United States request USMCA panel against Mexico's measures on Genetically Modified Corn
16 min read
The United States has requested the establishment of a bilateral dispute settlement panel under the United States – Mexico – Canada Agreement (USMCA)1 against Mexico's Presidential Decree of February 13, 2023,2 establishing a "ban on use of biotech corn in tortillas or dough, and gradually ban the use of biotech corn in all products for human consumption and for animal feed" (the Decree).
The Presidential Decree
The objective of the Decree is to mandate what government agencies must do regarding the use, sale, distribution, promotion and import of glyphosate and agrochemicals that contain glyphosate as an active ingredient3 and genetically modified (GM) corn.4 According to Mexico, this is necessary to safeguard health, a healthy environment and food security and self-sufficiency.
Government agencies are prohibited from acquiring, using, distributing, promoting or importing GM corn, as well as glyphosate or agrochemicals that contain glyphosate as an active ingredient, for any use, within the framework of public programs or any other government activity.5
For GM corn, Mexican biosecurity authorities will revoke and refrain from granting permits for the release into the environment in Mexico GM corn seeds; and revoke and refrain from granting authorizations for the use of GM corn grain for human consumption (as of the entry into force of the decree, the day following its publication).
Authorities will also gradually substitute GM corn out of animal feed6 and industrial uses for human food.7 Until such substitution is achieved, the Federal Commission for the Protection against Sanitary Risks (COFEPRIS) may grant authorizations for GM corn for animal feed and industrial uses for human food, but will not grant waivers for human consumption8 ("an immediate ban on GE corn for nixtamalization or flour production").9 The Decree does not establish a deadline for the substitution process on GM corn for animal feed (yellow corn) or for industrial use for human food.
|Contextual information on white and yellow corn in Mexico10
|Maize is the most representative crop in Mexico due to its economic, social and cultural importance.
|Growing GM corn in Mexico has not been allowed for 25 years, though millions of tons of GM corn enter the country each year via imports.
Tariff line: 1005.90.04
Tariff line: 1005.90.03
WTO Most Favored Nation (MFN) Applied Tariff: 20%
USMCA Tariff: 0%
WTO Most Favored Nation (MFN) Applied Tariff: 0%
USMCA Tariff: 0%
White corn represents 86.94% of Mexican production and is mainly intended for human consumption. This production satisfies the totality of the national consumption.
Yellow corn is used for industry or the manufacture of balanced feed for livestock. Mexican production satisfies only 23.95% of the national requirements.
|The United States is the main foreign provider of both white and yellow corn. The US total export value of corn (2022 figures) was $18.7 billion (58 million metric tons), with Mexico being its second largest market with $4.29 billion, just after China ($5.21 Billion). "Private exporters reported sales of 112,000 metric tons of corn for delivery to Mexico during the 2023/2024 marketing year."
|Mexico produces an annual average of more than 27 million tons of white corn.
|Mexico produces more than 15 million tons of yellow corn annually.
|With an average per capita consumption per year of 196.4 kg of white corn, especially in tortillas, white corn represents 20.9% of the total expenditure on Food, Beverages and Tobacco by Mexican families.
The Decree states that "the main purpose of these measures is the protection of the right to health and a healthy environment, of native corn, of the milpa, of biocultural wealth, of peasant communities, and of gastronomic heritage; As well as guaranteeing nutritious, sufficient and quality food." The declared objectives of the Decree ("safeguard health, a healthy environment and food security and self-sufficiency"), should be read alongside the Mexican Government's objectives of increasing the production of white corn to satisfy national needs with internal production, including through programs like Production for Well-being and Guaranteed Prices, to advance a food self-sufficiency strategy.11
The 2023 Decree derogates and amends a previous decree dated December 31, 2020, which addressed similar measures on white corn (for human consumption) and yellow corn (for animal consumption).12 The new Decree eliminates the original transition deadline (January 31, 2023) and orders COFEPRIS to integrate a joint investigation protocol with the equivalent agencies in other countries, to carry out a study on the consumption of genetically modified corn and the possible damage to health (a mandate that suggests Mexico lacks existing scientific support as required by the SPS).13
Emergence of the US consultations
As a result of these measures and other restrictions on biotechnology products, the United States requested technical consultations on March 6, 2023, under the USMCA Sanitary and Phytosanitary (SPS) Chapter (Article 9.6.14),14 for "an explanation of the reasons for" and "pertinent relevant information regarding" certain Mexican "measures"15 concerning biotechnology products.16
In accordance with the SPS Chapter (and the WTO provisions which the USMCA Chapter reaffirms), each Party has the right to adopt or maintain sanitary and phytosanitary measures necessary for protecting human, animal or plant life or health; provided that those measures are consistent with the Chapter provisions, which requires sanitary and phytosanitary measures to be based on scientific principles. Unfortunately, the Decree is silent on the evidentiary support of the purpose and objectives stated in the Decree, and any information provided by Mexico to the United States after the technical consultations request has not been made public. Supporters of Mexico's measures worry that any imports of bioengineered corn would threaten native species, as the varieties can cross-pollinate. Establishing a scientific basis to the Decree is important to determining whether it complies with the SPS Chapter of USMCA, on whether it is not a disguised restriction on trade between the parties, and if the measures are more trade restrictive than necessary to achieve the level of protection that Mexico determines to be appropriate (SPS Articles 9.6.6(e) and 9.6.10).
