollinators. Even if buffer zones were sufficient to deter cross-pollination(75), it would be impossible to guarantee separation of the different varieties in the long run. For example, seed blown from trucks during transport ensures unintentional contamination of sites, which over time will affect other sites. It is suggested that such spread of GMO plants will inevitably lead to the appearance of superweeds, through crossing with plants in the wild which are closely related (such as mustard weed with canola)(76).

Another major concern is that the wide distribution of a limited number of crop varieties means restricted genetic diversity, thereby making an outbreak of diseases and pests over large areas more likely in the future. Already, limited supply of non-GMO varieties may be a concern in the USA (77). Although a decrease in bio-diversity is an area of concern at present, the widespread introduction of GMOs is thought to increase this trend.

As development of pest resistance to the in-built pesticide is likely to happen sooner or later(78) it is argued that, in the long-term, not much gain is to be made from the application of the technology. Opinions have been expressed that even a few years' reduction in pesticide use should be worth the investment for environmental reasons. Another point is that other management systems (such as organic agriculture), which are at present using BT sparingly, may soon not be able to use this technique, due to overall resistance of the pests.

Concerns from environmentalists include the unpredictability of new species: about where they could spread(79), how they can mutate, and about their effect on other forms of life. Concerns have been expressed about the development of new virulent strains of viruses, especially in soil or the alimentary tracts of mammals, which may create conditions for genes in transgenic plants engineered for viral resistance with viral genes, to recombine with pathogens, creating new pathogens.(80) A well-publicised example of effect on non-target organisms is the case of pollen of Bt maize that affects the Monarch butterfly under laboratory conditions(81), but effects on other organisms in the field have also been shown.(82) On these points, claims and counterclaims(83) are made, but perhaps the main point is the uncertainty involved with the releases, releases that may bring about unexpected and unpredictable, and in some cases irretrievable, consequences.

Investors

The opinion has been expressed in Australia that it is important for the country to be involved in the developmental phase of GMOs. This is seen as a way in which to keep the seed costs down for farmers, and make maximum use of already invested public funding in the raw material used in GE.(84) A similar thought is expressed by the Department of Agriculture, Fisheries and Forestry-Australia (AFFA). It points out that Australian researchers:

Another reason to encourage local investment in GE technology is to enable the development of GE crops of interest to Australian growers. Australian investments would facilitate development of crops important for Australia, in which international firms are not interested due to the limited size of the market.(86) However, if international investors do not consider the Australian market worthwhile, then it is difficult to see how Australian investors would find it interesting, unless this investment originates from the public purse.

The lack of capital availability to set up such ventures is expected to be influenced by risk of failure, complexity of institutional arrangements regarding ownership of the technology, innovations which make investments more attractive, and market resistance to GMO products.(87) In that vein, some applaud the Government's overhaul of the capital gains tax system, which is expected to encourage domestic and overseas investments into Australian innovations.(88)

Internationally there seems to be some pressure away from investments into this technology, as witnessed by the Deutsche Bank which '...advised the world's largest investors to sell their shares in leading companies involved in the development of genetically modified organisms because consumers do not want to buy their products^' .(89) Shares of Monsanto, a major company involved, are reported to have fallen over the last half year up until August 1999, against a rising trend.(90) Biotechnology companies in Australia in general are reported as having obtained net profit margins (before tax) of 0.15 per cent over the last financial year.(91)

Other deterrents for investors could well be an anti-trust lawsuit to be brought in the USA announced in September 1999(92), and a suit to challenge the legality of introducing GMOs.(93) The issue here is whether the EPA approved Bt crops without fully assessing their environmental safety.

Institutional arrangements

Where issues of human health and environment are involved substantial market failure occurs, and governments have a role to play to protect people and the environment. This role is played via regulations and institutions.

Genetic engineering issues were relevant before some of the organisations, presently involved, existed. The Australian Association for the Advancement of Science (AAAS) began monitoring gene technology developments in the 1970s and the Recombinant DNA Monitoring Committee was established in the Department of Industry, Technology and Commerce (DITAC) in 1982. In 1987 it was reconstituted and in 1988 was moved to the Department of Administrative Services where it took on the name of Genetic Manipulation Advisory Committee (GMAC). It had the task to oversee the development and use of novel genetic manipulation techniques in Australia and offer advice to the Minister.

