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Canada and the U.S. are using free trade rules to attack Mexican food sovereignty

Ongoing USMCA case will test the agreement’s bias in favour of biotech companies and genetically modified foods

June 22, 2023

8-minute read

In December 2020, Mexican president Andrés Manuel López Obrador (known colloquially as AMLO) announced the government would be taking measures to replace the controversial herbicide glyphosate with sustainable, culturally appropriate alternatives. AMLO’s New Year’s Eve decree also declared that Mexico would end the cultivation and import of genetically modified (GM) corn for human consumption (in tortillas, for example) and, eventually, as animal feed. Most yellow corn produced in the U.S. is genetically modified to resist pests or tolerate herbicides such as glyphosate.

The decree was grounded partly in domestic economic objectives outlined in the 2019–2024 National Development Plan. It was also a direct response to demands by organized farmers movements and to Mexico’s international obligations as a member of the Convention on Biological Diversity (which Canada has also signed) and the Cartagena Protocol on Biosafety. Furthermore, banning glyphosate would serve a precautionary public health role given the herbicide’s World Health Organization status as “probably carcinogenic to humans.”

While the Mexican reforms had been on the public and political agenda for years, a reaction to the devastating effect of subsidized U.S. corn imports on rural livelihoods, AMLO was finally following through. Mexican environmentalists and farming groups praised the measures as “important steps in moving toward ecological production that preserves biodiversity and agrobiodiversity forged by small-scale farmers over millennia.”

On the other side of the fence, U.S. legislators, GM corn traders, and biotech, seed and chemicals industry lobbyists at CropLife prepared a war plan. Their push included a test of the Canada-U.S.-Mexico free trade deal that replaced NAFTA in 2020—the USMCA.

The GM corn dispute

Over the past two years, Republican and Democratic lawmakers, along with the Canadian government, have complained that the Mexican measures discriminate against non-Mexican agriculture and are somehow anti-science. The biotech lobby was especially vocal in its demand for a USMCA trade dispute based on allegations that the GM corn phase-out violated the treaty’s chapter on sanitary and phytosanitary standards (SPS), which is trade lingo for food-related health and safety measures.

This February, responding to relentless U.S. pressure, the Mexican Ministry of Economy issued another decree clarifying and replacing the one from December 2020. The new decree explains that the prohibition of GM corn for dough and tortillas will not affect trade with the U.S., since Mexico is nearly self-sufficient already in non-GM white corn. The new decree also drops plans to phase out GM yellow corn imports (the vast bulk of all U.S. corn exports to Mexico) for animal feed.

It wasn’t enough. On March 6, the United States Trade Representative (USTR) requested technical consultations with Mexico under Article 9.19 of the SPS chapter of the USMCA. Three days later, Canada did the same. This was mainly a formality, the obligatory first step in any dispute involving food safety measures, since the U.S. had clearly made up its mind that Mexico’s scientific rationale for the GM corn decree was not good enough.

On June 2, the USTR escalated by requesting dispute settlement consultations under Chapter 31 of the USMCA. It cited approval processes around GM corn, cotton and canola. Canada requested to join those consultations as a third party a few days later. The Canadian government’s complaint warns that, “When a key trading partner such as Mexico does not authorize biotechnology applications for Canadian agricultural exports, this creates an asymmetry in North American regulatory conditions that can lead to trade disruptions.”

“We fundamentally disagree with the position Mexico has taken on the issue of biotechnology, which has been proven to be safe for decades,” said U.S. Agriculture Secretary Tom Vilsack, announcing the U.S. escalation. “Through this action, we are exercising our rights under USMCA while supporting innovation, nutrition security, sustainability, and the mutual success of our farmers and producers.”

The dispute seems aimed at compelling AMLO to scrap the restrictions on GM corn in tortillas and masa, withdraw Mexican plans to gradually substitute GM with non-GM corn in animal feed and other industrial uses, and basically commit to approving, in future, any genetically modified crops cultivated in Canada and the U.S.

If the U.S. and Canadian consultations lead to a request to establish a dispute settlement panel, it will be the first test of the USMCA’s far-reaching and intentionally deregulatory food policy restrictions.

USMCA’s draconian food safety rules

In some ways, the USMCA can be said to be more “worker-centred” than NAFTA. The deal’s new labour provisions have been surprisingly successful at upholding core labour rights in Mexican auto plants and are now being tested in the garment and mining sectors. The USMCA also weakens NAFTA’s investor-state dispute settlement (ISDS) rules that empower corporations to sue governments over lost profits, and removes ISDS completely for U.S. investors in Canada and vice versa.

The dispute is a defence of a particular export strategy dependent on GM-intensive cultivation.

However, the NAFTA replacement is the furthest thing from a “progressive” trade deal. USMCA chapters covering how governments regulate, including for food-related health and safety reasons (sanitary and phytosanitary standards, or SPS), are positively draconian.

From beginning to end, the SPS chapter in the USMCA significantly ratchets up restraints on government policy-making—beyond those which existed in other past and present trade agreements. The USMCA package reflects the deregulatory priorities of the Trump administration and Canadian governments in the service of established biotech interests operating in both countries.