As importers can still obtain authorization for GM corn for animal feed (yellow corn) and industrial use for human consumption, if Mexico continues to grant said authorizations the relatively small amount of trade affected by the Mexican measures will reduce the economic consequences of the dispute significantly (i.e., any possible retaliation against Mexico for not complying with the recommendations of the panel in the event of an adverse result).
It may be fair to argue that beside the specific trade restrictions that the ban and eventual substitution of GM corn would imply, the most critical policy concern for the United States is Mexico's questioning the safety of biotechnology food products, which from the US perspective are seen as a key "…innovative tool to respond to climate and food security challenges."17 In its panel request news release, USTR stated: "Mexico's approach to biotechnology is not based on science and runs counter to decades' worth of evidence demonstrating its safety and the rigorous, science-based regulatory review system that ensures it poses no harm to human health and the environment."
Mexico has argued that this is a political dispute, arguing that the Decree does not have a commercial impact, "since Mexico produces much more corn than it requires for the dough and the tortilla, while the corn that is imported from the United States, whether white or yellow, is complementary and it is used for industry and animal feed." In recent years, the volume of US corn imports has increased despite restrictions.18 Although this argument may be relevant in the event of a possible suspension of benefits calculation, commercial impact is not a requirement to bring a dispute under the USMCA.19
Nonetheless, there are important systemic considerations on this dispute regarding the scientific discussions on the safety of GMOs for human health, and food security concerns, setting aside any possible ideological concerns that go beyond the USMCA.20
Following its request for a panel, USTR said in a statement that "Mexico's measures are not based on science and undermine the market access it agreed to provide in the USMCA,"21 which seems to be the main SPS issue under dispute. The United States argues that the Mexican measures violate various USMCA SPS provisions,22 including as to how this type of measure has to be elaborated and based on scientific principles, has to provide opportunity to comment before publication, and has a more restrictive consequence than that necessary to achieve its purported objective, etc.
Mexico argues that its measures are in compliance with the USMCA,23 although earlier in August, Mexican Agricultural Minister Víctor Suarez suggested that Mexico invite the United States to conduct joint scientific research on the health effects of GM corn and that the United States denied this request. This again raises the possibility that Mexico indeed lacks the scientific support to sustain the validity of the Decree under the USMCA SPS Chapter requirements.
Meanwhile, Canada, which joined the consultations as a third party in June 2023 expressing economic and systemic concerns, has reiterated its participation as third party at the panel stage. Although Canada is not a significant exporter of corn to Mexico, Canada does export other GMOs to Mexico (canola oil for example)24 and has a wider, systemic concern on the interpretation of the USAMCA and possible consequences for food security and trade in other GMOs.
USMCA Dispute Settlement Proceedings
Three years since its entry into force, six dispute settlement proceedings have been brought under Chapter 31, State-to-State mechanism.25 After a panel is established (e.g., August 17 for the corn Decree), in accordance with an estimated timetable under the Chapter and its Rules of Procedure, Parties should submit written submissions and hold hearings before the end of the year; receive an initial report (no later than 150 days after the date of the appointment of the last panelist) which may occur by mid-February 2024, and a final report by March 2024.