More recently, the Interim Office of the Gene Technology Regulator (IOGTR) has been instituted to take a leading role in this area. GMAC can be considered to be the forerunner of the IOGTR. It is, however, still in existence and, although not strictly a regulatory body, some details are given on this organisation before discussing others.

In agriculture, regulations related to the technology of genetic engineering have been in the hands of several bodies, the Australian and New Zealand Food Standards Council (ANZFSC), the Australian Quarantine Inspection Service (AQIS) and the National Registration Authority for Agricultural and Veterinary Chemicals (NRA).

Apart from regulating the industry, government also has the task of informing the public about biotechnology in Australia. Biotechnology Australia was formed this year in the Department of Industry Science and Resources, with $10 million to spend over two years. Part of that budget, $1.7 million per year for two years, is to be spent to educate Australians on the issue of genetic engineering.

Genetic Manipulation Advisory Committee

GMAC is a non-statutory body established in 1987 and, at that time, was located in the Department of Industry, Technology and Commerce. It replaced and extended the work of the Recombinant DNA Monitoring Committee (RDMC). In June 1999, responsibility for GMAC was transferred to the Health and Aged Care portfolio and it presently advises the newly established IOGTR.

The Committee consists of about 20 part-time members, drawn from disciplines relevant to assessing genetic manipulation proposals, and appointed by the Minister for Health and Aged Care for their expertise rather than as representatives of a particular interest group.

Guidelines for small and large-scale research work, for deliberate release and for the potential for unintended release of genetically engineered organisms were in operation. These were not compulsory, although GMAC maintained that '...sanctions could be implemented if a researcher refused to abide by GMAC's advice'. The example of researchers being required to sign agreements before being awarded funding was given.(94) Obviously not all those involved in the development of gene technology were dependent on these kinds of arrangements, and it is not clear how those who were not dependent on the public purse could be compelled to comply with GMAC's guidelines. GMACs lack of legal teeth is acknowledged by IOGTR(95), although breaches of their guidelines are shown to be few, and probably not far-reaching.

Recently, GMAC has transformed into an advisory body to the IOGTR, and will be called the Gene Technology Advisory Committee (GTAC). IOGTR has outlined the way ahead for GTAC. It will continue to oversee research and releases of GMOs of organisms which are unlikely to occur in nature or likely to pose a hazard to public health or to the environment(96). It will also be responsible for identifying potential hazards and appropriate procedures to ensure safety.

Interim Office of the Gene Technology Regulator

The aim of the Government is to set up a regulatory framework in which all matters concerning genetic engineering can be taken care of. It is the intention that a Gene Technology Bill will be introduced into Federal Parliament in April 2000(97). The Office of the Genetic Technology Regulator (OGTR), which will administer the bill, is expected to be fully operational no later than early 2001. It will be housed in the Therapeutic Goods Administration (TGA) of the Department of Health and Aged Care, indicating the Government's concern to separate from industry matters of public health and safety and of environment. However, public interest groups wanted the OTGR established in Environment Australia because they felt that its presence in the TGA creates a concentration of interests on drugs, tests and human gene therapies which ought to be separate from professional and industrial medical interests close to the TGA.

The OGTR will work closely with State and Territory Governments.

Meanwhile, the Interim OGTR, instituted in August 1999, performs the tasks of regulator. To that end it is to:

• regulate all aspects of the development, production and use of genetically modified organisms (GMOs) and their products, where no other existing regulatory body has responsibility
• work with other regulatory bodies to ensure the consistent application of standards and to harmonise genetic safety assessments across all systems of regulation.(98)

In the performance of its tasks, it will draw upon existing legislation. In agriculture this includes:

• foods: Australia New Zealand Food Authority Act 1991, administered by ANZFA and accompanying State/Territory legislation
• agricultural and veterinary chemicals: Agricultural and Chemicals Code Act 1994, administered by the NRA and accompanying State/Territory legislation
• imports and exports: Quarantine Act 1908, Imported Food Control Act 1992 and Export Control Act 1982, administered by the Australian Quarantine and Inspection Service (AQIS) and by Wild Life Protection legislation administered by Environment Australia.

