21 October 2013

A study on GMO policy determinants shows that importing countries can export their regulation model

A research paper published by two researchers at the LICOS Centre for Institutions and Economic Performance of the Catholic University of Leuven, Belgium, analysed determinants of GMO policies in 60 countries.

The paper starts by ranking countries according to a composite index of GMO standards restrictiveness based on six dimensions:

1. •Approval process (absence, mandatory process at three different levels of enforcement, ‘GM free’ declared country)
   

2. •Risk assessment (absence, mandatory process at two different levels of enforcement, ‘GM free’ declared country)
   

3. •Labeling (absence, voluntary, mandatory without threshold or with threshold greater than 1%, threshold less than 1%, ‘GM free’ declared country)
   

4. •Traceability (absence, two levels of enforcement, GM free declared country)
   

5. •GMO non-GMO coexistence rules (none, three different levels of enforcement, ‘GM free’ declared country)
   

6. •Membership in international agreements (none, one, two)
   

The result of the computation of this index shows that the most pro-GMO policy is found in Hong Kong (index 0.10) and the most anti-GMO policy is found in Zambia and Zimbabwe (index of 1.00). South Africa has an index of 0.30; India and the US 0.35; Argentina 0.40; Brazil and China 0.50; Australia 0.55; the EU 0.69; Japan 0.70; France, Italie and the Netherlands 0.75.

The paper then continues and identifies the main determinants of the GMO policy by considering :

1. •Trade related determinants: the export share of agri-food products of two relevant markets, the EU and Japan which are important importers with strict GMO policies; the level of tariff protection, as standards are often considered to be used as substitutes to tariff protection; land per capita that represents a factor endowment ratio
   

2. •Structural determinants: share of GMO acreage in each country; share of land cultivated with substitute to main GMO crops; share of land cultivated under organic crops; share of rural population
   

3. •Institutional determinants: level of democracy; level of environmental regulations; legal contributions to political parties; share of private media; level of GDP per caput in purchasing power parity.
   

The results obtained show that the main determinants of restrictive GMO regulations are the share of agri-food product exports to the EU and Japan, the absence of comparative advantage in the agricultural sector, a strong presence in the country of organic farming, and stringent environmental regulations. A greater importance of private media and a higher level of GDP per caput were also in favour of more stringent GMO regulations.

Interestingly this shows the power major ‘‘clients’’ have on rules applied in their main supplying exporting countries. In a way, those countries which import goods export their norms.

One can regret that this power is not being used in a more coordinated way to export also the advanced social model prevailing in some major importing countries, in particular the EU. Rather, currently, dominant thinking is that importing countries should downgrade their social model to be more ‘‘competitive’’ on the world market. By adopting this approach, one can bet that these countries will considerably degrade their social system and this will lead to a levelling down of social standards. In doing this, they will miss a historic opportunity to improve social conditions of hundreds of millions of workers in the world.

Read the research paper:

Vigani and Olper, GMO Standards, Endogenous Policy and the Market for Information, LICOS Discussion Paper 306/2012

Last update:    October 2013

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