Building a Transatlantic Biotech Partnership

The United States and Europe continue to turn up the heat in their long-simmering biotech stew. In May 2003, the Bush administration initiated a challenge within the World Trade Organization (WTO) to Europe’s five-year de facto moratorium on approving new genetically modified (GM) seeds for planting in Europe. Although Europe subsequently approved a small number of new GM imports, the United States maintains that Europe’s markets remain closed to U.S. farmers. In April 2004, the European Union (EU) implemented new regulations that require mandatory labeling of all GM food and food products sold in Europe, despite U.S. claims that labeling is costly, unworkable, and unscientific. Further conflict seems inevitable.

Yet as ugly as the GM food fight remains, it may well be just the beginning of a potentially much larger cultural conflict over biotechnology. Scientific advances soon will force the international community to confront the ethical, economic, environmental, and governance challenges presented by human biotechnology (including cloning and research on embryos), the creation of transgenic animals by mixing DNA from different species, and a raft of other almost unimaginable developments. Just as the United States and the European Union have chosen different paths on GM food, they might do so on biotechnology in general. The results could stall trade liberalization and economic growth, derail international efforts to manage the biotech revolution wisely, and erode further the shared sense that people in the United States and Europe have common values, interests, and objectives. All this, in turn, could undermine the very notion of a transatlantic community.

Although these risks are real, broader fallout between the United States and Europe over biotechnology is avoidable. Both sides must strengthen international cooperation on biotech science, establish an international body for setting biotech standards, and work toward a global consensus by addressing the needs of developing nations. Minimizing international conflict over the unfolding biotech revolution is possible, but only if action begins now.

Consequences of revolution

Modern biotechnology, which involves manipulating organisms through advanced genetic science, has a brief but remarkable history of discovery. A conventional wisdom has developed that speaks of “green” (agriculture), “red” (medical), and “white” (industrial) biotech applications, but this categorization does little to describe the breadth of innovation. As with other breakthrough technologies, biotech has the potential to change the world for better or worse.

Consider a few examples. Some varieties of biotech corn and soybeans are more resistant to disease, drought, and pests than are traditional varieties. With continued improvement, such crops will lower food prices, reduce pesticide use, improve human nutrition, and raise farm yields. Yet, the environmental consequences of biotech agriculture remain uncertain. Genetically altered crops, like traditional varieties, have the potential to crowd out other species, crossbreed with other plants, and trigger unpredictable and possibly damaging ecological change. Similarly, medical biotechnology has led to improved drugs, diagnostic tests, vaccines, and fertility treatment. But it also has opened the door for human cloning; “designer babies” chosen for traits such as sex, height, and intelligence; and the introduction of nonhuman DNA, and hence nonhuman traits, into people. Human reproductive biotechnology might create enormous challenges in international politics as well. What if scientifically advanced nations had populations that were taller, stronger, and smarter than “ordinary” populations in poor countries? What effect would that have on armed conflict or human rights? Indeed, the full implications of biotechnology are difficult to grasp, yet what seems clear is that biotech has the potential to literally change life on earth and what it means to be human.

In response to the various opportunities and risks, the United States and Europe have begun to regulate how, when, and where biotechnology should be used. Most countries, including the United States and EU member states, are only just starting to think about whether biotech processes and products require special domestic legislation. For example, merely 40 countries have laws on cloning. In addition, the countries that currently regulate biotech are taking very different approaches, as the debate over GM crops and foods illustrates. When some nations act but not others, biotech research can simply move offshore. Singapore, China, and South Korea, for example, already have said that they might be prepared to allow foreign investment in biotech practices that are banned elsewhere. Regulatory differences, therefore, have strong competitiveness consequences. Moreover, bans on controversial practices, such as human cloning, may prove of limited benefit if other nations do not have similar prohibitions. Although the lag between scientific discovery, national action, and international coordination is perhaps inevitable, today’s patchwork of domestic regulation is incomplete, inconsistent, and, therefore, ineffective.