Since its inception, the IOGTR has emphasised a need for:

• more transparency and accountability for the procedure of considering/accepting applications
• clear identification of the decision maker, that is, the Minister of Health and Aged Care makes the final decision
• putting in place a mechanism for enforcing compliance with conditions of release of GMOs, which up until now had been on a voluntary basis. (99)

While the OGTR is in the process of being set up and its structure finalised, decisions will have to be made on the commercialisation of general releases of GMOs. The IOGTR is therefore involved in tasks such as revising GTAC's structure and processes to enable more transparency and accountability; establishing processes and procedures which facilitate decision making regarding the release of GMOs; contractual arrangements regarding GMOs; and taking on tasks where no other agency has the responsibility.(100) In other words, the IOGTR is involved in setting up the structure within which it, and presumably the OGTR, will function.

Australia New Zealand Food Authority Act 1991

The Australian Food Authority Act originates from 1991. In 1995 Australia and New Zealand signed a treaty to establish a joint system for developing food standards in the two countries, and the act is now known as the Australia New Zealand Food Authority Act 1991.

The Australian and New Zealand Food Authority (ANZFA), a statutory authority under Australian Commonwealth Law, operates under the Act. It has a Board with seven directors, and it advises the Australian and New Zealand Food Standards Council (ANZFSC), a body which consists of the Health Ministers of the Australian Commonwealth and the State and Territories, and New Zealand. The Council decides on food standards to operate in Australia and New Zealand (partially).

ANZFA and ANZFSC are helped in their tasks by the ANZFA Advisory Committee, consisting of the ANZFA Chairperson, nominations of each State and Territory and of New Zealand, and other specific government agencies from Australia and New Zealand. ANZFA also uses the services of the Australian Government Analytical Laboratory for testing.

ANZFA is part of a wider regulatory system. Other legislation which affects food standards include:

• New Zealand Food (Amendment) Act 1996
• State and Territory food legislation based on a Model Food Act
• Food Safety (hygiene) Regulations
• Commonwealth Trade Practices Act and its State and Territory equivalents
• Commonwealth customs and quarantine legislation
• Trade measurement and packaging legislation
• Other legislation governing the food industry.

The importance of ANZFSC and ANZFA here is that they are in the centre of decisions made on how to handle GE food.

ANZFA stresses its partnership with all kinds of different organisations: (101)

However, with so many stakeholders to take into consideration, the question arises about weights attributed by ANZFA to the opinion of each group. This situation, where ANZFA is expected to take into account opinions of diverse groups, exposes a considerable problem of how to deal with different constituents when their views are directly opposed to one another.

Australian Quarantine Inspection Scheme

AQIS administers the Quarantine Act 1908 that covers the regulation of imports of plants and animals into Australia. AQIS also administers the import requirements for imported foods on behalf of ANZFA as part of the Imported Foods Control Act 1992. When an importer wants to import an organism which has been genetically modified, AQIS conducts a quarantine import risk assessment, and determines whether risk management conditions need to be applied prior to issuing an import permit. Exports are regulated under the Export Control Act 1982. The Quarantine Proclamation 1998 provides for the prohibition of plants pending assessment.(103)

National Registration Authority for Agricultural and Veterinary Chemicals

The NRA operates under the Commonwealth Agricultural and Veterinary Chemicals Code Act 1994, and relevant State legislation. NRA's task is to evaluate all agricultural and veterinary chemicals before use is allowed, and it decides whether they fulfil requirements of registration, as defined under the Act. Proposed changes within the Act can be submitted to AFFA, by the NRA and other bodies. AFFA then refers it to the Policy Committee, which will give a recommendation to the Standing Committee on Agriculture and Resource Management (SCARM). If SCARM approves of the change, this will then be drafted by AFFA to go before Parliament as a Disallowable Instrument. These changes will be mainly in the area of what substances the NRA could exclude from its registration program.

