Ciba Giegy's Genetically Altered Maize Hybrid

Maize Case

Ciba-Geigy's Genetically Altered Maize Hybrid

I. Identification

1. The Issue

This case study will examine Ciba Geigy's genetic improvement of hybrid maize to resist the European corn borer (ECB), and the impact it may have upon the environment as well as trade relations between the US and The European Union (EU). The genetically engineered ECB resistant maize hybrid was developed by the Swiss- based chemical and pharmaceutical firm Ciba's Seeds Division. Favorable field reviews of the hybrids' reaction to conditions found in countries such as France, Spain, Italy, Argentina, Canada, and the US have been conducted since 1992. This development has the potential to save millions of hectares of corn each year. Although numerous countries have approved the new maize for use on the market, the European Union is more hesitant to allow it on the mareket. The EU has not yet made a decision whether or not to ban imports of genetically modified maize, a move which could seriously jeopardize EU/US trade relations, although many agree that such action does not seem unlikely. The first-ever crop of Bt corn (or maize -- the two terms are used interchangeably throughout this report) was just harvested in the fall of 1996, but officials on both sides are giving no ground on the issue. The following report examines the issues raised by both sides, as well as study the potential economic and environmental effects.

2. Description

Biotechnology may be on the verge of revolutionizing the agriculture industry. Although "natural" varieties of basic foodstuffs continue to dominate the global markets, genetically engineered crops are becoming increasingly commonplace on both the farm and the supermarket shelf, improving and replacing many of the more traditional, "natural" varieties. ECB resistant maize is the latest in the parade of genetically engineered plants, following the lead of hybrids such as soya beans, tomatoes, potatoes, sugar beet, and cotton, and the first crop of hybrid maize will be available on the market in winter 1996.

Ciba-Geigy , the Switzerland-based chemical and pharmaceutical firm, has genetically engineered a strain of maize that is resistant to insects such as the European corn borer. These insect pests damage and destroy millions of hectares of maize crops each year in Europe, North America, and Asia, costing farmers 5-7% yield losses. This is estimated to be $1 billion annually for American farmers alone. By resisting the ECB, field trials have had average yield increases of 12-15 bushels per acre. (Ciba booklet) The increased output is likely to increase profits for farmers worldwide.

Since the 1930's, strains of the Bacillus thuringiensis protein, or Bt, have been topically applied to the soil to control ECB populations. However, these applications have not been wholly successful at controlling the corn borer, as much of the ECB life cycle actually takes place inside the plant. The European corn borer is extremely difficult to control using chemical insecticides because the larvae burrow into the maize stalk itself. Surface treatments do little to protect the plant once the insect has burrowed inside. To directly address this problem, Ciba has developed the new ECB-resistant hybrid that controls the ECB from within the plant.

Picture of a Corn
Field

Through the addition of two genes not naturally present in the plant, one Bt gene and one "marker" gene, Swiss engineers have "programmed" the hybrid to be resistant to the European corn borer. The two genes are usually accepted together. Through engineering, the first gene is present only in plant tissues where the corn borer feeds. Ciba's new Bt corn thus has the unique ability to control insects from within the plant itself. By consuming a minute amount of plant tissue or pollen, ECB larvae ingest the Bt insect control protein, soon stop feeding and die, effectively terminating the ECB life cycle. (Ciba pamphlet) The second gene added by Ciba engineers is used as a "marker" during development in order to track successful genetic transformations. However, the second gene has become quite controversial, for in addition to being easily trackable, it is also resistant to ampicillin, a common antibiotic. While resistance to ampicillin is not a worrisome gene characteristic for maize, officials are concerned about possible ramifications to consumers further along the food chain.

Bt maize meets all current standards of the U.S. Environmental Protection Agency (EPA), U.S. Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA), and the EU and has been approved for the US 1996 growing season. Canada and Japan have also approved Ciba Seeds' ECB tolerant maize for domestic use. In direct response to EU fears concerning the safety of the hybrid corn, Ciba states that "other organisms, including humans [and] livestock ... lack the specific gut environment necessary for the insect control protein to bind. If the protein is consumed by these organisms, it is digested the same way as other dietary proteins." (Ciba Pamphlet)

Despite the numerous tests which have been performed, the EU still says that manufacturers or importers must concretely demonstrate that the hybrid maize does not pose health risks for humans or the environment. (NBIAP News Report) Environmental lobby groups have called the hybrid a "mutant" (Economist). Scientists are concerned that the gene which makes the corn resistant to ECB might, when eaten, be absorbed by consumers such as cows and humans, and then by resident bacteria. While cows, humans, and bacteria are not threatened by the European corn borer itself, scientists fear that absorption of the new gene would transfer resistance to the antibiotic ampicillin to the human, cow, or bacteria. The fear is that dangerous bacteria might develop resistance or immunity to the antibiotic. If an organism were to accept this gene into its own genome, for example, it could potentially become resistant to the antibiotic ampicillin. This idea naturally terrifies the science and health communities, who have only in this century gained the ability to effectively fight bacteria throught the use of antibiotics. If by eating the new hybrid maize bacteria were to become immune to such treatments, it would have disastrous effects upon global health and disease prevention/protection.