For example, the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to which both Canada and Mexico are a party includes a dedicated section on trade in biotech products but it deals mainly with transparency in the GM approvals process and how to respond to incidents of low-level presence in food shipments of products not authorized in the importing country. In a similar section of the USMCA, the parties “confirm the importance of encouraging agricultural innovation and facilitating trade in products of agricultural biotechnology.

With respect to food safety standards, the SPS chapter of the CPTPP speaks of not creating “unjustified” barriers to trade, while the USMCA seeks to avoid “unnecessary” barriers—a much vaguer, and therefore more difficult to prove, standard. As mentioned above, Mexico’s GM corn and glyphosate decree was justified on a number of domestic and international grounds. Who should be the judge of whether these popular and democratically enacted measures are necessary?

The USMCA adds extra objectives like to “enhance compatibility” of SPS measures “as appropriate,” and “advance science-based decision making.” In practice, with respect to GM products, “science-based” means biotech industry studies. Canada has decided to stop doing its own science for many new products. In general, the SPS rules in the USMCA intentionally limit the scope of food health and safety policies that also seek to achieve environmental, social and economic objectives.

The U.S. dispute—that Canada has joined as a third party—relies on a half-dozen provisions of the SPS chapter to challenge three related Mexican measures: 1) the non-authorization of U.S. biotech products; 2) the ban on GM corn for tortilla production, and; 3) plans to gradually substitute GM corn for human and animal consumption. In each case, the U.S. cites the following USMCA violations (emphasis added):

What are Mexico’s options faced with these challenges? To begin with, it’s not clear that the Mexican GM corn and glyphosate decrees, or the failure to approve new biotech “events” (as new products are called), can be neatly packaged as sanitary and phytosanitary standards (i.e., as strictly related to food safety or animal and plant health).

As mentioned, the Mexican policies are framed as economic development and environmental measures as well. Were Mexico to defend the policies on economic grounds they might still run afoul of other USMCA provisions, including Article 2.11 related to trade in goods. However, if the policy could be successfully defended as an environmental protection measure, the U.S. dispute falls apart.

Mexico could also try to defend the measures against the U.S. allegations under the SPS chapter. If they succeed, this would inoculate the policies from further trade challenges. Most commentators assume this is a long-shot. The U.S. only has to prove one of the above six points for any challenged measure for Mexico to be found in violation of the agreement in that case.

Still, the shifting science on glyphosate, as well as disputes about the role that GMs should play in a resilient food system, may play in Mexico’s favour. Article 9.6.5 of the SPS chapter gives Mexico the leeway to adopt provisional measures stricter than those in Canada and the U.S. “if relevant scientific evidence is insufficient.” In that situation Mexico would be expected to undertake or seek out further scientific studies, which it is currently doing, and adjust the SPS measures as needed.

On the one hand, this plays into biotech interests by putting additional pressure on countries to avoid precautionary measures. On the other, it is written with enough room for countries to take the appropriate time needed to determine whether a SPS measure is still appropriate given new information.

The politics of the dispute for the U.S. and Canada

President López Obrador’s announcement of restrictions on imports of GM corn and glyphosate was an entirely reasonable response to erratic markets and the need to enhance national food self-sufficiency. The disruptions in global food markets during the Covid-19 pandemic and in wheat and fertilizers markets in the wake of Russia’s invasion of Ukraine led to new calls among policy-makers around the world for measures to lessen dependence on imported grain.

Mexico’s corn decrees may affect U.S. exporters more than anyone else, but this does not prove they are discriminatory. The revised decree doesn’t actually affect the bulk of U.S. feed corn exports at all. It’s not clear how much of the white corn exports that could be affected are GM, but Mexico only imports about five per cent of its white corn while growing the rest itself. In any case, non-GM producers in the U.S. say they are eager to supply the Mexican market.

So, why wage a hard fight over such a small market—one that Canada is not involved in—and a fight that favours particular companies over others? Fundamentally, for the U.S. and Canada, there are longer-term reasons for reining in Mexico’s ability to determine the nature of its agricultural production.

The dispute is a defence of a particular export strategy dependent on GM-intensive cultivation. Both the U.S. and Canada, having bought into the GM promise, regularly attempt to beat back foreign efforts to chart different kinds of food systems that scientific evidence can show are better for the environment. Canadian and U.S. trade policy with respect to biotechnology, culminating in the excessively restrictive SPS rules of the USMCA, is the result of regulatory capture by monopolistic firms.

That said, USMCA disputes are not the end of the story. Countries are expected to bring their measures in line with panel rulings, but where this is politically challenging there is always room to compromise. The Biden administration has yet to respond to the panel decision in favour of Canada and Mexico against the U.S. interpretation of the USMCA auto rules of origin. It’s possible the U.S. is using this biotech case, in part, as leverage over Mexico in a negotiated outcome to that other dispute.

But backroom trade politics are no way to handle questions as important as the future of food policy in a rapidly changing climate. This case could become an opportunity for the three countries and their civil societies to honestly weigh the minimal trade effects of Mexico’s measures against the imperative to build greater resilience and fairness into agricultural markets. Given Canadian and U.S. allegiance with the biotech lobby, that might be hoping too much.

The authors would like to thank Cathy Holtslander, Tim Wise, and Scott Sinclair for their helpful comments in preparing this article.

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