Logan Castellanos is a student at Georgetown University and an intern with WorldTradeLaw.net/International Economic Law and Policy Blog
The United States is escalating its GE corn dispute with Mexico amid calls to action from members of Congress from corn-producing states. In response to changes in Mexico’s GE protocols stemming from President López Obrador’s 2020 and 2023 Corn Decrees, the United States has begun legal proceedings against Mexico under the USMCA on the grounds that Mexico’s ban has no scientific basis.
"The U.S. believes in and adheres to a science-based, rules-based trading system and remains committed to preventing disruptions to bilateral agricultural trade and economic harm to U.S. and Mexican producers," said Agriculture Secretary Tom Vilsack in a statement.
Mexico has stood firm with its GE corn ban, citing health and cultural reasons for its recent legislative change. Technical consultations did not lead to a resolution, causing the US to invoke the dispute settlement provisions under Chapter 31 of the USMCA, which established a panel tasked with deciding whether Mexico’s ban is consistent with USMCA rules. The dispute is ongoing, with the panelists having been selected and Canada joining the dispute as a third party, and a hearing likely to take place soon.
This post describes the background to the Mexican corn legislation, the escalation of trade tensions leading to a formal dispute, and the interest groups in each country that have played a role behind the scenes.
Background
The Bicentennial of the United States-Mexico Diplomatic Relations occurred on December 12, 2022. This momentous event provides an opportunity to reflect on the past strengths and weaknesses and future possibilities of a U.S.-Mexico partnership, a relationship with robust agricultural trade as a key feature. In 2022, the U.S. exported $29.64 billion worth of agricultural goods to Mexico, and Mexico exported a record $44.2 billion to the U.S. — a total increase of 13% in two-way agricultural trade from the previous year.
The North American Free Trade Agreement (NAFTA) eliminated virtually all tariffs and quotas on trade among the U.S., Mexico, and Canada. Lifting these restrictions sparked an era of bountiful corn trade, among other things, between the U.S. and Mexico. From 2007-2017, the annual value of U.S. corn and corn-based exports to Mexico rose $1.8 billion, not adjusting for inflation. The United States-Mexico-Canada Agreement (USMCA), which came into effect on July 1, 2020, continued this era of thriving corn trade. However, this trade became threatened by a Presidential Decree issued by Mexican President Andrés Manuel López Obrador on December 31, 2020, which called for authorities to “revoke and refrain from granting authorizations for the use of genetically modified corn grain in the diet of Mexican men and women, until it is completely replaced” no later than January 31, 2024.
The 2020 Corn Decree vaguely described the processes by which genetically modified (GM/GE) corn grain would be replaced, citing “congruence with the country’s food self-sufficiency policies,” which are not further outlined. Another point of confusion in this decree was the use of the language “for human consumption,” which was also not defined. As discussed in more detail below, the U.S. argues that this ban is not backed by science and therefore violates the USMCA.
While this decree surely created a stir within the agricultural trade industry, López Obrador’s 2020 Corn Decree should not have come as a surprise. Having founded the MORENA party as a social movement in October 2011, López Obrador campaigned heavily on the issue of corn prior to his election in December 2018. His promises, largely aimed at rural Mexicans, focused on food self-sufficiency and increasing crop yields. Releasing the 2020 Corn Decree merely fulfilled one of his campaign promises.
Trade Tensions Rising
From 2018, when López Obrador assumed office, to 2021, when he announced a forthcoming ban, Mexico did not release any decisions regarding GE authorization. The Biosafety Law of Genetically Modified Organisms dictates the sale and importation of GE goods in Mexico. This law delegates the power to authorize the importation of GE products to the Secretariat of Health (SALUD), which, technically, must produce a decision within six months of receiving a completed application. The lack of approvals from 2018 to 2021 is in stark contrast to the prior operations of Mexico’s regulatory agencies, which had previously approved 181 applications, half of which (90) were related to corn.