In accordance with the USMCA Dispute settlement provisions, a panel may, within 20 days after the last panelist is appointed, grant leave to applications made by non-governmental entities from Mexico and the US to file written views that may assist the panel to evaluate the submissions and arguments of the parties.26
Because of the scientific principles approach under which any sanitary of phytosanitary measures should be based on27 (along with relevant international standards, guidelines or recommendations), one key feature of Disputes brought under Chapter 31 is that if the dispute involves scientific or technical issues, it "should seek advice for experts chosen by the panel in consultations with the disputing Parties"; and if it deems appropriate it may establish an "advisory technical experts group, or consult relevant international standard setting organizations,"28 if this occurs the estimated timetable could be affected accordingly.
USMCA incorporates World Trade Organization (WTO) definitions under the SPS Agreement,29 and it would be expected that the arguments of both parties would be influenced by WTO dispute settlement reports.30
If the panel finds Mexico has breached the USMCA, the resolution of the dispute could be the repeal of the Decree or a mutually acceptable compensation or any other remedy agreed between the Parties.31 If a resolution is not reached, the United States could suspend the application of benefits of equivalent effect to the breach (usually in the form of elimination of preferential tariffs to Mexican products) until a resolution is agreed.32
The amount of the retaliatory measures should be supported and if the amount is not agreed, the panel may be reconvened to provide its views on the level of benefits or equivalent effect. It is unclear how much this figure could be, but in 2022 Mexico imported 658,800 tons of white corn (87.9% of which was from the United States).33
1 US panel request, available here.
2 This Decree repealed a previous Decree with similar content, which covered yellow and white corn, available here (in Spanish). The Ministry of Economy press release, available here (in Spanish), states: "The 2023 Decree includes restrictions only for white corn. […] prohibits the use of genetically modified corn for dough and tortillas. This does not affect trade or imports in any way, among other reasons, because Mexico is more than self-sufficient in the production of GM-free white corn. What it is about is consolidating such sovereignty and food security in a central input in the culture of Mexicans. Regarding the use of genetically modified corn for fodder and industry, the deadline to prohibit its use is eliminated, subject to the existence of a sufficient supply."
3 The Decree mandates Mexican authorities to revoke and deny any authorization and permits to import, produce, distribute and use glyphosate from the date of publication of the decree escalating (gradual substitution) until March 31, 2024. This Alert focuses on the US panel request and does not elaborate on the glyphosate measures incorporated in the Decree.
4 The Decree defines GM corn, as "corn that has acquired a novel genetic combination, generated through the specific use of biotechnology techniques that are defined in the applicable national and international regulations."
5 This prohibition was implemented on December 31, 2020, under a previous Decree that had similar consequences as that of March 2023.
6 Which is intended for the livestock and aquaculture sector (as defined in the Decree).
7 Which is intended for human consumption, after industrialization other than nixtamalización (as defined in the Decree).
8 See Article 7th, second paragraph of the Decree. The Decree defines "corn for human consumption" as corn that is prepared for human consumption through nixtamalization or flour production, which is what is made in the sector known as masa (dough) and tortilla. Nixtamalization derives from Nahuatl: from nextli ashes + tamalli tamale, and is defined by the Oxford English Dictionary as "In Latin American cookery: maize kernels which have been boiled and steeped in an alkaline solution (usually lime water) in order to remove the hulls, used to make masa (masa n.)."
9 See US panel request.
10 Sources: National agricultural planning 2017-2030, Mexican white and yellow grain corn. Available here / Ministry of Agriculture and Rural Development – 30 June 2020 / WTO Tariff data / Civil Eats / USDA reports.
11 See Ministry of Agriculture and Rural development (June 30, 2020) (in Spanish). The Ministry of Economy declared that "the central objective of the Decree is to preserve: 1) that the tortilla continues to be made with native corn and 2) that Mexico increases its production of corn with native seeds, thus ensuring the conservation of its biodiversity, which is already happening. That is, it does not modify the state of affairs." See also press release February 27, 2023, here (in Spanish).
12 Available here (in Spanish).
13 USMCA dispute settlement allows disputes to be brought against actual or proposed measures (See Article 31.2(b)).
14 See USMCA Article 9.20:6: "No Party shall have recourse to dispute settlement under Chapter 31 (Dispute Settlement) for a matter arising under this Chapter without first seeking to resolve the matter through technical consultations in accordance with this Article."