EU member states also must contend with regional biotech laws. The European Union is handicapped by its weak and often untested institutions. For more than six years, the majority of member states flouted directives restricting the planting of new GM crops. Although the EU Commission initiated in July 2003 a legal challenge in the European Court of Justice to this widespread rebellion, the suit itself underscores the fragile nature of EU authority vis-à-vis its member states. In addition, the European Union is hobbled by its plodding, bureaucratic decisionmaking. For example, progress in reforming health systems has been glacial; the commission’s new Food Safety Agency, which was announced with fanfare several years ago, remains a work in progress; and the long promised revisions to EU directives on crop approvals and labeling are only just entering into force. Often, the European union seems like an awkward teenager: big, growing, and full of potential but lacking in grace, authority, and confidence.

Unfortunately, all this stands against a backdrop of great regulatory uncertainty and incoherence at the global level. Consider the case of GM crops. International responsibility for regulating agricultural biotech is divided among at least three major institutions. First, the Codex Alimentarius (Codex), a joint organ of the United Nations Food and Agriculture Organization and the World Health Organization, is entrusted with setting food safety standards. Second, a new treaty arrangement—the Biosafety Protocol— created new global institutions and a legal framework for parties to address issues related to possible environmental risks from trade in GM organisms. The protocol, which entered force in September 2003, enables countries to object to the initial importation of a new living GM organism, to access information about biotechnology products approved in other countries, and to receive technical assistance in establishing domestic environmental regulations for biotechnology. (The protocol covers 107 countries among the 188 nations that are parties to the Convention on Biological Diversity; the United States is the sole major power that is not a party to either agreement.) Third, the World Trade Organization, with its large and ever-growing membership, governs global trade in goods and services. Nations that participate in WTO deliberations must abide by certain rules that, in general, seek to prevent parties from discriminating against products based on where and how they were made.

The interplay among these legal regimes is unclear. When it comes to trade disputes, for example, the WTO’s tribunals have the authority to patrol the boundaries among them. WTO rules forbid discrimination between “like products” and require that national health, safety, and environmental regulations are science-based. The WTO will likely be required to address a number of difficult questions. Are GM and non-GM alternatives considered “like products”? How should the WTO treat GM food labeling, given overwhelming public demand for it in some countries but an absence of scientific evidence of public health risk? What deference, if any, should the WTO give to actions taken under the Biosafety Protocol or other environmental treaties? Could the EU justify restrictions on U.S. products by citing the biosafety treaty even though the United States is not a party? The truth is that no one really knows how the WTO would rule.

Yet another level of uncertainty concerns whether international biotech obligations could be enforced effectively. For example, would an EU member state implement a directive from the WTO or the European Union itself that contradicted its own national biotech regulations? That seems doubtful in the face of strong public concern over GM food and the political risk of inciting a larger anti-WTO, antiglobalization, and anti-EU backlash. Thus, it is likely that the recent WTO complaint against Europe on GM crops, although not unjustified, will do little to help U.S. farmers in the near term (justas the WTO order in 1997 requiring Europe to lift its ban on U.S. beef fed with hormones has done little to open those markets to U.S. exporters). To begin with, although the WTO may issue an initial ruling soon, expected appeals would take at least another year or two to resolve. Moreover, a victory for the United States is not assured and a favorable ruling would likely be ignored by Europe. In addition, opening markets in Europe through legal tribunals could prove self-defeating insofar as unpopular WTO legal mandates might weaken support for trade liberalization overall. Markets in Europe will open when consumers in those countries can see tangible benefits to biotech crops that outweigh concerns about possible environmental and health risks. Snappy GM food products that would appeal to consumers, such as low-cholesterol eggs, will take years to appear on grocery store shelves in substantial numbers. That said, one can understand the frustration that led the United States to file the WTO complaint in the face of Europe’s unscientific approach and glacial policy reforms.

Thus, real regulatory clarity on biotech regulation is many years away. Following the trail of responsibility for managing biotech risks is like playing an annoying game of “whack-a-mole.” Every time one looks to a national, regional, or international institution for regulatory guidance, another one pops up with its own inconsistent standards. Confusion reigns.