Since the release of the 2020 Corn Decree, there have been numerous conversations between U.S. and Mexican trade officials regarding the ban. In November of 2022, U.S. Agriculture Secretary Tom Vilsack met with López Obrador and top Mexican cabinet officials. Following this meeting, López Obrador, attempting to assuage U.S. concerns, made it clear that the ban in the 2020 Corn Decree was intended only to apply to GE yellow corn intended for human consumption, not to all GE yellow corn. This distinction was intended to quell U.S. concerns over exports of GE yellow corn intended for animal feed and other industrial usage.
In the following weeks, Vilsack, along with Ambassador Katherine Tai and other officials from the Office of the United States Trade Representative (USTR), continued meeting with high-level Mexican officials to attempt to reach a resolution without the use of USMCA enforcement. Then on January 30th, 2023, USTR sent a formal, written request to Mexico asking for relevant reasoning and information regarding Mexico’s new biotechnology provisions, directly calling out Mexico’s lack of scientific backing for its GE corn ban.
Mexico responded on February 13, 2023, by releasing the 2023 Corn Decree, which would go into effect the following day. The 2023 Corn Decree cleared up much of the confusion surrounding the language of the original decree. The document clearly defined three categories of corn for consumption: 1) “Corn for human consumption” refers to corn that is produced for human consumption through nixtamalization, which is a processing treatment used in the dough and tortilla industry; 2) “Genetically modified corn for industrial use for human consumption” is defined as GE corn that is intended for human consumption other than that used for dough or tortillas; 3) “Genetically modified corn for animal feed” is defined as GE corn that is intended for use in the livestock and aquaculture sectors as feed.
The 2023 Corn Decree directs SALUD and other biotechnical regulatory bodies to “revoke and refrain from issuing” authorizations of GE corn intended for human consumption, which was clearly defined as corn for the dough and tortilla sector, the first category.
Additionally, the decree called for the gradual substitution of GE corn used in “genetically modified corn for industrial use for human consumption” and “genetically modified corn for animal feed” sectors, permitting the approval of GE corn in these sectors until full substitution of GE corn in the market is achieved. The caveat for allowing the approval of GE corn only for certain uses directly puts the responsibility onto individual producers to ensure that any GE corn used in Mexico will not be used for dough and tortillas. Similar to the first decree, Mexico did not further define the manner by which full substitution will be reached, citing “availability of supply,” “food-self sufficiency policies,” and “accordance with scientific principles and relevant international standards” as the means by which integration will be determined.
While the 2023 Decree did directly respond to the U.S. request for further information, it did not provide further reasoning to back up Mexico’s decision to phase out GE corn. On March 6th, 2023, USTR requested technical consultations under the Sanitary and Phytosanitary (SPS) Measures chapter of the USMCA. It is important to recall that under the SPS chapter of the USMCA, parties have agreed to “strengthen disciplines for science-based SPS measures,” and in doing so establish specific obligations in this area. In the U.S. view, Mexico’s imprecise 2023 Decree potentially violates several of these obligations.
When the SPS consultations did not resolve the issue, the U.S. decided on June 2, 2023 to escalate the issue and formally request USMCA dispute settlement consultations with Mexico. The countries were not able to resolve the dispute through consultations, and on August 17th, 2023, the U.S. requested the establishment of a panel under USMCA.
After the Parties were unable to reach a mutual agreement on a panel chair, the U.S. was randomly selected to choose the chair of the panel, and three panelists were selected. The U.S. chose Christian Häberli, a Swiss citizen and fellow of the World Trade Institute as the chair; it also chose Hugo Perezcano Díaz, a Mexican citizen and former Deputy Director of International Economic Law at the Center for International Governance Innovation as one of the panelists; and Mexico selected Jean Kalicki, a U.S. citizen and independent arbitrator at Arbitration Chambers as a panelist.
The Interest Groups Behind the Dispute
United States
Trade disputes are formally carried out by governments, but private sector interest groups also exert a great deal of influence. Corn is a powerful industry within the United States, and there is a lot of money at play — the National Corn Growers Association (NCGA) ranked in the top 5% of campaign contributors in the 2022 election cycle. The organization, in tandem with state corn associations, has been lobbying Congress and pressing the Biden administration for over a year to take legal action against Mexico, spending over $350,000 lobbying in 2022.
