Trade panel rules in US favor in Mexico GM corn dispute case

By David Lawder

WASHINGTON (Reuters) -A trade-dispute panel ruled on Friday that Mexico's restrictions on U.S. genetically modified corn exports violate the U.S.-Mexico-Canada Agreement, handing the Biden administration a major trade victory in its final weeks.

The U.S. Trade Representative's office said the panel ruled in favor of all seven U.S. legal claims in the long-running case. It said the panel found Mexico's restrictions are not based on science and violate the USMCA's chapters on sanitary and phytosanitary measures and on market access and national treatment.

The three-member panel's final report in the case recommended that Mexico bring its corn-trade policies into compliance with the trade agreement. It has 45 days to do so under the 2020 trade deal's rules.

The corn dispute began six months after USMCA came into force when then-President Andres Manuel Lopez Obrador initiated a decree in December 2020 that GM corn be banned by the end of 2024, a move largely targeting U.S. corn exports. His successor, President Claudia Sheinbaum, has supported the policy.

After years of little movement, USTR requested arbitration to settle the dispute, challenging Mexico's 2023 decree that immediately banned use of GM corn in tortillas and dough, and instructed government agencies to gradually eliminate its use in other foods and in animal feed.

The U.S. argued the Mexican government's claims that GM corn is harmful to human health were not based on science.

"The panel's ruling reaffirms the United States' longstanding concerns about Mexico’s biotechnology policies and their detrimental impact on U.S. agricultural exports, U.S. Trade Representative Katherine Tai said in a statement.

Tai said science-based trade policies allow American farmers to compete fairly.

Mexico's economy and agriculture ministries said in a joint statement that they disagreed with the ruling but would respect the decision.

"The Government of Mexico does not agree with the Panel's decision, as it considers that the measures in question are aligned with the principles of public health protection and the rights of Indigenous peoples," the agencies said.

Nonetheless, they said that dispute resolution was a key component of the USMCA trade deal, noting that Mexico prevailed in a recent automotive dispute.

(Reporting by David Lawder and David Alire Garcia; additional reporting by Brendan O'Boyle; editing by Diane Craft and Rod Nickel)