IATP Policy Brief, December 20, 2022
For the last three months, business pages and farm media in the United States have been sounding the alarms about the Mexican government’s announced phaseout of imports of genetically modified (GM) corn. Mexican President Andrés Manuel López Obrador first reported the move in a December 2020 presidential decree, which immediately banned the cultivation of GM corn in Mexico and mandated the phaseout of GM corn imports and the importation and use of the herbicide glyphosate by January 31, 2024.
Mainstream U.S. farm organizations reacted immediately, calling on U.S. government officials to invoke the new biotechnology provisions in the newly revised U.S.-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement in July 2020. But the most recent alarm bells were prompted by an economic modeling study from consulting firm World Perspectives, Inc. (WPI) that claims to show catastrophic impacts of Mexico’s looming GM corn ban on U.S. and Canadian farmers and on Mexico’s own food security.
The media dutifully reported the story, with alarmist headlines and dire warnings to U.S. officials to stop Mexico from enacting the ban. “Mexico Threatens a Trade War with the U.S. and Canada,” read a Wall Street Journal headline. The Hill warned “Mexico moves closer to a devastating policy for US agricultural exports.” Farm-state legislators cited the study and demanded the U.S. government sue Mexico for trade violations.
Largely unreported was the fact that the original modeling was commissioned by CropLife International, the agrochemical industry trade association. And the March 2022 study was updated to reflect market turbulence caused by the Russia-Ukraine war on behalf of a self-described “coalition of leading food and agriculture industry stakeholders in both Mexico and the United States.” Those “stakeholders” include CropLife and comprise a Who’s Who of agribusiness interests in the U.S. and Mexico, all of whom have a strong economic interest in opposing Mexico’s proposed restrictions on GM corn.1
The purpose of this study is to analyze the methodology and assumptions in the industry-sponsored modeling to determine whether researchers have inflated the estimates of the negative impacts of the proposed GM corn ban. Indeed, we find that the researchers overestimate the costs of the ban in both the U.S. and Mexico by:
treating the January 2024 GM corn ban as sudden, even though it had been announced three years earlier;
treating the ban’s deadline and scope as inflexible, even though the Mexican government has announced it will phase in the ban on feed corn;
underestimating U.S. producers’ ability and willingness to respond to increasing demand for non-GM corn;
ignoring the Mexican government’s funded effort to decrease import dependence by increasing its own corn production;
overestimating the yield advantages of GM over non-GM corn;
imputing high costs associated with segregating non-GM from GM corn in international supply chains.
Taken together, these flaws call into question the high cost estimates in the industry-sponsored modeling. Many U.S. corn producers have indicated a willingness and ability to increase production of non-GM corn. Given Mexico’s clear signal that it wants to buy non-GM corn and its willingness to procure it from U.S. farmers, the specter of a trade dispute is uncalled for. There is no discriminatory action against U.S. producers, just against GM corn from any country. A close textual reading of the USMCA’s biotechnology provisions by IATP’s former senior attorney documents that Mexico has the right to enact such a restriction based on legitimate science-based concerns about human health and the environment. U.S. farmers would be better served by taking the advance notice of Mexico’s interest in procuring non-GM corn and preparing to supply this important market for U.S. farm goods. In the process, they would also be giving U.S. consumers something market surveys indicate they desire: greater choice in the marketplace to purchase non-GM food products.