The relevance of the NRA in connection with GE is twofold, first of all animal vaccines and secondly substances with pesticidal characteristics in crops. It is this last category which has been important in recent years. Cotton, with a gene of Bacillus thuringiensis (BT), has been approved in Australia, to protect the plant from Heliothis. At the time of the Act's adoption, it was phrased broadly enough to be able to cover micro-organisms such as BT. The living cell, with the new characteristic, was deemed to fall within that category. If crops are engineered for characteristics other than those related to pesticides, they would not fall under the jurisdiction of the NRA.

The NRA is advised by:

• Environment Australia
• Worksafe Australia
• Chemical Policy Assessment Unit in the Department of Health.

Although the NRA has provision for community consultations, the problem of attributing weight to the opinions of its stakeholders is as relevant for this organisation as it is for ANZFA. Another issue concerns transparency. When details about a product are submitted to the NRA for registration, 'commercial-in-confidence' conditions can apply. If submitted under those conditions, no other group has access to the data, which implies that a review or challenge by other interested stakeholders cannot take place. There is no definition for 'commercial-in-confidence'. Public interest groups and environmentalists see this lack of transparency as an impediment to sound decision making.

Summary and conclusions

In the last decade, a potential for significant and sustained productivity increase in agriculture has come about and the question is how Australia can best take advantage of this technology.

Like much technological change, genetic engineering precedes, yet necessitates, institutional and social change. Discussion of the likely impacts and implications of GE is needed before the appropriate changes can be made.

In considering the likely impacts, one of the main conclusions of this paper is that there is a high level of uncertainty attached to almost all factors involved in the issue of genetic engineering in agriculture. Although there are expectations of great progress in agriculture, the extent of this is largely unknown. Uncertainties relate not only to productivity, but also to the impact on consumers and the environment.

The absence of large productivity gains at present, however, does not mean that they are not possible in the future. It also needs to be recognised that it is not necessarily the farmers who gain substantially from the introduction of a new technology, although they may lose their competitive edge if they lag other countries in technology adoption. However, even if farmers were not to capture the gains from the adoption of GE varieties, there can still be a gain for the country as a whole, which could warrant public investment in the technology.

In connection with GMOs farmers face several difficulties. One is consumer acceptance of the product, at least in the short term, as there is an increasing demand for labelling of the product to distinguish it from non-GE products. The issue of 'substantial equivalence' is yet to be settled. It is of course possible that, with more information, there could be less resistance to buying GE food than there appears to be at present. This, at least, seems the assumption behind the emphasis of government and industry bodies on an information campaign directed to consumers. Recent experience with information provision on this topic suggests, however, that the opposite can well be the case, and that consumers become more wary of GMOs. With the divergent points of view on the benefits and costs of the technology, a crucial question is what part of the funding will be allocated to either side.

Farmers also risk legal action from those who want to keep their products GMO-free. This can occur especially with wind or insect pollinated crops, such as maize and canola. From the point of view of farmers who do not want their crop cross-pollinated with GE pollen, introduction in Australia of the crops at all becomes a problem as it will be difficult to contain these plants once introduced, as with any new crops or varieties. For example, when transported to the market, some seeds are bound to blow off the vehicle, and roadside contamination is unavoidable in the long run, with potential long-term consequences for the whole of the country. At present it is not clear who will bear the costs of such contaminations, and this will need attention. It is therefore perhaps not surprising that the majority of farmers in an Australian survey indicated their preference for a moratorium on GMOs.

The environmental issues involved are also significant. A decrease in pesticide use is heralded as a great environmental improvement by GE proponents. Although it is not clear yet that there are significant benefits, especially in the long run and on a large scale, any decrease may be seen as an improvement. On the other hand, the escape of undesirable genes into the environment with no possibility of ever recalling them seems a risk worth paying attention to. A further environmental issue is the trend of decreasing bio-diversity.

