02 December 2002. NEIL KING JR. Staff Reporter of THE WALL STREET JOURNAL

WASHINGTON -- If the Bush administration decides to knock heads with Europe over its ban on new U.S. biotech foods, the reason will lie less in France or Italy than in drought-hit Zambia.

Though facing a serious famine, Zambian officials decided to turn away 26,000 tons of U.S. food aid in October, saying the shipments contained genetically modified corn that wasn't safe. The kernels, Zambia's agriculture minister said, could pollute the country's seed stock and hurt its export markets.

To Bush aides, the move was stark proof that Europe's antibiotech crusade has hit home even in countries critically short on food. But the deeper fear is this: That as Zambia goes, so may go many of the big food markets in Asia, Latin America and the Middle East, where there are also rumblings of European-style unease over genetically modified crops and the need to block them from entry.

So how to stem the tide? Administration officials say they may have only one choice: to file a case at the World Trade Organization against the European Union's four-year moratorium on approving new U.S. biotech foods. The argument would be that the ban is purely political and based on no scientific finding of risk.

"Europe is ground zero, but it is not at all the whole of our concern," says one U.S. trade official. "If we allow Europe to flout science and the international trading system, nothing will prevent others from doing the same."

Whether to pursue a WTO biotech suit is now a matter of intense administration debate as officials strive to craft a recommendation for the White House by early next year. U.S. Trade Representative Robert Zoellick is said to favor going forward, but some senior State Department officials worry a food fight could complicate relations with Europe at a delicate time.

The lack of glee is understandable. Even proponents of lodging a case concede that a U.S. victory at the WTO would strain relations with the Continent, anger EU consumers and tar the image of U.S. food products -- all without prying open the European market. The Europeans, even with an adverse ruling, still wouldn't be likely to let in new U.S. biotech products. European Trade Commissioner Pascal Lamy, meanwhile, warns that a WTO suit would "freeze" all efforts within the EU's executive arm to convince member states to lift the ban.

Environmentalists, too, think it would be pointless. "No WTO case is going to get EU consumers to eat what they don't want to eat," says Charles Margulis, a Greenpeace biotech adviser.

But the crucial upside, U.S. officials say, could be elsewhere. They cite the continuing feud with Europe over its refusal to allow in U.S. beef containing growth hormones. The United States won a beef-hormone case against Europe at the WTO four years ago. The victory did nothing to change EU behavior, but it did keep other countries from imposing similar bans.

"There's no question that the hormone case sent a very strong message to the rest of the world that these types of trade restrictions are not acceptable in the WTO. And in that sense, it was an important U.S. victory," says Peter Scher, a former agricultural trade negotiator in the Clinton administration.

The U.S. is overwhelmingly the world's largest planter of genetically modified crops -- mainly soybeans, cotton and corn. Much of that now is shipped along with regular crops to Japan, China, the Middle East and Southeast Asia, with total exports topping $12 billion a year. These products also make their way into everything from bread to beer.

The EU biotech moratorium, in place since 1998, has hit U.S. corn exporters hardest by blocking an estimated $250 million in annual sales. The six EU states backing the ban, among them Austria and France, say they will stick to it until the EU puts in place proposed consumer rules that U.S. food exporters say could cause even worse havoc.

Under an agreement struck last week, everything from breakfast cereals to animal feed with more than 0.9% of genetically modified ingredients will need a label. Another proposal may require companies that deem a product GMO-free to keep five- year records proving that no ingredient, all the way back to the farm, ever crossed paths with anything bioengineered.

"This would be crazy and impossible to put into practice," says Mari Stull, head of international policy at the Grocery Manufacturers of America, a Washington-based industry group.

A large swath of the U.S. farm sector urged Mr. Zoellick in a letter last month to "end U.S. patience" and pursue a WTO case at once. One reason: Europe's actions "may be negatively affecting the attitudes and actions of other countries."

EU diplomats say their policies and the views of EU consumers, don't dictate what others do halfway around the world. They also reject suggestions that Europe played any role in Zambia's turning down the U.S. food aid.

But on many fronts, the ripple effect is clear. In a classic example last week, the Illinois Farm Bureau urged growers in the state to avoid all GMO corn varieties not approved for the EU market -- the first such state bureau to do so. The concern, the bureau said, is that unapproved strains might mingle with approved ones, causing the EU to block all Illinois corn: a fear similar to that expressed in Zambia.

Various European-style labeling regimes are either in place or being considered in countries as disparate as South Korea, Japan, Israel, Egypt and Mexico. China caused a row with the U.S. this summer when it imposed biotech rules that crimped the flow of U.S. soybeans. Meanwhile, the fight over whether to allow planting of biotech seeds has grown intense in Africa, India and parts of Latin America.

Mr. Zoellick has assiduously sought allies in the tug of war with Europe. Biotech crops were a major theme of his travels to Kenya, South Africa and Botswana this year and he has banged on the issue across South America. But if he goes to the mat with the EU, those in his corner will be few: Canada, Argentina, Australia, the Philippines, maybe Brazil and South Africa.

U.S. officials say that somehow they must lay down a marker. "We have been very, very patient," another administration official says. "But our patience is running out."