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Genetically Modified Foods and the Limits of Trade Agreements

May 23, 2013 in Economics

By Simon Lester

Simon Lester

Last weekend, The Washington Post had a good article about how difficult it will be for the upcoming U.S.-EU trade talks to deal with the issue of genetically modified foods. Many people in the EU — government officials, farmers, consumers — are wary of these foods, and want to keep them out of the EU entirely (no production, no importation). By contrast, most people in the U.S. are less concerned, and the products are widely produced and sold here. For those Americans who try to avoid these foods, Whole Foods and similar stores are good market-based options. As my colleague Bill Watson points out, consumer demand for non-genetically modified foods results in “a market response that provides convenient access for GM-wary eaters while (most importantly) preserving choice for less-cautious consumers.”

Can trade negotiations resolve the differences in U.S. and EU attitudes and provide the basis for more trade in these products?”

Let’s put aside the issue of whether there is any rational basis for the fears related to these foods. From a trade policy perspective, the issue is whether trade negotiations can resolve the differences in U.S. and EU attitudes and provide the basis for more trade in these products.

My guess is that the answer is no. The EU views are just too strong. They may be irrational, but they are deeply held. They can’t be broken down by the demands of trade negotiators (U.S. negotiators have been making these demands formally and informally for many years, with little success).

Beneath the surface of all this is one of the core issues of trade policy: What is free trade? Is free trade the removal of protectionism? Or does it mean creating a single market where all goods and services sold in one market can also be sold in other markets?

There are efficiency arguments for the latter. But politically, I’m not sure it’s achievable. Convincing people in two or more countries that we would all be better off if we remove our protectionism is one thing. (It’s kind of a no-brainer, to be honest.) By contrast, convincing people that their deeply held policy preferences (rational or otherwise), and the regulations that result, are misguided is something else entirely.

As I see it, trade negotiations are best suited to dealing with the issue of protectionism, that is, when a government discriminates against foreign products to favor domestic competitors.

Of course, sometimes multiple …read more

Source: OP-EDS

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