Internationally, the issue is important in trade. The EU and Japan support the right of consumers to demand mandatory labelling of GE products. The USA is opposed to mandatory labelling, at least at present. The WTO meeting at the end of November will very likely put this issue on the agenda for discussions in the next round of multilateral trade negotiations, but there is no guarantee that it will be resolved shortly.

At present the IOGTR is in the position of setting up a framework to regulate the industry, which should take account of the various issues discussed in this paper. Processes are to be established to enable use of genetic engineered products without jeopardising the safety of food and the environment. The issues of transparency and accountability of the GE regulatory process are considered important, as is public consultation. The issue of 'commercial-in-confidence' will need attention, as present practices mean that evidence provided in the process of GMO acceptance cannot be examined by other parties. This hinders transparency and accountability.

Given the prevailing uncertainty and public concern about many aspects of GE products, and the importance of GE policy for Australia's farming future, Australia can only benefit from input from all directions when deciding which way to go at the crossroads.

Endnotes

2. Hon. Nick Minchin, 'Funding for Biotechnology Strategy', Media Release 11 May 1999.

3. National Farmers' Federation, Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services Inquiry into Primary Producer Access to Gene Technology, June 1999.

4. M. Ragg, 'Farmers make a meal of technology debate', Sydney Morning Herald, 21 July 1999.

5. Anne Lloyd, 'Farmers uncertain about GM Crops. Clear Message from survey: "Convince me!", Rural Press Report, 15 September 1999.

6. Farm Weekly, 16 September 1999, pp. 3-4.

7. Nikki Tait, 'Top US buyers spurn modified corn', Financial Times: World Trade, 15 April 1999.

8. Radio National Breakfast, 'Legal action planned to prevent major companies using genetic engineering to gain control of world agriculture', with G. Doogue, 22 September 1999.

9. See also Rosemary Polya, 'Genetically Modified Foods - Are We Worried Yet', Current Issues Brief No. 12, Department of the Parliamentary Library, Canberra 1999, pp. 6-7.

10. Craik Skehan, 'Billions at stake as food is frozen out', Sydney Morning Herald, 27 October 1999.

11. Hon. Dr Michael Wooldridge, 'New Safety: Measures for Genetically Modified Products', Media Release, 22 August 1999.

12. Charles Benbrook, 'Evidence of the magnitude and consequences of the Roundup Ready soybean yield drag from university-based varietal trials in 1998, AgBioTech InfoNet Technical Paper, no. 1, 13 July 1999.

    Also on: http://www.biotech-info.net/RR_yield_drag_98.pdf.

13. See: http:/www.consensusconference.chirp.com.au.

14. Charles Benbrook, 'Evidence of the magnitude and consequences of the Roundup Ready soybean yield drag from university-based varietal trials in 1998', AgBioTech InfoNet Technical Paper, no. 1, 13 July 1999.

    Also on: http://www.biotech-info.net/RR_yield_drag_98.pdf.

15. See: http://www.econ.ag.gov/whatsnew/issues/gmo/modeling.htm, 'In 'uncontrolled experiments,' such as when analyzing farm survey data, caution must be exercised because conditions other than the 'treatment' are not equal. Thus, differences between mean estimates for yields and pesticide use from survey results cannot necessarily be attributed to the use of genetic engineering technology since the results are influenced by many other factors not controlled for, including irrigation, weather, soils, nutrient and pest management practices, other cropping practices, operator characteristics, pest pressures, and others.'

16. Mike Duffy and Matt Ernst, 'Does planting GMO seed boost farmers' profits?', Leopold Letter, vol.11, no. 3, Leopold Centre for Sustainable Agriculture, Iowa State University, 1999. Also on: http://www.ag.iastate.edu/centers/leopold/fall99leoletterindex.html.

17. R. Watt, 'GM crops will be assessed on profits', Australian Farm Journal, August 1999, p. 14.

18. B. Pyke, Transgenic cotton teaches a few lessons', Australian Farm Journal, August 1999, p. 16.

19. http://www.aph.gov.au/hansard/reps/commttee/r2648.pdf, p. 27-28.

