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Summary of Discussions of August 12, 2010 Meeting of the Advisory Committee on International Economic Policy


Bureau of Economic, Energy and Business Affairs
August 12, 2010

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The meeting was open to the public; however, participants’ statements, other than those cited, are not for attribution. The meeting drew more than sixty individuals from the membership, general public and media.

Committee Chairman Theodore (Ted) Kassinger of O’Melveny & Myers, LLP, opened the meeting of the Advisory Committee on International Economic Policy (ACIEP) and welcomed the members and participants. Chairman Kassinger reminded participants that the meeting would be conducted under the Chatham House Rule and introduced Jose W. Fernandez, Assistant Secretary of State for the Bureau of Economic and Business Affairs (EB). The topic of discussion for the meeting was “The Role of New Agricultural Technologies in Addressing Global Challenges.”

Assistant Secretary (A/S) Fernandez announced the names of the eight new members of the Advisory Committee and discussed key international priorities for the Department and the Economic Bureau. He also: gave an update on the President’s National Export Initiative and efforts to double exports; summarized the recent announcements on Iran sanctions legislation by the United Nations and the European Union, citing the need for more work on the policy and implementation; and discussed the outcome of the African Growth and Opportunity Act (AGOA) Forum. A/S Fernandez opined that AGOA is good legislation, but Africa needs ways to expand its exports into the U.S. market and build the infrastructure necessary to compete in the global marketplace. He also highlighted plans for an entrepreneurship summit in North Africa, the U.S. initiative on counterfeit medicines, and a pilot project with Central America on remittances.

A/S Fernandez then introduced the meeting topic and discussed the U.S. position on agricultural products developed through the use of biotechnology. The U.S. government in general supports the safe and appropriate development of genetically engineered crops because of their potential for creating healthier foods with higher yields and a reduced impact on the environment. The State Department participates in the development and implementation of U.S. biotechnology policy with respect to trade and development. State is the U.S. government lead on certain issues, such as the Biosafety Protocol to the Convention on Biological Diversity, works closely with regulatory and trade agencies, and is at the forefront of international discussions on the regulation and trade of biotechnology. A/S Fernandez commented that he was eager to hear members’ various viewpoints on the topic.

Roger Beachy, Director of the National Institute for Food and Agriculture at the U.S. Department of Agriculture, gave a presentation that addressed the background of biotechnological developments in agriculture, and important energy, environmental and health issues that may be addressed through the development of biotechnology products. Biotechnology would improve nutrition and reduce allergens, and could be used as an instrument to deliver vaccines for preventable illnesses. Biotechnology can mitigate the effects of climate change by making agriculture more climate neutral, increasing water security for the world, and assisting the adaptation of plants and animals. The presentation also described how biotechnology is instrumental in addressing energy needs. Genetic engineering and biotechnology are the keys to success in developing plants that produce biomass more efficiently and cellulose that is easier to process for conversion into fuel. Achieving goals for biofuel production is likely impossible without advanced technology. Dr. Beachy also suggested that increasing the productivity of agriculture from by just 0.5 percent would alleviate the world’s food shortages.

Dr. Judith Chambers, Director of the Program on Biosafety Systems at the International Food Policy Research Institute, followed with another background presentation. Dr. Chambers described how technology historically has been instrumental in increasing agricultural productivity and addressing the increased demand for food, feed, fiber, and fuel. At the turn of the 20th century, each U.S. farmer fed seven people while today each U.S. farmer feeds 96 people due to increased crop yields, crop protection and efficient machinery. Globally, with the recent advent of biotechnology, crop yields have increased from 9% to 31%, pesticide use has substantially decreased, and farmer income has increased from $117 per acre to $250. As the world’s population grows from 6.5 billion to 8 billion by 2025, food and biofuel consumption will dramatically increase and climate change will alter land and water availability. In Dr. Chamber’s view, Africa presents the biggest global challenge. Its future depends on agriculture. Thirty to fifty percent of the gross domestic product for African countries depends on agriculture, with the majority of the population’s living made by farming, but there are thousands of hunger-related deaths every day and nearly 200 million people are malnourished. Agricultural productivity gains in the United States reflect a culture more receptive to technology and innovation and the adoption of biotechnology than elsewhere. Developed and advanced developing countries, such as China, Brazil, Argentina, India, and South Africa, that have adopted biotech crops like maize, cotton, and soy have seen the benefits and positive impact of genetically engineered crops. Africa can likewise improve its food production through greater adoption of agricultural technologies.

Following these background presentations, Mr. Kassinger invited members of the Committee to express their views.

