The ongoing dispute between the U.S. and Mexico over the latter’s restrictions on imports of genetically modified (GM) corn does not directly affect the produce industry. Nevertheless, the situation is worth watching for possible indirect effects.
The background, from Reuters: “Mexico published a presidential decree on genetically modified (GM) corn in late 2020, saying it would ban GM corn in the diets of Mexicans and end the use the [sic] herbicide glyphosate by Jan. 31, 2024. The wording of the order threw Mexico’s demand for corn imports into question. President Andres Manuel Lopez Obrador [AMLO] has said GM seeds can contaminate Mexico’s age-old native varieties and has questioned their impact on human health.”
The latest development: on Thursday, August 17, U.S. trade representative Katherine Tai said that the United States would create a dispute resolution panel under the USMCA trade agreement to challenge Mexico’s ban on GM corn for human consumption on the grounds that it violates USMCA.
On Friday, August 18, AMLO dismissed the need for the panel, saying it was the result of industry influence on American politics due to “the pressure of big agriculture groups, who are connected to lawmakers and have a lot of influence.”
The president added, “We’re not violating the trade agreement.”
The ban only applies to corn used for human consumption; Mexico allows imports of GM corn for animal feed, although AMLO has also expressed concerns about the corn making its way into the food supply.
It is interesting to note the nations that ban the use of GM plants: Algeria, Bhutan, Belize, Ecuador, Kyrgyzstan, Madagascar, and Peru. The only major nation to ban them is Russia.
My own impression is that constant U.S. pressure will eventually lead Mexico to admitting GM corn for all markets. But any number of things can happen on the way.
Like a trade war.
If the U.S. chooses to escalate the dispute, retaliatory moves are a real possibility. Of course, these can never be completely reciprocal: the U.S. does not import enough Mexican corn for its ban to pose any threat.
But, trade wars being what they are, the U.S. can pressure Mexico by halting imports of other commodities that are of similar value.
Look at these figures: U.S. corn exports to Mexico were valued at around $5 billion in 2022. In the same year, Mexican avocado exports to the U.S. were valued at $3.1 billion. Not an exact match, but close enough that the U.S. could hit Mexican avocados as a way of pressuring AMLO.
We can look back to the temporary but startling ban on avocado imports in February 2022. The ostensible cause was a threat phoned in to an American inspector in Michoacán. The ban was called on the eve of Super Bowl Sunday—an event that has become associated with guacamole as turkey is with Thanksgiving. It was cleverly timed: reminding Mexico of the value of the U.S. market while taking place late enough to prevent supply disruptions for the Big Game.
Then the ostensible motive was to pressure Mexico into opening the entire nation to U.S. potato exports, which had previously been limited to a small territory along the nations’ border. U.S. potato exports to Mexico were valued at $2.1 billion last year.
In short, it is conceivable that avocados could be targeted again to put similar pressure on Mexico to import U.S. GM corn.
Or perhaps tomatoes: tomato imports from Mexico were valued at $2.48 billion in 2022.
There is no overt sign of any such moves right now. But as I said at the outset, the situation bears watching.