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LEADING ACADEMICS ON HOW THE U.S.-MEXICO CORN DISPUTE WILL END UP


by Ian Sheldon, Seungki Lee, and Chris Zoller, Department of Agricultural, Environmental, and Development Economics, and Ohio State University Extension, The Ohio State University

Background to the Dispute

The recent announcement by the Office of the US Trade Representative (USTR) that it was requesting technical consultations with Mexico under the Sanitary and Phytosanitary Measures (SPS) Chapter of the United States-Mexico-Canada Agreement (USMCA), is the latest step in the ongoing dispute over Mexican efforts to ban imports of genetically modified (GM) corn (Office of USTR, March 6, 2023).

The dispute has its origins in a decree issued by the Mexican President Andrés Manuel López Obrador on December 31, 2020, calling for GM corn for human consumption to be phased out by the end of January 2024 (Reuters, February 13, 2023). Not surprisingly, given Mexico is the second-largest export market for US corn totaling $4.792 billion in 2022 (USDA/FAS, 2021), with about 17 million metric tons of yellow corn crossing the border annually (USDA/ERS, December 13, 2022), the original decree ratcheted up trade tensions between the two countries. Following US pressure, Mexico scrapped the 2024 deadline banning GM corn for animal feed and industrial use on February 13, 2023, all the while retaining the ban on its use for human consumption (Reuters, February 13, 2023).

Despite these changes, the recent move by USTR is essentially the first step in the process by which the USMCA dispute settlement mechanism is triggered, once other efforts/mechanisms to resolve the issue have failed - specifically, in its response to a letter from USTR, Mexico did not "...allay US concerns with Mexico's measures concerning [genetically engineered] GE corn....Therefore, the United States does not consider that further use of other mechanisms would resolve the matter..." (Ambassador Katherine Tai, USTR, March 6, 2023).

>b>Summary

The dispute between the United States and Mexico over the latter country's proposed ban on imports of GM corn for human consumption has reached the point where the United States has made an initial step towards seeking a panel ruling through the dispute settlement mechanism of USMCA. If a panel investigation goes ahead, our expectation is that it will rule in favor of the United States. Crucially, ending the dispute matters to US farmers from states that have significant corn exports to Mexico, as well as to other farmers whose margins would likely come under significant pressure if the ban is enforced. This is also a major test for the SPS Chapter of USMCA to which the United States, Mexico and Canada have all signed up.

To read the entire report click here.


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