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

Published date01 September 2014
Date01 September 2014
AuthorJun Yang,Jikun Huang
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
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-
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 Chinas 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
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.

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