Advancing national interests

Unfortunately, the United States and Europe have sought to use the confusing international regulatory environment to individual advantage, rather than to mutual welfare. Once again, this is most clear in the case of biotech agriculture. Both transatlantic partners have sought to enlist multilateral organizations to establish global standards that would advance their respective national interests. Europe has pushed for recognition of its “precautionary principle.” Now firmly a part of law in Europe, the principle rests, in part, on the idea that nations should exercise precaution in the face of risk and uncertainty. This idea is neither new nor particularly controversial; the United States helped pioneer a precautionary approach in its early laws intended to protect the nation’s air and water. What has been controversial, however, has been Europe’s view that its version of precaution can be invoked to justify government regulation of biotech products even prior to any scientific evidence of harm. In the face of strong public concern about GM food, politicians in Europe have asserted the right to ban biotech products based on abstract societal impressions of risk. In contrast, the United States has pressed internationally for strict respect of WTO rules, including requirements that technical barriers to trade be science-based and that GM and non-GM varieties be treated alike. The European Union’s precautionary principle, insofar as it would permit preemptive restrictions that are not solidly based on science, has been enemy number one for the United States.

Success for both parties in the global race to set biotech standards has rested on securing the support of developing countries. Poorer nations (particularly those in Africa) that wonder whether they have the scientific and institutional capacity to make informed decisions about the potential risks of biotech crops have tended to side with Europe. Developing nations that have large agricultural exports (such as Chile and Argentina) and that have a stake in an open global trading system (such as China) have been more sympathetic to the United States. To win the hearts and minds of the poorest nations, the United States and Europe have used a mixture of competing foreign aid and political pressure.

The globalization of the agricultural biotech dispute has produced significant and largely unintended consequences. The most dramatic example came in 2003 during the East African famine, when Zambia rejected U.S. food aid. The Zambian government cited Europe’s restrictions on biotech imports as evidence that biotech crop imports into Zambia might harm its people, damage its environment, and deny its farmers access to markets in Europe. President Bush blamed Europe for fueling unscientific fears and contributing to starvation. In turn, EU leaders accused the United States of creating a climate of distrust by refusing to segregate, trace, document, and label biotech crop exports. The experience demonstrates how developing nations have become participants in and potentially victims of transatlantic biotech disputes.

The issue of human cloning and research on embryonic stem cells provides another example of transatlantic differences being played out primarily at a global level. At the United Nations, the United States, together with Costa Rica and other predominately Catholic nations, is pushing for a global ban on such activities. France and Germany, in contrast to their highly skeptical attitudes toward GM food, are advocating a more laissez-faire approach to stem cells. The southern, predominantly Catholic flank of Europe (Spain, Italy, and Greece) has sided with the United States and foiled the development of a common EU position.

By internationalizing the biotech controversy, Europe and the United States have made it harder to resolve their transatlantic impasse. Even if the allies reach a bilateral accommodation, they still must convince other countries to accept the compromise approach. Securing multilateral agreement, always difficult, will become even more complicated because developing nations are now pushing their own biotech agenda, such as gaining more technical assistance and altering global rules on intellectual property rights. There is every reason to believe that these countries will demand significant concessions from the United States and Europe in biotech negotiations, just as they are doing in current WTO deliberations. For this reason, strengthening the transatlantic relationship on biotech will require a global as well as a bilateral strategy.

Future friends or foes?

The dominant global economic powers are racing to impose their regulations on each other and the rest of the world through the process of international standard-setting. The stakes are high because international standards, although often technical in nature, influence economic competitiveness, trade, and growth, as well as observance of deeply felt ethical or cultural beliefs about reproduction, medicine, animals, and the environment. Whether the United States and Europe will continue this pattern of competition or will turn instead to a more mutually beneficial partnership will depend a great deal on whether the parties view it as in their economic and social interest to work together.

Biotech is already big business in the United States and Western Europe. Combined, firms in these regions produce more than $42 billion in annual revenue, employ close to 175,000 people, and control 90 percent of today’s global biotech market. Thus, the transatlantic partners share a stake in securing global acceptance of biotechnology, guaranteeing access to global markets, and ensuring respect for intellectual property rights.

