US escalates dispute with Mexico over GM corn, after formal consultations fail

The North American neighbors are inching closer to a full-blown trade dispute under the U.S.-Mexico-Canada Agreement (USMCA) on trade over Mexico's policies to limit the use of GM corn, which it imports from the U.S.

If the consultations announced on Friday fail to resolve disagreements within 75 days, Washington can request a dispute settlement panel to decide the case.

Asked if Canada would take similar action to the U.S., a spokesperson for the Trade Ministry said Canada is "considering its next steps" and would be "guided by what is in the best interest of our farmers and the Canadian agriculture sector."

The United States requested formal trade consultations in March over objections to Mexico's plans to limit imports of GM corn and other agricultural biotechnology products. Those consultations took place, but failed to resolve the matter, the senior USTR officials said.

A spokesperson for Mexico's Economy Ministry did not immediately comment on the move. The Agriculture Ministry declined to comment.

Earlier this week, Mexico's agriculture minister expressed confidence in an interview that the dispute with the U.S. would not escalate to a dispute settlement panel.

The conflict comes amid other disagreements between the U.S. and Mexico, most notably over energy in which the U.S. has argued that Mexico's nationalist policy prejudices foreign companies.

Despite changes to Mexico's decree on GM corn, which it modified in February, the U.S. said the Latin American country's policies are not based on science and appear inconsistent with its commitment under the USMCA.

The new decree eliminated the deadline to ban GM corn for animal feed and industrial use, by far the bulk of its $5 billion worth of U.S. corn imports, but maintained a ban on GM corn used in dough or tortillas.

Mexican President Andres Manuel Lopez Obrador has said GM seeds can contaminate Mexico's age-old native varieties and has questioned their impact on human health.

"They did make some modifications such as removing the specific timeline for banning biotech products, but the decree does call for a gradual substitution and eventual banning of biotech corn, and this part of the measure itself is not science-based," said a senior USTR official.

The consultations will also address Mexico's rejection of new biotech seeds for products like soybeans, cotton and canola, U.S. officials said.

U.S. Agriculture Secretary Tom Vilsack said in a statement, "We fundamentally disagree with the position Mexico has taken on the issue of biotechnology, which has been proven to be safe for decades."

The National Corn Growers Association (NCGA), which represents U.S. farmers, praised the U.S. move.

"Mexico's actions, which are not based on sound science, have threatened the financial wellbeing of corn growers and our nation's rural communities," said NCGA President Tom Haag in a statement.