Opinion of the Economic and Social Committee on 'Genetically modified organisms in agriculture - impact on the Common Agricultural Policy'
Date: 1998-07-01
Institutions: European Economic and Social Committee
Subjects: common agricultural policy, consumer protection, environmental protection, genetically modified organism, impact study

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An understanding of the true situation brings only
benefits. No poor person wants to continue to live in
poverty. The solution thus lies in a fair and realistic
shared responsibility for the prerequisites for develop-
ment and a fair and realistic allocation of the fruits of
development.

The ESC urges that the proposals outlined in
14.
this opinion be implemented without delay. Initial
assessments — admittedly very limited — demonstrate,
if proof were needed, that poverty represents a serious
social and economic problem, quite apart from the
ethical, moral and civic aspects of this issue. Everyone
is involved. No-one can be unconcerned for themselves

or their children, either now or perhaps in the future,
nor can they fail to be concerned about the future of
society in the various Member States and the protection
and promotion of the values which they espouse.

15.
The Committee made the same observations in
1989 in its information report. The above observations
do not imply that nothing has been done in the meantime
— far from it — what they do imply, however, is that
the situation has worsened and that resolute, realistic
policies, based on consensus, are needed to tackle it.

This is an issue which fully concerns every single one of
us in the European Union.

Brussels, 1 July 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on ‘Genetically modified organisms in
agriculture — impact on the Common Agricultural Policy’

(98/C 284/08)

On 11 December 1997, the Economic and Social Committee, acting under the third paragraph
of Rule 23 of its Rules of Procedure, decided to draw up an opinion on ‘Genetically modified
organisms in agriculture — impact on the Common Agricultural Policy’.

The Section for Agriculture and Fisheries, which was responsible for preparing the Committee’s
work on the subject, adopted its opinion on 15 June 1998. The rapporteur was Mrs Sa´nchez
Miguel.

At its 356th plenary session (meeting of 1 July 1998) the Economic and Social Committee
adopted the following opinion by 145 votes to two with six abstentions.

1.

Introduction

1.1.
The use of modern biotechnology in agriculture
offers new solutions which are, at first sight, guarantee-
ing yields, helping to cut the use of plant health products
in combating pests and diseases, and creating quality
products. A debate is opening up within the EU on the
use of transgenic organisms in farming, reflecting views
on the possible undesirable medium- and long-term
effects on consumer health and the environment of their
application to the plant sector. Meanwhile, genetically
modified produce from non-EU countries, the US in
particular, is being marketed.

According to estimates for 1998, transgenic
1.1.1.
plants occupy 30 million hectares of cultivated land

around the world (compared to 14 million in 1997),
essentially concentrated in the United States (some
88 %), South America (Argentine cotton; 6 %) and
Japan (also 6 %). The area under cultivation in China
is unknown, but thought to be considerable. It is
calculated that worldwide, 60 million hectares will be
under this form of cultivation by the year 2000, only
1 % of which will be in Europe.

1.2.
This opinion sets out to adopt a flexible position
which, nevertheless, constantly takes account of all
those concerned, farmers, consumers and agro-industry,
and to reach conclusions. It will focus in particular on
the effects which the cultivation of transgenic organisms
would have on the CAP and, consequently, on final
product prices, with a view to the possible impact of
their widespread presence on the international market.

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1.3.
A key issue, which needs to be looked at first, is
that of permission to register and market genetically
modified varieties. Not all Member States have similar
policies in this regard: some Member States still refuse
to allow genetically-modified maize varieties from the
United States to circulate within their territory, in spite
of Community authorization. France authorized the
marketing of American transgenic maize several years
ago, but until recently would not allow it to be grown
on its own territory.

1.4.
Authorization of transgenic crops in the EU
must be preceded by comprehensive information and
wide-ranging public debate involving all
interested
parties, setting out in scientific terms both the advantages
and disadvantages for farmers and consumers: market
success depends on consumer confidence. Dialogue
should be sought between GMO producers and farmers.

techniques do not currently concern complex or non-
localized genetic characteristics.

2.2.
In February 1998 the European Parliament adop-
ted a balanced opinion on biotechnologies, firstly setting
out the expected benefits for agriculture and urging the
Union to make a major research effort in this field to
catch up with its international competitors. It also calls
for international harmonization of the legal framework
governing the authorization of GMOs in order to prevent
distortions of competition. Secondly, it underlined the
human and environmental risks posed by biotechnolo-
gies, as well as the ethical questions raised by their use.

2.3.
At European market level, on 22 April 1998
the Commission delivered a favourable opinion on
marketing three genetically-modified varieties of maize
and one of colza.

2. General comments

3. Technical section

State of biotechnological progress at experimen-

2.1.
tal level and in practical applications.

3.1. Definition of genetically modified organisms

2.1.1.
Genetic engineering techniques were ready for
experimental use by the mid 1980s. They began to
provide commercially exploitable products in the early
1990s, with the US, Japan and China leading the
field. The development of practical applications in the
European Union has been held up by the obstacles which
have been erected, in particular by the slow and complex
official authorization procedures, the delay in granting
patents, and also by a less favourable economic and
industrial environment.

2.1.2.
Applications currently concern bacteria, fungi
and certain plant organisms, although potential also
exists for animals. Genetic engineering applications for
animals are not yet ready or profitable, and raise ethical
problems for the higher animals.