20. Cathy Bolt, 'Growers want new cotton type', Australian Financial Review, 4-5 September 1999.

21. National Farmers' Federation, Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services Inquiry into Primary Producer Access to Gene Technology, June 1999.

22. National Farmers' Federation, Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services Inquiry into Primary Producer Access to Gene Technology, p. S296, June 1999.

23. M. Ragg, 'Farmers make a meal of technology debate', Sydney Morning Herald, 21 July 1999.

24. Anne Lloyd, 'Farmers uncertain about GM Crops. Clear Message from survey: 'Convince me!', Rural Press Report, 15 September 1999.

25. Farm Weekly, 16 September 1999, pp. 3-4.

26. Nick Nuttall, 'Bees spread genes from GM crops', The Times (UK), 15 April 1999.

27. Xavier Bosch, 'Spain makes transgenic crop producers pay into insurance fund', Nature, vol. 397, 25 February 1999.

28. Bridges Weekly Trade News Digest, vol. 2, No. 47, 7 December 1998.

29. The International Federation for Organic Agricultural Movements voted against the use of GMOs in food production and agriculture at its 12^th Scientific Conference in November 1999 (Ecology and Farming, No. 20, January 1999, p. 29).

30. C. Lyddon, 'Gene modification fears boosts organic produce', Reuters, London, 20 April 1999.

31. R. Barrett, 'Wind-blown genes cut into organic profits', Wisconsin State Journal, 24 March 1999.

32. B. Hoyle, 'Canadian farmers seek compensation for 'genetic pollution', Nature Biotechnology, vol. 17, August 1999.

33. Abbott, 'Swiss reject GM trial to protect organics', Nature, 29 April, 1999.

34. 'Australia to ship largest cargo of canola to Europe', Asia Pulse, 8 January 1999.

35. J. Paulson, 'NFU fights 'genetic pollution'; National farm group wants Ottawa to make ag-biotech firms liable', The Saskatoon Star Phoenix, 12 May 1999.

36. Reuters, 3 March 1999.

37. T. McDougal, 'Fears that GM crop impasse could spark agri-trade war', Farmers Guardian, 19 June 1998.

38. Reuters, 'US seeks 'sensible proposal' on biotech foods at WTO', 21 October 1999. Can be found on: http://www.agriculture.com/worldwide/AgricultureFarming/10_19_1999.reulb-story-bcwtousabiotech.html

39. Trade related issues are covered in a later section.

40. Nikki Tait, 'Top US buyers spurn modified corn', Financial Times: World Trade, 15 April 1999.

41. Nick Nuttall, 'Cap'n Birdseye puts freeze on GM foods date', The Times (UK), 28 April 1999.

42. Greenpeace, 'Nestles joins stampede to get out of GE food products', London, 28 April 1999.

43. Nick Nuttall, 'Cap'n Birdseye puts freeze on GM foods date', The Times (UK), 28 April 1999.

44. C. Bolt, 'Alliance to push benefits of biotechnology', Australian Financial Review, 17 May 1999.

45. See: http://www.agbioforum.missouri.edu/

46. See also below, in Section Australia New Zealand Food Authority Act 1991.

47. Labels: Linking Producers and Consumers, vol. 3, no. 7, October 1999. Can be found on: http://www.newsbulletin.org/bulletins/getcurrentbulletin.cfm?bulletin_id=28&sid=

48. M. Smith, and M. Wrong, 'EU sets out plan for modified food labels', Australian Financial Times, 22 October 1999.

49. The Sunday Age, 'GM: Britain gets tough', 19 September 1999, p. 13.

50. Labels: Linking Producers and Consumers, vol. 3, no. 6, August 1999. Can be found on: http://www.newsbulletin.org/bulletins/getcurrentbulletin.cfm?bulletin_id=28&sid=

51. Eric Millstone, Eric Brunner and Sue Mayer, 'Beyond 'substantial equivalence'', Nature, 401, pp.525-26, 7 October 1999.

