ISSUES FOR DISCUSSION

1. ISSUES FOR DISCUSSION 1. How to fit complex (EU) regulation into the model 2. The analytical model: regulations and scenarios 3. What do we miss: non-pecuniary externalities on GM-free production 4. International agreements: trade effects and harmonization

2. Carter Seminar at INEA 19/6 A GENERAL INTRODUCTORY COMMENT: There is a well-established set of models on GMOs trade and labeling scheme/regulations EU-Italian research is lagging behind in using these tools in analysing the GMOs debate in EU However: is this modelling approach generally able to take into account most critical issues on the agenda? Put in another way: are these models missing (ruling out) something which is, indeed, crucial for the EU position/policy and EU-USA controversy?

3. Carter Seminar at INEA 19/6 1 - Fitting the EU regulation: The model depicts EU regulation as: mandatory labeling upon approval It is also stated that welfare effects (labeling/harmonization) are not so relevant for (mainly) feed crops (soybean-corn) However: EU regulation imposes labeling on both food and non-food products, on both GMOs and products containing GMOs This regulation (dir 2001/18) is recent and still uncertain (e.g., tolerance threshold): For wheat For soybean and maize: meat and labeling+traceability For the moment we know: there is a specific regime for soyabean and corn; but: Not all varieties are approved Some countries are still banning approved varieties (e.g Italy) GM-free productions using soybean-corn (organic, typical products)

4. Carter Seminar at INEA 19/6 2 - Regulations and labeling scenarios (table 2): A labeling scenario is a set of regulations and consumers/producers behaviour: trade and welfare effects derived Who really knows which is the behaviour upon regulation? Should we need a model deriving behaviours from regulations? The No-labeling scenario: Why no-labeling instead of No (approved) GM production? Why USA (Country A) should not produce GM food under no-labeling while they do under current regulations (the internal regulations is the same)? EU producers and consumers: Why EU farmers-food sector never produce GM food? Why EU consumers do not use GM food under mandatory labeling? Is the signal so strong also for (not so) tolerant consumers?

5. Carter Seminar at INEA 19/6 3 - Costs of labeling/segregation: Marginal cost of labeling and segregation are fixed (independent on labeling scheme) but the former is greater (<K)? What happens if not? What happens if =f(K) (e.g. the greater K, due to strong controls and segregation, the smaller is )? GM-free productions (organic, typical-quality products): Introduction of GM crops create a negative (non-pecuniary) extenality in any labeling scheme (segregation costs; 0 tolerance) The costs are higher with voluntary labeling and no labeling (but with GMOs production): +K. Why the polluter pays principle does not apply?

6. Carter Seminar at INEA 19/6 4 – International agreement on harmonization: Can be reached in a technical/scientific context (e.g. Codex Alimentarius). But: It is not based on the scientific ground It can not deal with trade effects of regulation WTO has to be involved (no dispute): Can this harmonization be admitted within SPS (or TBT)? Harmonization or compensation: If we look for general welfare gains (Pareto enhancing solutions), why, within WTO, we do not accept different regulations (TBT) and compensate trade effects? Bagwell-Staiger modelling How much these modelling approaches differ? Which is the “best” (most affordable) approach for reaching an international agreement?