15 See USMCA definitions: "measure includes any law, regulation, procedure, requirement, or practice," and in accordance with the dispute settlement chapter, it applies when a Party considers that an actual or proposed measure of another Party is or would conflict with an obligation of this Agreement or that another Party has otherwise failed to carry out an obligation of this Agreement; or when a Party considers that a benefit it could have reasonably expected to accrue to it under Chapter 2 (National Treatment and Market Access for Goods), Chapter 9 (Sanitary and Phytosanitary Measures), is being nullified or impaired as a result of the application of a measure of another Party that is not inconsistent with this Agreement.
16 Request for technical consultations available here. USTR referred to authorization rejections by COFEPRIS, since August 2021, covering not only corn, but also canola, cotton and soybean. This topic is no longer mentioned in the panel request since Mexico has apparently begun granting the authorizations for those other products. In its panel request, USTR mentions that Mexico has already rejected authorization applications from genetically engineered products but is not including claims on those measures at the moment (See footnote 1 of the panel request).
17 See USTR Katherine Tai's Press Release, available here. US representatives of Iowa (the largest corn-producing state), have stated that 92% of corn grown in the United States is GM. See Letter to USTR, dated November 14, 2022.
18 Ministry of Economy, Press release February 27, 2023.
19 In accordance with the USMCA Article 31.2, a dispute can be brought (i) to avoid or settle disputes on the interpretation or application of the Agreement, (ii) against actual or proposed measure inconsistent with an obligation of the Agreement; or when a Party has otherwise failed to carry out an obligation of this Agreement or (iii) when a Party considers that a benefit could have reasonably expected to accrue to it under different USMCA Chapters including Chapter 9 (Sanitary and Phytosanitary Measures), is being nullified or impaired as a result of the application of a measure of another Party that is not inconsistent with this Agreement.
20 See news reports from Excelsior and El Economista.
21 The US identifies the presidential decree and Mexico's legal regime governing the importation and sale of GE products other than for cultivation (the Tortilla Corn Ban), along with any instruments that implement or maintain the tortilla corn ban as the "measures."
22 Articles 9.6.3, 9.6.6(a), 9.6.6(b); 9.6.7; 9.6.8; 9.6.10 and 2.11. The United States is also asserting that USMCA benefits are being nullified or impaired (see footnote 5 of the panel request).
23 Arguments by Mexico seem to assume that GM corn not only harms health but that it also harms native varieties of corn.
24 See Canada's canola exports to Mexico hits a record high.
25 Active cases: (i) Mexico's measures concerning genetically engineered corn; (ii) Dairy tariff rate quota allocation measures 2023 (second dispute); (iii) Measures in the electricity sector; and (iv) Automotive rules of origin. Concluded cases: (i) Crystalline silicon photovoltaic cells safeguard measure; and (ii) Dairy tariff rate quota allocation measures (first dispute).
26 See USMCA Article 31.11:1(e) and Article 20 of the USMCA Rules of Procedure for Chapter 31, describing the content of the applications for leave, which shall be no longer than 100 words, and if the panel grants leave to a non-governmental entity, its submission must not be longer than ten typed pages, which shall be made public. "Each disputing Party shall, no later than 14 days after the date of the establishment of the panel, make public […] the opportunity for non-governmental entities in each Party's territory to submit requests to provide written views in the dispute; and the procedures and requirements for making such submissions, consistent with these Rules."
27 See Article 9.6:1 and 9.6:3.
28 See USMCA Article 9.20; see also FAO CODEX Alimentarius: Does Codex develop standards for GMOs?
29 See Article 9.1 definitions, and additional references to the WTO and its SPS Agreement.
30 Mexico recently participated in a WTO dispute against Costa Rica (DS524) in which the Panel found, among others, that Costa Rica failed to take into account available scientific evidence in its assessment of risks, nor its measures were based on scientific principles and were maintained without sufficient scientific evidence. The WTO SPS Agreement has been quoted on 53 requests for consultations, and five of them relate with GMOs: DS205; DS291; DS292; and DS293, but only DS291 reached the stage of panel report. See the WTO one-page summary here.
31 See Article 31.18.
32 See Article 31.19.
33 See "Mexico's president signs agreement with tortilla makers to only use non-GMO white corn."
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