If dangerous bacteria were to become resistant to ampicillin it could pose enormous problems for the health industry. Prompted by these concerns, the EU hopes to prevent problems before they begin. To this end the EU Council has not authorized the new maize hybrid for use within the EU, citing the potential health implications of the new grain. Additionally, there are strong indications that the EU is considering placing bans on the importation of this grain from the United States into the European Union. This is highly controversial, as the new corn kernels are virtually indistinguishable from "natural" kernels until they are examined genetically. To examine the DNA of each individual kernel of corn that the US exports to the EU is unthinkable, and yet that is what would be required if the US were allowed to ship only "natural" corn across the Atlantic. In the end, the EU would be effectively placing a ban on all US grain and grain products. US maize exports to the EU range between $530 and $300 million annually, placing high stakes on this political battle of wills. (Reuter EC Report) Considering that the U.S. produces 80% the world's maize exports, this would be amazing on the part of the EU. Estimates of corn production requirements have been as high as 2,200 million bushels -- for the EU to forbid itself to access any of this corn would be a remarkable development. Adding to the complexity of the issue, the dispute is developing in the shadow of a long-standing disagreement over the EU's ban on hormone-treated beef. (Financial Times)

The ban would not only have a negative effect on US maize exports to the EU, but could also adversely impact Ciba, the firm developing the breakthrough hybrid. As the sale of Bt corn to the EU would be prohibited, fewer farmers would purchase the grain for commercial use, resulting in less profits for the company. Also, a ban on Bt corn would likely forestall the drop in prices that the increased output of the ECB-resistant hybrid. Prices of maize and maize-goods would not decrease because of the artificial control on the market system. However, both sides of the issue are for the moment downplaying the potential trade restriction, saying that "to say it's the start of a trade war is to put the cart before the horse," emphasizing that imports of unmodified maize will not be restricted under such a policy. (Reuter EC Report)

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Key word clusters:
a. Trade Product: Food
b. Biodiversity: Temperate
c. Environmental Problem: Health

4. Draft Author and Date:
Jennifer Leeper, last updated in December, 1996

II. Legal Cluster

5. Discourse and Status: Disagreement and Allegation

The issue is a potential ban imposed by the European Union on the importation of maize grown with Ciba-Geigy's new European corn borer resistant hybrid on the grounds of potential antibiotic resistance to bacteria or viruses present during the digestion process. Obviously both sides to the conflict have different views. The European Union argues that banning the importation of Bt corn into the EU would be a non-discriminatory act since all countries would have to meet the same criterion. The EU also maintains that because the universal ban would apply European and international producers alike, it would not violate GATT agreements. Finally, the EU maintains that a univesal ban onl hybrid maize would not be a protectionist policy, as there is no fledgling hybrid corn market that the EU might be trying to protect.

However, the United States and Ciba see the issue differently. The U.S. Environmental Protection Agency, U.S. Food and Drug Administration, U.S. Department of Agriculture have all tested the new grain and found it safe for the commercial market, for both animal and human consumption. This has prompted US officials say that the EU's proposed ban is protectionist of "natural" maize varieties. This is because any country which cultivates the new Bt corn will suffer from the EU's proposed policies, as it will have little means of demonstrating that the export corn is not Bt corn. As explained earlier, tests can be performed to distinguish between the two varieties, but these tests are long and complicated and essentially useless for import control purposes. An EU ban on hybrid maize imports would effect the majority of all US maize exports to the EU, as the US "[has] no means of guaranteeing the [ECB-resistant maize] won't get into export channels". (Reuter EC Report) The US is objecting to the looming trade dispute, citing the numerous studies disputing these these fears.

6. Forum and Scope: European Community and Regional

The issue primarily involves the USA and EU, but other countries around the world will undoubtedly have to abide by the outcome of the situation. The ECB destroys millions of hectares of maize crops each year throughout Europe, North America, and Asia.

7. Decision Breadth: Seventeen Countries

The outcome of this situation certainly effects all sixteen states in the European Union as well as the United States -- undoubtedly other maize producers such as Canada and Japan will also be effected by the final settlement.

8. Legal Standing: Treaty

The possible ECB-resistant maize ban would be a treaty drafted by the joint government of the European Union, if such a step is indeed taken.