“Mexico’s decree, which runs counter to scientific findings and is in direct violation of USMCA, is negatively impacting American corn growers,” said Tom Haag, the President of NCGA. “U.S. officials have exhausted every avenue trying to resolve this conflict and are left with no other choice but to turn to a third-party panel in hopes of quickly rectifying this issue. We are deeply appreciative of USTR for standing up for America’s corn growers.”
The American Farm Bureau Federation was also persistent in its lobbying for action against Mexico. Ranking in the top 3% of lobbying contributors to Congress, the organization spent over $2.5 and $2.1 million in the 2021 and 2023 election cycles.
“Mexico’s biotechnology ban is not only a clear violation of the USMCA, but also it ignores science, stands in the way of our farmers’ sustainability, and denies families in Mexico safe and affordable food,” said American Farm Bureau Federation President Zippy Duvall. “That’s why Farm Bureau is grateful for support from both USDA and the Office of the U.S. Trade Representative, as Secretary Vilsack and Ambassador Tai stand by U.S. farmers and hold Mexico to our agreement.”
As a result of these and other groups lobbying sympathetic members of Congress, pressure to litigate against Mexico also came directly from the Capitol. Senator Chuck Grassley (R-IA), NCGA’s top individual recipient for the 2022 election cycle, co-authored a letter with Senator Joni Ernst (R-IA) expressing concern about the GE corn ban on November 14th, 2022. The letter highlighted the importance of corn exports to the Senator’s home state of Iowa, citing a study by World Perspectives Inc. to showcase the impact of a ban on the national economy. The study found that over the next 10 years, a Mexican ban on GE corn would cause the U.S. to lose $73.89 billion in economic output, lowering GDP by $30.55 billion, with a loss of 32,000 jobs.
Just a month later, another Congressional letter was sent to Ambassador Tai and Secretary Vilsack, this time with the bipartisan support of 26 Senators. While these Senators tended to represent states where farming is a priority, the bipartisanship of this request showcases the ability of agricultural politics to transcend party lines, which are often irrelevant when it comes to protecting a state’s most profitable exports. While these letters may have little impact on how the U.S. navigates the technical and legal aspects of this dispute with Mexico, they show that there is overwhelming support from politicians and the private sector alike in preserving the export of GE corn to Mexico.
Mexico
The situation in Mexico shifts the lens of this dispute from economic issues to cultural ones. A movement tracing back over sixteen years, “Sin Maíz No Hay País” or “Without Corn There is No Country,” is a widespread campaign across Mexico calling for the protection of native corn varieties. The organization’s main objective, according to its website, is “to fight for food sovereignty by strengthening peasant production through favorable public policies.” Favorable public policies, in this context, manifest themselves as GE corn bans and renegotiations of international trade agreements to favor local, rural agriculture. The organization’s advocacy efforts, through meetings, marches, and boycotts, most memorably came to fruition upon the introduction of the Federal Law for the Promotion and Protection of Native Corn in 2019. The bill, penned by Senators Ana Lilia Rivera Rivera and Jesusa Rodríguez Ramírez of the MORENA party, declares the cultivation of Mexican native corn as “National Food Heritage.” The bill also claims to promote the sustainable development, biodiversity, and legal protection of native corn, largely through the creation of a National Corn Council (CONAM). Passed into law in early 2020, before the signing of the USMCA, the law effectively protects 60 varieties of native corn against the possibility of crossbreeding with GE corn.
According to Rivera, this bill was motivated by “… the debt that [Mexico] still has with indigenous communities since the implementation of the North American Free Trade Agreement (NAFTA)in 1994.” This ‘debt’ refers to the negative impacts of the NAFTA-spurred shift in corn supply due to the simultaneous removal of Mexican corn tariffs and the continuation of U.S. farm subsidies. Cheap U.S. corn swiftly took over the market, posing real problems for local Mexican farmers. According to Public Citizen, an NGO that is critical of free trade and trade agreements, within several years of NAFTA coming into force, the price of Mexican corn fell 66%, and 1.1 million small farmers and 1.4 million farm-dependent laborers were forced to find work elsewhere.