52. 'Physicians and Scientists for Responsible Application of Science and Technology' maintain that unexpected substances may appear due to GE, which would make these products 'new' on http://www.psrast.org/mianunpr.htm.htm. They compare the methods of testing 'substantially equivalent' and new products on: http://www.psrast.org/subeqow.htm.

53. British Medical Association, 'The impact of genetic modification on agriculture, food and health-An interim statement', London, May 1999.

54. Australian Medical Association, Public Health Association, Australian Consumers' Association, 'Grave fears that gene food lables will be denied to consumers', Media Release, 29 July 1999.

55. B. Pearson, 'Howard scotches food label plans', Australian Financial Review, 21 October 1999.

56. See: http://www.anzfa.gov.au/documents/gen24_99.asp.

57. 'Labelling of genetically modified food', ANZFA Media Release, 22 October 1999.

58. 'Food Produced using gene technology', ANZFA Fact Sheet, August 1999, edition 7. See: http://www.anzfa.gov.au/LatestMedia/FactSheets/Foods_Produced_Using_Gene_Technology

59. 'Stakeholder views from a public consultation on the labelling of foods produced using gene technology', ANZFA Fact Sheet, 26 October 1999. Can be found on: http://www.anzfa.gov.au/LatestMedia/FactSheets/Stakeholder_Views_From_A_Public_Consultation.htm.

60. Australian Consumers' Association, 'Gene technology in the food chain', Lay Panel Report of the first Australian Consensus Conference, Canberra, 10-12 March 1999.

61. NFF, 'GMO food labelling may breach WTO rules', Media Release, Canberra, 21 October 1999.

62. Australian Food Council, 'Gene Technology Regulation - Sense and Sensibility Prevails', Media Release, 24 February 1998.

63. Codex Alimentarius Commission, 'Report of the 27^th Session of the Codex Committee on Food Labelling', 27-30 April 1999, Ottawa.

64. WTO, 'Australia - Measures affecting importation of salmon', Report of the Appellate Body, WT/DS18/AB/R, 20 October 1998.

65. Agreement on the Application of Sanitary and Phytosanitary Measures, Article 5.7.

66. In her testimony before the House of Representatives Standing Committee of Primary Industries and Regional Services, Primary Producer Access to Gene Technology, Dr Craig mentions that the NFF received '...legal advice which suggests that the decision of ANZFA may cause Australia to have trade problems in the WTO; that is because of this whole issue of focussing on production and processing methods, which is not a legitimate trade barrier to impose'. 29 September 1999. See http://wopablue/hansard/reps/commttee/r2672.pdf, p. 16.

67. Oxley, 'Poor environmental policy - the fundamental problem in the 'trade and environment' debate. Paper presented at the Roundtable on Trade and Environment Conference, Canberra, 25 August 1999.

68. J. McDonald, 'Mainstreaming ESD - Trade and environment in the millennium Round'. Paper presented at the Roundtable on Trade and Environment Conference, Canberra, 25 August 1999, p. 8.

69. ibid., p. 40.

70. ibid., p. 39, and speech by Ambassador of EU at National Press Club, 21 October 1999.

71. See: http://www.wto.org/wto/environ/eco.htm.

72. Nic Lampkin and Susanne Padel, 'The Economics of Organic Farming', CAB, Wallingford, UK, 1994.

73. See: http://www.econ.ag.gov/whatsnew/issues/biotech/Table3.pdf.

74. Mike Duffy and Matt Ernst, 'Does planting GMO seed boost farmers' profits?', Leopold Letter, vol. 11, no. 3, Leopold Centre for Sustainable Agriculture, Iowa State University, 1999. Also on: http://www.ag.iastate.edu/centers/leopold/fall99leoletterindex.html.

75. Charles Benbrook, 'Evidence of the magnitude and consequences of the Roundup Ready soybean yield drag from university-based varietal trials in 1998', AgBioTech InfoNet Technical Paper no. 1, 13 July 1999.

    Also on: http://www.biotech-info.net/RR_yield_drag_98.pdf.