III. Geography Clusters

9. Geographic Locations

a. Geographic Domain: Europe and North America
b. Geographic Site: North America
c. Geographic Impact: European Union and the United States

10. Sub-National Factors: Yes

The European Council's decision on whether to ban the import of genetically altered maize is being influenced by domestic farm lobbies. The EU is well known for it protective agricultural policies, and European farmers will not willingly open their markets to the genetically improved maize that will give foreign producers a competitive advantage over their own domestic products.
The United States also has a powerful farm lobby that will very likely pressure the government to push for acceptance of the hybrid on the European market.

11. Type of Habitat: Temperate

Maize has been native to North America for over 5000 years, but was not introduced to Europe Columbus returned from his discovery of America at the end of the 15th Century. American maize is grown in virtually all of the United States, but the majority comes from the nine states in the "corn belt": Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, and South Dakota. This is a region with a temperate climate similar to that of Western Europe.

IV. Trade Clusters

12. Type of Measure: Import Ban and Import Standards

The European Council is considering placing a ban on the import of all maize grown in the US, in an effort to prevent the inadvertent importation of hormonally altered kernels, which the EU is afraid might adversely effect citizens.

13. Direct vs. Indirect Impacts: Direct and Indirect

The possible EU ban on the importation of genetically altered maize will obviously have a negative direct effect upon American maize farmers and the maize industry. The ban would potentially exclude all US grains from the European market, be they Bt maize kernels or of the natural variety, which would severely threaten the extent of the American maize industry. If such a ban is passed by the Council, American maize growers would likely have to spend a large amount of money creating a system to ensure that exports to the EU were Bt-free. This suggests a positive indirect effect for the American engineering corporations that would devise such a system.

14. Relation of Measure to Impact

a. Directly Related: yes: hybrid Bt maize/corn
b. Indirectly Related: no
c. Not Related: no
d. Process Related: yes

The EU is afraid that the new hybrid maize poses a potential threat to biodiveristy. As explained earlier, scientists and health officials are particularly that bacteria or other organims might indeed be capable of absorbing the ampicillin into their genome, thus rendering themselves immune to the antibiotic.

15. Trade Product Identification: Maize

16. Economic Data

Maize is the major feed grain grown in the United States, leading all other crops in both value and volume of production. Approximately 9 billion bushels are harvested: roughly 50% is used to feed livestock, 25% is used domestically for both household consumption and industrial purposes, and the remaining 25% is exported. US maize exports to the EU are typically worth about $300 million per year, although when prices were higher than normal in 1995/1996, maize exports were worth $530 million. With the new Bt maize, farms are expected to yield 12-15 bushels per acre more than is currently harvested from non ECB resistant seeds. This mean that total corn sales will bring in an additional $1 billion to American farmers using the new Bt maize seeds. Although only 6% of American farmland was planted with the hybrid in 1996, an EU ban on its importation would have seriously detrimental effects upon American farmers, as the process for identifying natural kernels from hybrid ones is both expensive and time consuming.

Map of 1995 US Corn Harvest

17. Degree of Competitive Impact: Medium

American farmer's use of Ciba's genetically engineered maize would likely cause a drop in the price of American maize and maize products. The cost of the modified kernels is not significantly greater than that of standard maize seed, and the increased yields are expected to more than compensate for the added cost of the seeds. Also, the supply of corn on the market would increase due to the hybrids' ability to resist the ECB and yield more grain, thus driving the prices of maize down. The EU's proposed ban is likely to exaggerate the decline in maize prices, driving prices down even further, as the lack of a European market outlet for their grain causes American farmers to further slash their prices in an effort to attract domestic customers.

18. Industry Sector: Food

19. Exporter and Importer: US and the EU

The US currently exports roughly 40% of the world's corn supply, constituting roughly 80% of total world corn trade. For 1996-97, global corn output is forecast to reach 567 million tonnes, up 11 per cent from the year before. Although only 6% of American fields were planted with Bt corn, the hybrid maize will provide a significant amount of corn on the world market.

V. Environment Clusters

20. Environmental Problem Type: Source, Biodiversity

The EU's hybrid maize proposed ban is based upon environmental objections that would be classified as potential source problems. The EU is concerned that the new maize would result in a change to the general habitat, as viruses and other organisms absorb the grain's immunity to ampicillin. This absorption would alter the bio-chemistry of the organisms effected, creating incalculable potential ramifications throughout the food chain. This could potentially result in a decrease in biodiversity. If pessimist scenarios are followed far enough, the alterations could result in the extinction of one or more species as common remedies for virus infections become impotent. Thus, this potential for biodiversity loss is also fueling EU objections to Ciba's hybrid.

