Trade and Economic Implications of Low Level Presence and Asynchronous Authorizations of Agricultural Biotech Crops in China

• Published date: 01 September 2014
• DOI: http://doi.org/10.18278/wfp.1.2.2
• Date: 01 September 2014
• Author: Jun Yang,Jikun Huang

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World Food Policy - Volume 1, Number 2 - Fall 2014

Jikun Huang1 and Jun Yang2

1 Center for Chinese Agricultural Policy, Chinese Academy of Sciences, Beijing, China.

2 School of International Trade and Economics, University of International Business and Economics, Bei-

jing, China.

Trade and Economic Implications of Low Level Presence

and Asynchronous Authorizations of Agricultural Bio-

tech Crops in China

China has developed its own strong biotech program as well as a biosafety regula-

tion system for genetically modied (GM) commercial production and import, but

has yet started to seek approval for its GM events in any foreign country. China’s

biosafety regulations on biotech crop import, which requires that import applica-

tions start aer approval from the country of origin and the zero tolerance rule, will

have important implications for major GM producing countries that export GM

products to China in terms of trade, price, and production and also to China itself

in terms of food price and economic welfare. As China continues to expand its bio-

tech crop commercialization, to minimize its trade conicts with its exporting des-

tination countries, China may also need to revisit its current policy of not seeking

approval for its GM events in its major export destination countries in the future.

A less trade-distorted regulation on low level presence (LLP) can benet from the

comparative advantage of agricultural production, stabilized domestic food price,

and increased total social welfare. Global cooperation should be set up to enhance

the safety management and also lower the multifarious and unnecessary costs of LLP.

Keywords: Genetically Modied products, Low Level Presence, economic impacts

Introduction

Genetically modied (GM) crops

have expanded signicantly in

the past 15 years. Aer the United

States rst ratied the commercial plant-

ing of GM cotton in 1996, the world has

witnessed a rapid increase in the number

of countries adopting GM crops and in

the cultivated area of GM crops. By 2012,

28 countries in the world had planted GM

crops, with the cultivated area reaching

170.3 million hectares, accounting for 10%

of the global agricultural area (James 2012).

Among the planted GM crops, soybean,

maize, cotton, and canola accounted for the

largest area and exhibited a rapid increase.

China is one of the major countries

with a strong, modern biotech program,

which has grown into the largest initia-

tive in the developing world (Huang et al.

2002). Public investment in biotech crops

and livestock has doubled every three—

four years during the late 1990s and early

2000s (Huang et al. 2005). In 2008, China

initiated a new GM program with a total

budget of U.S. $3.8 billion for 2009–2020,

focusing on GM rice, wheat, maize, cotton,

soybean, pig, cattle, and sheep.

China has also commercialized

several biotech crops since 1997. ose

approved for commercialization prior to

2006 included GM cotton, petunia, toma-

to, sweet pepper, poplar trees, and papa-

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Trade and Economic Implications of Low Level Presence and Asynchronous Authorizations

ya. Bt3 cotton is the most successful story

of China’s biotech program. Its cultivated

area reached 3.7 million hectares in 2009,

accounting for about 70% of China’s total

cotton area. Bt cotton, compared with non-

Bt cotton, has raised cotton yields and al-

lowed farmers to signicantly reduce their

pesticide use (Huang et al. 2002; 2003).

In 2009, the Ministry of Agricul-

ture (MOA) issued production safety cer-

ticates to Bt rice and phytase maize, while

there are also several other biotech crops

in the pipeline. Approval of biosafety for

biotech rice and maize is a milestone of

China’s biotech development. Although the

decision for commercial production has yet

to be made, biotech maize and soybean are

in their pre-production stages under the

biosafety regulation, which is the last stage

before they are issued biosafety certicates

for production.

China has also developed a compre-

hensive biosafety regulation and monitor-

ing system for both domestic commercial-

ization and import of GM crops(Huang et

al. 2008). However, it is interesting to note

that while several GM crops have been

commercialized and that there are also a

signicant number of GM crop events in

the R&D and regulatory pipeline, China has

not started to seek approval for its GM crop

events in any foreign country. Exporters

of Chinese commodities, particularly rice

and processed rice food exporters, have ex-

pressed concern that China’s current policy

of seeking only domestic approval of GM

crops could cause low level presence (LLP)

of GM events to make their way into Chi-

nese exports of commodity shipments and

processed foods. On the other hand, China

has set up a case-by-case regulatory system

for its GM food and feed imports. With

over 10 years experience in GM soybeans

and soybean oil import, China is now the

largest importer of GM soybean. In addi-

tion, China has recently shied from a net

exporter to a net importer of maize, with

the rise of its GM maize import reaching

more than 5 million tons in 2012.

is paper is organized into ve

parts. Following this introduction, part 2

discusses China’s authorization procedure

for agricultural biotech products, particu-

larly for biotech crop imports, and exam-

ines China’s GM products in the pipeline

that may require authorizations from for-

eign countries to market these GM prod-

ucts. Part 3 presents China’s trade of rice,

maize, and soybean and assesses the like-

lihood of LLP of GM crops in both China’s

imports and exports. Part 4 presents the

methodology and scenarios for simulation,

and part 5 shows the results on the impacts

of LLP on trade, production, and price of

major agricultural commodities.

China’s Biosafety Regulations and

Approval Process of Trade for GM

Events

An overview of China’s biosafety regulation

China has established and improved

its legal and regulation system for

agricultural biosafety since the ear-

ly 1990s. e rst biosafety regulation, “the

Measures for Safety Administration of Ge-

netic Engineering,” was issued by the Min-

istry of Science and Technology (MOST)

in 1993. Following MOST’s guidelines, the

Ministry of Agriculture (MOA) issued the

Implementation Measures for Safety Con-

trol of Agricultural Organism Biological

Engineering in 1996. It covered implemen-

tation measures for plants, animals, and

microorganisms, and provided the detailed

3 Bt refers to Bacillus thuringiensis, used to confer

some tolerance/resistance to insect pests in Bt crops.