Global Market Effects of Alternative European Responses to Gmos

Current debates about genetically modified organisms (GMOs) in agriculture reveal substantial differences in perception of the associated risks and benefits. Genetically modified crop varieties allegedly provide farmers with various agronomic benefits, but serious environmental, health and ethical concerns also are being raised. A majority of people in numerous countries want at least to have labels on products that may contain GMOs, while the most extreme opponents (particularly in Western Europe) want to see GM products totally excluded from production and consumption in their country. This paper first discusses the ways in which the emergence of GMOs is generating policy reactions, which could lead to trade disputes between Western Europe and the United States. It then uses an empirical model of the global economy to quantify the effects on production, prices, trade patterns and national economic welfare of certain (non-European) countries adopting GM crops. Those results are compared with what they would be if Western Europe banned imports of those products from countries adopting GM technology. An alternative market-based approach also is considered, whereby a shift in consumer preferences in Europe is investigated