An ACIEP member explained why many consumers have serious concerns about the introduction of bio-engineered food products. According to the member, many consumer groups worldwide advocate for labeling requirements that will disclose to consumers the presence of genetically modified organisms (GMOs) in food products and for regulations that require such products to be proven safe for humans and the environment before going to market. The member commented that at the Biosafety Protocol negotiations, the U.S. was obstructionist and worked for the weakest possible implementation schemes in developing countries. The U.S., along with two other countries, Argentina and Mexico, blocked an agreement that required labeling genetically engineered food. The U.S. allows voluntary labeling but does not require mandatory labeling for engineered food products, whereas European countries, Japan, Korea, Thailand, Brazil, Russia, China and Malaysia require mandatory labeling when foods contain GMOs.

This member continued that consumers and foreign governments also are resistant to biotechnology because it is viewed by many experts as playing a small role in the fight against hunger, while available resources could be put instead to much more effective use. Africa is at the center of the effort to resolve food security issues. Organic agriculture should be supported in Africa more strongly because large-scale organic farming techniques are already well known, and these techniques are more sustainable from an environmental standpoint. Investment in infrastructure development could also do more to address hunger in Africa than biotechnology. More infrastructure projects would increase trade, create irrigation systems, and facilitate access to fertilizer. The success of India’s increased food production during the “green revolution” may be attributed in part to USAID and World Banks financial assistance for infrastructure development projects and building fertilizer plants in the region. A third more pressing need is to revamp U.S. food aid programs, which now undermine local production and long term dependency on free imports. The ACIEP member also pointed out that the development of genetically engineered food is experimental and costly. Almost ten million dollars has been used by scientists in Kenya trying to develop a type of maize that is resistant to the stem borer in the last 10 years, whereas many roads and bridges could have been built with those financial resources. Finally, agricultural biotechnology poses a threat to sustainable development in poor countries because all genetically engineered crops are patented and a few companies dominate the market; as a result, farmers can no longer grow, save, and replant their own seeds, in turn creating a dependency on seed companies. In sum, this member recommends that the focus not be on promoting biotechnology, but how to best fight hunger globally.

Assistant Secretary Fernandez responded to these comments by explaining to the members that while the Department of State seeks to support the effective use of biotechnology in agriculture and to work closely to resolve the concerns among consumer groups and others with its use, the Department does not see biotechnology as the silver bullet in eradicating hunger. State’s recent Feed the Future Initiative, for example, is intended to promote trade, increase modes of transportation, and promote sustainable development as means to feed the hungry; it is not about biotechnology. Scientists believe biotechnology is safe, but the Department recognizes that many consumers oppose it.

Next, another member responded to the presentations by pointing out that the background presentations, as well as the advocacy in support of biotechnology products more generally, do not include data reflecting consumers’ points of view. From the standpoint of consumer products companies that might be interested in introducing products containing GMOs, consumer concerns must be understood and addressed. The dialogue on biotechnology issues has not changed or moved forward in years. Consumers need to be informed in order to make informed choices. Both sides need to learn to seek common ground. Companies will not support products that consumers have not accepted as safe.

Another member then discussed the misinformation about biotechnology in least developed countries. The lack of information, functioning regulatory systems, and adequate infrastructure present the greatest challenges for small scale farmers. She suggested that these challenges be addressed together with technology.

Other members also pointed to a need to advance the discussion beyond the long-time arguments that emphasize complete acceptance or rejection of bio-engineered agricultural products, and the importance of reducing trade-distorting agriculture subsidies and food aid programs.

Subcommittee Updates

Investment Subcommittee Co-Chair Alan Larson reported on the Subcommittee’s upcoming project to review the role, function, and implementation of the U.S. National Contact Point for the OECD Guidelines on Multinational Enterprises. The Investment Subcommittee has been asked to provide recommendations and advice for the process by the end of the year.

An ACIEP member asked for the status of the Review of the Model Bilateral Investment Treaty (BIT) which was the subject of the prior investment subcommittee’s work. A/S Fernandez responded that the review of the Model BIT is still under discussion and he emphasized the value of the Investment Subcommittee’s report to the Administration.

Barry Carter, Chair of the Sanctions Subcommittee, discussed the Subcommittee’s work plan and gave an update on its recent activities. Professor Carter convened meetings in June and July with U.S. government officials to discuss the implications of the recent sanctions on Iran by the U.S. and the U.N. The subcommittee will focus on the recent sanctions on Iran and consider how U.S. jobs are impacted by the new legislation; review Cuba sanctions policy with regard to travel and trade relations; analyze U.S. sanctions on Burma; and review the new U.S. financial services regulation law with a view towards possible recommendations about the implementation of provisions for conflict minerals.

Closing
Chairman Kassinger conveyed his intention to begin scheduling ACIEP meetings six months to a year in advance, and thanked the Committee members for their active participation in the meeting. The meeting was adjourned.



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