For many advocates, the issue is just as much cultural as it is agricultural. Corn is an eternal fixture of Mexican culture — Rivera referred to corn in her bill as “a symbolic axis that articulates the collective memory of indigenous peoples. It is an axis through which the mythical and symbolic past of indigenous peoples can be recovered, reproduced, and reinterpreted.” The movement against GE corn is heavily based on the preservation and acknowledgment of indigenous corn cultivation practices, which advocates argue could be overwhelmed by GE corn integration.
At the same time, Lopez Obrador’s 2023 Corn Decree does face some opposition from within Mexico as well. For example, the Consejo Nacional Agropecuario (National Agricultural Council) has voiced concerns regarding Mexico’s ability to pick up American production slack should a ban go into effect. “Mexico is currently not self-sufficient in growing yellow corn and, in fact, corn producers have been switching corn production to agave production, a crop used to make tequila,” said Luis Fernando Haro, the Director of the National Agricultural Council. The Council also expressed concern about a possible rise in food prices if there were increased domestic production. A study conducted by World Perspectives Inc. supports this hypothesis, though the data examined is based on a full GE corn ban, not a ban solely on GE corn for human consumption. It was found that if a full ban were implemented, the cost of corn in Mexico would increase by 19%, and tortillas by 16%. It was also estimated that in the first year following the ban, non-GE corn prices would rise 48%.
The Third Party: Canada
Until recently, the Canadian government has been relatively absent from this dispute. On March 7th, 2023, Canada requested technical consultations with Mexico concerning the issue under the SPS chapter, citing overarching concern for general respect of the USMCA’s provisions. On June 9th, Canada officially announced it would join the consultations requested by the U.S., and on August 25th decided to participate as a third party in the dispute settlement proceedings.
“Canada believes that the measures taken by Mexico are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market,” said Canadian Trade Minister Mary Ng.
Though the Canadian government is supporting the U.S. position, Mexico has found champions in Canadian non-governmental organizations. Just two days prior to Canada’s joining as a third party, the National Farmers Union released a letter, sent to Minister Ng, urging her “to respect Mexico’s decision to prohibit imports of GM corn for human consumption, as it has put these measures in place in order to uphold its food sovereignty, including the traditional Indigenous farming systems known as milpa. We urge you to refrain from having Canada join the Panel as a Third Party in order to avoid escalating our role in this dispute out of respect for Indigenous rights.”
Canada’s current commitment to both Indigenous solidarity and the advancement of GE goods are in conflict. In this instance, it seems, innovation in biotechnology will take precedence over the protection of indigenous practices. As noted above, on March 7th, 2023, just a day after the U.S. requested the formal SPS consultations with Mexico, Canada requested the same — focusing their concern, instead, on overarching bans on GE goods. According to Bloomberg, Canada is not too concerned about corn itself, because it is not a major exporter of the good. What Canada is concerned about, however, is “arbitrary prohibitions” and “Mexico’s lack of respect for the USMCA trade pact.” Overall, while technically an observing third party in this dispute, Canada’s GE goals strongly align with those of the U.S., creating a partnership between the two in the legal dispute.
Conclusion
The complexity of the GE corn dispute between the U.S. and Mexico lies in its operation on a trifecta of competing axes: economic, scientific, and cultural. Championing economic and scientific reasoning, the United States asserts that Mexico’s biotechnology protocols are USMCA-inconsistent. Mexico’s inability to provide peer-reviewed evidence showing the harms of GE corn, the U.S. argues, undermines its commitments under the USMCA to science-based regulation. Instead, Mexico’s reasons for its changing GE corn policies are largely cultural, which, while important to the Mexican community, are unlikely to be accepted as a justification for these violations under the USMCA, although it is worth noting that Mexico's written submission in the case has not been made public yet, so Mexico's full legal defense is not known at this point.