These shared objectives stand in contrast to the potentially quite different interests of developing nations. To begin with, many developing countries feel they are entitled to a share of the profits that multinational corporations make from patenting genetic material from plants and animals found within their borders, but existing international patent norms do not recognize such profit-sharing claims. Developing nations also fear that excessive reliance on foreign biotech products might undermine their security. For example, Monsanto’s research on the so-called terminator gene, which could be inserted into seeds to produce plants that would yield sterile seeds which can be eaten but not planted, caused great anxiety among developing nations. Although Monsanto has now renounced any plans to develop this technology, the general sense that biotechnology poses real risks to local economies has taken hold in many developing nations.

At the same time, the economic interests of the United States and Europe are not identical. Although EU companies are slightly more numerous, U.S. firms account for approximately 70 percent of global biotech revenues, research, and employment. U.S. industry representatives crow privately that they expect to improve market share further with the release of the next generation of biotech products. In short, U.S. firms are outpacing their counterparts in Europein the race for profits and patents.

The difference in market power will have political consequences that could affect transatlantic foreign policy. EU firms are likely to fear lost market share in Europe more than they crave bigger export opportunities. With the enlargement of the European Union, the market within Europe has become even more central to Europe’s economy. Accordingly, political pressure for biotech protectionism is likely to exceed the desire to coordinate efforts with the United States to open markets and enforce biotech patents abroad. If this happens, then nations in Europe will be more apt to reject U.S. patents or erect technical barriers to trade rather than impose overt tariffs. Many U.S. policymakers already believe that protectionism has played a major role in Europe’s prolonged resistance to GM crop approvals. The reality matters less perhaps than the observation that economic interests may become a transatlantic wedge rather than a healing force.

Because politicians modulate national policy to correspond roughly with public sentiment, differences in public attitudes will help determine whether the biotech revolution further widens the transatlantic divide. Public attitudes in the United States and Europe are changing fairly rapidly and will continue to do so. Widespread acceptance of in vitro fertilization today is a far cry from the considerable public concern about test tube babies when the procedure was introduced in Britain 25 years ago. Even if temporary, however, public resistance to biotechnology will shape initial regulatory decisions. The extent to which the United States and Europe follow a similar evolution in public opinion, in terms of direction and timing, will prove a critical factor in determining whether biotech is a protracted irritant in transatlantic relations.

The conventional conception that people in the United States and Europe take vastly different approaches to risk, science, technology, government, and the environment greatly exaggerates the divide. Public attitudes about biotech have more in common than not. A number of recent polls (conducted by Harris Interactive and the London School of Economics, among others) indicate a shared openness to pharmaceutical and industrial uses of biotechnology. The polls reveal, for example, that 81 percent of people in the United States and 91 percent of people in Europe hold positive views of genetic testing. Further, a sizable majority in the United States (61 percent) and in Europe (82 percent) support some types of research on human stem cells. Even on the issue of biotech food, transatlantic differences are less pronounced than is commonly understood. In Europe, only a meager majority of people oppose all uses of agricultural biotechnology; in the United States, only a small plurality support agricultural biotechnology, and two thirds support the right of Europe to require labeling. Moreover, more than 90 percent of people on both sides of the Atlantic say they would prefer to know when they are eating GM foods. These similarities are cause for optimism.

Of course, the transatlantic allies view the world very differently. People in the United States, when compared to their counterparts in Europe, seem to be less trusting of government, less interested in international solutions, more inward looking, more proud of their culture, more conservative on reproductive issues, and more prone to mix public policy and religion. These are precisely the types of differences that could lead to divergent social attitudes and laws with which to control the biotech revolution.

These cultural differences, however, are not always controlling when it comes to biotechnology. Although U.S. residents may attach greater importance to religion, they appear more ready than their counterparts in Europe to play god in terms of introducing new plants and animals into the environment. Although U.S. residents are less trusting of government, they trust the federal Food and Drug Administration to keep their food safe far more than people in Europe trust their governments to do the same. The lingering effects of Europe’s numerous food scares and health scandals, as well as cultural attitudes about the importance of traditional foods in Europe, appear to far outweigh any underlying cultural differences on the role of government. Another example of a counterintuitive cultural outcome is Europe’s greater willingness to trust scientists and the free market to set voluntary ethical boundaries on medical biotech, including gene therapy. Thus, although culture may be important in determining U.S. and EU policy, its influence can be overstated or at least difficult to predict. That said, cultural differences at a minimum add greater uncertainty to the question of whether the United States and the European Union will join forces on biotechnology in the future.