Corn growers maintain that corn is environmentally friendly, particularly when used as an ingredient for industrial products. As corn is a totally natural additive, corn growers promote the environmentally-friendly paints and biodegradable cornstarch products as among the best "natural" products on the market.

21. Species Information

Name of Species: Zea mays L
Type: Maize/Corn/Grain
Diversity: US and Europe
IUCN Status: Rare
Corny Trivia

22. Impact and Effect:Low and Regulatory

23. Urgency and Lifetime

Urgency: Low and One Year

As Ciba's Bt hybrid maize is a new variety, there is little to no need to worry about species extinction in the foreseeable future. Opponents of the grain suggest that the hybrid will result in dramatic genetic alterations to various animals and viruses that come into contact with the ampicillin-resistant gene, but to date such fears have not been substantiated by test results. Although those with anti-genetically-altered-corn sentiments are down playing the fact, the new grain has been found to meet all current FDA, USDA, EPA, and EU safety regulations.

24. Substitutes: Like Products

As hybrid maize is actually a substitute for the lower-yield, natural variety of maize, farmers have an obvious substitute for Bt maize. However, neither of these varieties are in any serious environmental danger in the foreseeable future. If the EU ban does become law, American farmers will have the option of sidestepping the import regulations by switching to production of a different grain, such as wheat, barley, oats, or natural maize, for example.

VI. Other Factors

25. Culture: No

The EU's opposition to the importation of Ciba's ECB resistant maize is primarily motivated by scientific concern that organisms consuming the hybrid might absorb the ampicillin- resistant gene, altering their own genetic structure in the process. As explained, the possibility of viruses absorbing the extra gene is particularly terrifying. US officials would add that the possible ban stems from nationalism and political motivations to protect the European Union's domestic "natural" maize crop from the new, cheaper variety. Protectionist policies have characterized many of "Fortress Europe's" recent policies. If such protectionist claims were supported, US officials might file a claim with GATT or the WTO to settle the dispute in an international arena.

The EU's motivation is indeed culturally motivated. Several European countries, Germany in particular, have active popularly- based Green parties that weild significant domestic political clout. Therefore, while these Green parties have not claimed to bebehind the proposed ban, one cannot overlook the possibility that they are unofficially campaigning for a ban against the "unsafe" Bt corn.

26. Human Rights: No

While one could say that the proposed ban aims to protect European citizens' right to consume food without having to worry whether it contains Bt maize or not, the maize hybrid can hardly be considered a threat to the human rights of EU citizens. There is no violation of human rights for the Americans either, as for them the new corn merely means more grain to harvest.

27. Trans-Boundary Issues: Yes

This issue obviously crosses US/EU borders, as well as internal borders within the European Union. The problem is the admission of the new ECB resistant maize into the EU -- a border problem. As has been explained, an EU ban, either on just Bt maize or on all American maize, will have a significant effect on the trade flows between these two international entities.

28. Relevant Literature

Chalmers, Patrick. EU States must Vet US Gene-Modified Corn Imports. The Reuter European Community Report, BECAUSE Cycle, September 4, 1996. (The Reuter EC Report)

Ciba. Canada follows US in maize approval. January 30, 1996.

Ciba. Ciba Sees first to have US market approval for genetically improved maize. August 9, 1995.

Ciba. EU Scientific Committees to further assess the new Ciba maize. July 26, 1996.

Ciba-Geigy. A Guide for Corn Growers: Planting Ciba Seeds Maximizer Hybrid Corn with Knock out Built-in Corn Borer Control. US Edition, 1996 (Ciba Pamphlet)

Ciba-Geigy. Agricultural Biotechnology. (Ciba Booklet) Corn Refiners Association.

Corn Refining and Plant Biotechnology. September 24, 1996.

Durham, Michael. Look What's Coming to Dinner...Scrambled Gene Cuisine. The Observer, October 6, 1996.

Economist. Farming: A moral maize. p. 82, September 14, 1996.

Hawkes, Nigel. At war over the field of genes. The Times, September 9, 1996.

Inverizon International: InverField News Page. EU confusion on transgenic maize.

Maitland, Alison. Trade row looms over maize, EU threatens to ban US genetically engineered type of grain. Financial Times, September 4, 1996 (Financial Times)

---. Crop of fears over Maize: Alison Maitland on EU concern over a genetically modified food. Financial Times: London Edition, August 9, 1996

Mckie, Robin. Genetic Farming Puts Europe on Brink of Corn War. The Observer, September 22, 1996.

O'Donnell, Peter. Ciba's Maize Stalls in Europe; Marks Another Fudged Deadline for EC. BioWorld International, September 11, 1996.

USDA: "NBIAP News Report". European Attitudes - Agricultural Biotech. November 1994.

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