Dispute between Mexico and the US about Genetically Modified Corn Intensifies

Date:08-22-2023

Mexico’s ban on Genetically modified (GM) corn has raised tensions between Mexico and the US, its most important trading partner. In recent months, both countries have hardened their stance on the matter, which has now developed into a trade dispute under the US-Mexico-Canada Trade Agreement (USMCA).

Presidential Decree

The issue of genetically modified (GM) corn has been one of the most hotly debated issues in Mexican agricultural politics for several years. A key moment in the ongoing debate was the Presidential Decree issued on 31 December 2020, which announced a definite ban on the imports of GM corn by 31 January 2024.

Animal Feed

The years following this Decree, much of the discussion evolved around the question whether the announced ban would only apply to corn destined for human consumption, or also to corn destined for animal feed. This question was specifically relevant for American corn farmers and exporters: Mexico has traditionally been the largest buyer of American corn and buys about 17 million tonnes of - mostly genetically modified yellow - corn from the US each year, worth around 5 billion US dollars, around 25% of all US corn exports. Most of this imported corn is used for animal feed. If the announced ban would indeed apply to all GM corn, most of this trade would be in jeopardy. This is why US and Mexican farmers, as well as their lobbying organizations, had called on the Mexican authorities to provide clarity on the matter.

Scientific arguments

Simultaneously, US authorities, in particular Secretary of Agriculture Tom Vilsack, demanded scientific arguments for the ban on GM corn and threatened with legal action under the US-Mexico-Canada (USMCA) trade agreement. These demands were made in a context of already growing divergence between the positions of Mexican and the US about the use and safety of biotechnology in agriculture.  

Disappointment

As tensions rose between the US and Mexico about the ban on GM corn, Mexico issued a new Decree on 13 February 2023, scrapping the January 2024 deadline to ban GM corn for corn meant for animal feed and industrial use, while retaining the deadline for a definite ban on imports of GM corn for human consumption, specifically tortillas and corn dough and flour. This new Decree relieved some of the concerns of farmers, but was not enough to relieve the tensions between the US and Mexico: The day after the Decree was issued, US Agriculture Secretary Vilsack said he was ″disappointed″ by the new Decree, and stressed the importance of adhering to a ″science-based, rules-based trading system″ and the US commitment to ″preventing disruptions to bilateral agricultural trade and economic harm to U.S. and Mexican producers″.

Trade dispute

In recent months, the conflict escalated further: In March 2023, the US officially held ‘technical consultations’ with Mexico regarding the ban on GM corn and other biotechnology issues. As this first formal step of the dispute settlement mechanism failed to resolve the matter, the US requested dispute settlement consultations with Mexico under the same USMCA.  In the meantime, Mexico requested for a joint scientific investigation into the health impact of GM corn, which the US rejected.  

As these consultations did not resolve the dispute either, the US government now formally requested a dispute panel on August 17th. Under USMCA's dispute settlement rules, a five-person panel chosen from a roster of pre-approved experts, must be convened within 30 days, with a chair jointly chosen and the U.S. side choosing two Mexican panelists and Mexico choosing two American panelists. The panel will review testimony and written submissions and its initial report is due 150 days after the panel is convened.

Potential consequences

Many stakeholders in the debate are anxious to see how the conflict evolves as a dispute panel has potentially grave consequences for the trade relationship between the two countries. Depending on its outcome, the U.S. could apply punitive tariffs on Mexican goods. Canada announced it shares the US’ concerns and might join the dispute settlement consultations as a third party. Canada is not a major corn exporter, but Mexico is one of its largest markets for canola, much of which is also GM.