Avoiding biotech blowup

Neither conflict nor cooperation between the transatlantic partners are fated on biotechnology. To avoid a broader blowup, with all of its economic, trade, and political consequences, both sides will need to act quickly and decisively. A three-part strategy is needed.

Providing consensus scientific advice. The dispute on food biotech owes a great deal to the failure of the United States and Europe to develop a coherent global approach. Improving international governance is no easy task and will take decades. Stronger domestic action often is a prerequisite for improvements at the international level. With national approaches to cloning, stem cell research, and other lightning rod issues still being debated in capitals, big changes at the international level will probably have to wait.

What the United States and Europe can do now is to ensure that the international community receives common, well-informed scientific advice about the risks of new biotech products and procedures. When policymakers receive the same advice, they are more likely to make compatible decisions. Because innovation in biotechnology will be unpredictable and will occur across a range of areas, any scientific advisory body must have a flexible mandate and be nimble. Objectivity and public credibility also are important. At present, none of the existing international regimes pass these tests. Codex, the Biosafety Protocol, and the WTO all have narrow, parochial mandates, and only Codex has the technical capacity to analyze science well. The United Nations Educational, Scientific, and Cultural Organization (UNESCO), which might seem well suited to the task, given its name, is mired by political wrangling, slow to act, and poorly respected in Washington. At the same time, creating a new international science organization would be expensive, time consuming, and politically infeasible.

Therefore, the most realistic way forward is for the United States and Europe to strengthen the institutional links among existing domestic science bodies, including the various national academies of science on both sides of the Atlantic. These bodies exist to provide timely scientific advice to policymakers, and they have proven records of excellence. The national academies, unlike international organizations, take up hot topics and then move on, without creating permanent international processes that continue past their useful life. Working together, scientists in the United States and Europe would help set the global scientific agenda on biotech.

Fortunately, numerous national academies are taking tentative steps toward developing closer, collaborative relationships. In one landmark example, in July 2000 the academies in the United States and Britain, together with five academies from the developing world, issued an influential report outlining the potential benefits that GM agriculture might hold for food security. More recently, in April 2004, the National Academies in the United States launched a major cooperative effort to build the technical capacities of African academies of science. The initiative is supported by the Bill and Melinda Gates Foundation, and it stands as an example of the type of international scientific cooperation that the U.S. Congress should be funding as well. Another area where scientific and technical cooperation should occur but does not now is between the U.S. Food and Drug Administration and Europe’s new Food Safety Agency. Nurturing information exchange between these institutions would decrease the risk of conflicting regulatory and scientific standards that could impair free trade and produce political friction. The French academies of science, medicine, and biotechnology also have shown a willingness to stand up to GM food fear-mongers and would make worthwhile partners. Sustained coordination among the transatlantic science bodies, however, will require genuine government encouragement, along with budget support. Annually, the cost to the U.S. government would be a modest $2 million a yearand well worth the investment.

Promoting joint standard setting. The United States and Europe should strive to make common decisions on socially controversial biotech policy, such as cloning, transgenic species, human gene therapy, and human experimentation. Admittedly, trying to import international regulation into the United States before the country has decided on a domestic approach almost never works. Yet, if the transatlantic partners develop entirely independent approaches, then neither system will work. Scientists and biotech companies would migrate to the jurisdiction with the most favorable regulatory environments. Efforts to keep certain biotech organisms, including forms of human life, from coming into being would be futile. By developing common positions and then working together to advance them on a global level, the United States and Europe would have the best chance of creating a consistent global approach.

For this reason, the transatlantic powers should act in concert to establish a bilateral biotech standard-setting body with a 10-year mandate. The new body should be empowered to propose principles for domestic legislation, as well as to develop a plan for securing global acceptance of these principles. This effort would differ enormously from the biotech policy mechanisms that the parties have employed to date. Such coordination has occurred primarily within the confines of the biannual U.S.-EU summit process. Several years ago, the United States and the EU Commission established a high-level biotech working group composed of government officials. For a time, this group met via videoconference every few months to discuss issues such as the EU moratorium on new GM crop approvals and proposals for GM food labeling. This amounted to little more than an information-sharing process, however, as no effort was made to set common standards. In the waning days of the Clinton administration, the parties established a biotech advisory body called the Transatlantic Consultative Forum. That body was composed exclusively of nongovernmental experts who were charged with developing nonbinding recommendations. These recommendations were reported around the time that the Bush administration took office, and they were lost in the shuffle.

