Global Policy Forum

By Paul Brown

The US has demanded that the EU abandon its ban on the growing of genetically modified crops and pay at least $1.8bn (£1bn) in compensation for loss of exports over the past six years.

The challenge is outlined in papers filed to the World Trade Organisation that have been seen by the Guardian.

The WTO is now facing the biggest case in its history, one that could spark a damaging trade war between the US and Europe and split the international community.

Although the US announced it intended launching the case last year, many believed it was bluffing and trying to bully the EU into giving way on the issue of unfettered trade in GM.

But the papers, which were sent to the WTO last week, accuse the EU of imposing a moratorium on GM products in 1998 without any scientific evidence and in defiance of WTO free trade rules. The EU has until the end of May to reply before a WTO panel meets in June to adjudicate.

If it finds in favour of the US, the body will decide what trade sanctions can be imposed to force Europe to fall in line. The US has said it has lost $300m a year as a result of lost maize imports and would expect sanctions against the EU to help recoup the sums.

The affair has worldwide significance because if the US can force the EU into submission, then no country will be able to keep GM out without facing trade sanctions. But there is strong consumer resistance to GM in Europe and several countries have introduced rules banning imports of individual GMs, either for growing or in food.

These countries, Austria, France, Luxembourg, Germany, Italy and Greece, are all cited by the US in the case presented to the WTO.

In its submission it says that none of these bans can be legal. This is probably the strongest part of the US case because the trade rules allow countries to ban products on health or environmental grounds but they need to provide evidence.

The papers say that the EU "can present no scientific basis for a moratorium" and that the "product specific bans ... are not based on science and are thus inconsistent" with Europe's obligations under WTO agreements.

Britain has sought to avoid these trade sanctions by supporting the introduction of GMs at every opportunity and saying it is treating the growing of crops on a case-by-case basis. This led the government this year to ban the growing of GM oilseed rape and sugar beet on environmental grounds but to permit the growing of GM maize under strict conditions.

The case brought to the WTO will not be affected by the meeting of EU agriculture ministers yesterday which ended with a likely lifting of a ban on one specific variety of GM maize.

In its defence to the American action, the EU can argue that the effective moratorium of five years in making any decision on the future of crops was to allow time for crop trials to test the effect on the European environment.

WTO officials are aware that imposing draconian penalties on Europe for adhering to the overwhelming wishes of its people is likely to make it even more unpopular.

On the other hand, the US is determined to press the case and even if this fails it is set to bring a second case to prevent GM foods being labelled and traceability of crops being mandatory.

Both these elements became EU law this month and are likely to form a second case to the WTO as a "restraint" of trade if victory is not total in round one.

The looming WTO sanctions place increasing pressure on ministers to show willing by allowing some crops but do not remove the objections to the EU stance from across the Atlantic.

One of the key issues will be the attitude of the wider world. According to the US, Australia, China, Chile, Colombia, El Salvador, Honduras, New Zealand, Norway, Thailand and Uruguay have an interest in the case. But exactly what these countries will say to the WTO is unclear.

Sue Mayer of Genewatch said: "This is politically a nightmare for the WTO. Does it accept that the EU has the right to listen to the will of its peoples and be very cautious about the way it introduces GM - including spending five years completely overhauling its regulatory processes, or does it give into a technical argument from the US that rides roughshod over the wishes of millions of Europeans?

"It is anyone's guess what the consequences might be."