76. Nick Nuttall, 'Bees spread genes from GM crops', The Times (UK) 15 April, 1999, reports that canola pollen can be spread up to 4 kilometers from test sites, while buffer zones in the UK are of 200 metres. Brian Hoyle, 'Canadian farmers seek compensation for "genetic pollution'', Nature Biotechnology, vol. 17, August 1999, reports spread of pollen up to 8 km.

    Louise Robson, reports on pollen from pine trees, which can travel up to 600 kilometers (AAP: 'UK: conservation groups call for worldwide GM forestry halt', 9 November 1999, Story no. 8666.)

77. 'Engineered plants may spread genes to weeds', Nature Magazine, 3 September 1998.

78. Nikki Tait, 'Battle grows over modified food', Australian Financial Times, 6 October 1999.

79. Rural News, 'Study warns that Bt cotton may not be long term solution', 3 September 1999. See: http://www.abc.net.au/rural/news/stories/s49065.htm.

80. M. Williamson, 'Environmental risks from the release of genetically modified organisms (GMOs) - the need for molecular ecology', Molecular Ecology 1992, 7, pp. 3-8.

81. R.A. Steinbrecher, 'From Green to Gene Revolution: the environmental risks of genetically engineered crops', The Ecologist, 26, pp. 272-282, 1996.

82. Carol Kaesuk Yoon, 'Pollen from genetically altered corn threatens Monarch butterfly, study finds', The New York Times, 20 May 1999.

83. Nigel Hawkes, 'Ladybirds harmed in transgenic crop test', The Times (UK), 22 October 1997.

84. See: http://www.bio.org/food%26ag/bt0610.htm.

85. Australian Biotechnology Association, Submission to the House of Representatives Standing Committee of Primary Industries and Regional Services, Primary Producer Access to Gene Technology, Submission no. 39, 10 June 1999.

86. Department of Agriculture, Fisheries and Forestry - Australia, Submission to the House of Representatives Standing Committee of Primary Industries and Regional Services, Primary Producer Access to Gene Technology, Submission no. 77, 17 September 1999.

87. National Farmers' Federation, Submission to the House of Representatives Standing Committee of Primary Industries and Regional Services, Primary Producer Access to Gene Technology, Submission no. 36, 11 June 1999.

88. Department of Agriculture, Fisheries and Forestry - Australia, Submission to the House of Representatives Standing Committee of Primary Industries and Regional Services, Primary Producer Access to Gene Technology, Submission no. 77, 17 September 1999.

89. Australian Biotechnology Association, 'Australian Biotechnology Association strongly supports government capital gains tax system overhaul', News Release, Gardenvale, 29 September 1999.

90. Australian Financial Review, 'Seeds of discontent', 26 August 1999.

91. Australian Financial Review, 26 August 1999.

92. Helen Meredith, 'Tough times for the biotech companies', Australian Financial Review, 7 October 1999, p. 12.

93. Radio National Breakfast, 'Legal action planned to prevent major companies using genetic engineering to gain control of world agriculture', with G. Doogue, 22 September 1999.

94. 'US groups sue over approval of Bt crops...', Nature, vol. 397, 25 February 1999.

95. Faragher, Galloway K., McLean, 'Regulatory framework for genetically modified organisms in Australia', Paper presented at the Outlook Conference of the Australian Bureau of Agricultural and Resource Economics, February 1998, Volume 2, p. 106.

96. Interim office of the Gene Technology Regulator, Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services, Inquiry into the Primary Producer Access to Gene Technology, 22 September 1999, p. 6.

97. ibid., pp. 6-7.

98. ibid., p. 14.

99. Interim Office of the Gene Technology Regulator, Submission to the House of Representatives Standing Committee on Primary Industries and Regional Services, Inquiry into the Primary Producer Access to Gene Technology, 22 September 1999, p. 6.

100. ibid.

101. ibid.

102. Presentation to the Genetic Consensus Conference in March 1999, M. Bun for the Australian Consumer Association.

103. See: http://www.anzfa.gov.au.

104. For more details see Rosemary Polya, 'Genetically Modified Foods - Are We Worried Yet', Current Issues Brief No. 12, Department of the Parliamentary Library, Canberra 1999, pp. 6-7.

 

 

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