What is needed now is a genuine bilateral effort to negotiate compromise solutions. Establishing a firm political goal to develop joint norms would give focus to official U.S.-EU civil society forums, such as the Transatlantic Business Dialogue. The United States and Europe created these forums to encourage advocacy groups on both sides to develop common recommendations for governments. Because U.S.-EU summits often lack a clear, publicly available agenda and concrete outcomes, the recommendations developed by business, labor, consumer, and environmental groups have been equally unfocused. Eventually, transatlantic standard setting on biotechnology could be carried forward within the Organization for Economic Cooperation and Development (OECD) to ensure that Japan, Canada, and other nations with biotech know-how are also involved.

Addressing the needs of developing nations. The United States and Europe should develop a plan to promote their common interests on biotech relative to the developing world. These interests are mainly threefold: ensuring widespread acceptance of biotech exports, securing respect for intellectual property rights, and advancing sustainable development in poor nations. To achieve these goals, developing countries must be convinced that they too have an interest in the success of biotechnology and that biotechnology will not harm their economies or environments. To date, however, the least developed nations have benefited only modestly from the biotech revolution. In the area of health, for example, biotech medicines, vaccines, and tests are too expensive, and the global HIV/AIDS initiative has a long way to go to reach its milestones for success. Most industries in poor countries lack the capacity to use even simple industrial or environmental biotech. In agriculture, unlike the Green Revolution of the 1960s and 1970s, which increased yields globally, modern biotech cultivation has been confined largely to wealthy and middle-income countries. For-profit corporations developed GM seeds to be attractive to comparatively rich farmers in the developing world, who plant corn and soy, rather than to third-world subsistence peasants, who plant mainly rice. Although a number of new GM products of potential interest to the developing world are nearing the market, these products remain exceptional. In general, neither the United States nor Europe has made the development of biotech products for the least developed nations a priority. Currently, biotech firms stand to gain little by addressing developing country needs, even though these investments would benefit the transatlantic community by making major progress against global poverty.

The first step toward bringing developing countries on board is for leaders in the United States and the European Union to declare a truce to their respective efforts to convince developing nations to take sides in the GM food fight. Transatlantic policymakers should explicitly state that they will not tie foreign aid or other policies to a country’s position on GM agriculture. Such coercive measures are counterproductive to resolving trade disputes and building developing country buy-in to the biotech revolution.

Depoliticizing discussions on global biotech must be followed by directed action to correct for insufficient investment in socially beneficial biotech applications for the developing world. Specifically, the United States and Europe should push for an internationally coordinated biotech R&D agenda aimed at alleviating global poverty. The transatlantic parties should press this R&D initiative within the operating mechanisms of the OECD or the Group of Eight (which comprises the world’s leading industrialized nations), so that other major foreign aid donors can take part. The objective should be to help developing nations acquire the scientific and technical capacity to analyze for themselves the costs and benefits of biotechnology, for until they have a genuine capacity to make informed decisions, these nations will resist U.S. and EU biotechnology products. The United States and Europe can help build such capacity by supporting existing regional agricultural, medical, and science policy research centers in the developing world.

The United States, Europe, and other donors should fund the effort initially through their respective bilateral aid programs. In the United States, for example, funding could occur within the increases in development assistance already pledged by the Bush administration under the Millennium Challenge Account and via the U.S. Agency for International Development’s renewed focus on agricultural programs. While carrying forward their national efforts, the United States and Europe also should work together to create a new multilateral mechanism that would channel and coordinate biotech assistance to developing nations deemed likely to use the assistance most wisely. This assistance should be directed primarily to developing nations that keep their markets open to biotech imports and respect global norms on intellectual property rights. Modest investments in biotech for the developing world could reap enormous economic and security dividends for the world as a whole, while also promoting commercial interests in the United States and Europe alike.