2.1.3.
Transferable characteristics are simple ones,
coded by a clearly determined single locus gene. These

A genetically modified (or transgenic) organism
3.1.1.
is a living organism to which a given gene, identified on
a donor organism, has been transferred by genetic
engineering. The transferred gene confers a new charac-
teristic or property to the plant, which is passed on to
succeeding generations.

3.1.2.
Genes may be transferred by using a bacterium
such as Agrobacterium tumefasciens, which is capable
of injecting genetic material into a plant cell, by means
of plasmids. The genes are then incorporated into the
genome of the infected cell. Another method is to
bombard a plant cell with beads coated with DNA
fragments containing the transfer gene.

3.1.3.
Biotechnology includes a variety of techniques
and tools in addition to transgenesis, such as in-vitro
reproduction, the large-scale production of metabolites
via bacteria in fermentation, etc. Not all of these
techniques have necessarily resulted in large-scale appli-
cations.

3.2. Summary of commercialized GMO applications

As of January 1998

Characteristic

United States

Canada

Japan

EU

Soya

tolerance
ammonium

to

glufosinate- Agr Evo

tolerance to glyphosate

Monsanto

Monsanto Can. Monsanto
Japan Ltd.
Inc.

Monsanto

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As of January 1998

Characteristic

United States

Canada

Japan

EU

high oleic acid content

Du Pont Agr

Colza/Canola

modified lipid profile

Calgene

Calgene Inc.

tolerance
ammonium

to

glufosinate-

Agr Evo Can. Agr Evo
Inc.

Plant Genetic
(F,
System (P)
UK, April 1998)

Novartis
(Dec. 1996)

Novartis
(glu-
fosinate), Agre-
vo (glufosinate),
Monsanto
(glyphosate)
(F, UK April
1998)

tolerance to imidazole

tolerance to glyphosate

tolerance to a herbicide

Sterile male, fertility restorer

Pionner Hi Bred
Int. Inc.

Monsanto Can. Monsanto
Japan Ltd.
Inc.

Monsanto
Japan Ltd.

Plant Genetic
System

Maize

resistance to corn borers

Northrup King Ciba Seeds & Monsanto
Japan Ltd.
Myogen
(Novartis)
(Novartis)

Co.

resistance to corn borers/tole- Novartis
rance to glufosinate or gly-
phosate

Novartis

Novartis

resistance to lepidoptera

Monsanto Ciba
(Novartis)

tolerance
ammonium

to

glufosinate De Kalh Agr Evo

male sterility tolerance to glu-
fosinate ammonium

Plant Genetic
System

tolerance to imidazole

Tolerance to herbicide

resistance to an insect

resistance to an insect

Ciba Seeds
(Novartis)

De Kalb Ge-
netics Corpora-
tion

Pionner Hi Bred
Int. Inc.

Ciba Geigy
Japan
(Novartis)

to
tolerance
resistance to lepidoptera

glyphosate/ Monsanto Agr.
Co.

Potato

resistance to insects

resistance to coleoptera

Monsanto

resistance to Colorado beetle Monsanto

Nature Mark
Potatoes

Tomato

retarded ripening

retarded softening

Agritope Cal-
gene Monsanto
DNA Plant
Tech

Zeneca & Peto-
seed

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As of January 1998

Characteristic

United States

Canada

Japan

EU

Cotton

tolerance to sulphonyl

tolerance to glyphosate

Du Pont de
Nemours

Monsanto

tolerance to bromoxinyl

Calgene

resistance to lepidoptera

Monsanto

Pumpkin

resistance to a virus

Upjohn
(3 viruses)
Asgrow
(2 viruses)

Papaya

Tobacco

Chicory

resistance
to
(Papaya Ringspot Virus)

virus PRV Cornell U

tolerance to bromoxinyl

male sterility + tolerance to
glufosinateammonium

Apart from the major countries mentioned in the above
table, transgenic soya is being grown in Argentina and
Brazil, together with transgenic cotton in Argentina and
Australia, and corn borer resistant maize in Argentina.
This list is not exhaustive and is changing every month.
It should be pointed out that the area which may be
under cultivation in China is unknown, but could be
considerable.

3.3. Expected benefits

3.3.1.
In addition to those varieties currently on the
market which have been improved by genetic engineering
— some dozen food or commercial crops — enormous
research-based progress may be expected imminently in
this area, although most applications are still (June
1998) at the experimental stage. The potential improve-
ments are very considerable, particularly for food crops
in southern countries, where the contribution of GMOs
will, quite simply, be vital. Nevertheless, biotechnology
— just like any other plant improvement technique —
can never represent a miracle cure for all ills. Huge
improvements may be expected, but it would be danger-
ous to view them as a panacea. Mention should also be
made of the expected development of GMOs in the area
of non-food products. These represent a valuable source
of diversification for agriculture.

3.3.1.1.
improvements, yields, product quality)

agricultural

For

production

(technical

SEITA (F)

Bejo Zeden BV
(NL)

of farming on the environment. They also entail risks
for farmers due to their dependence on companies,
when the latter are in an oligopolistic position and
require farmers to buy both transgenic seeds AND
the herbicide in question (see point 3.4.5).

— The advantages lie in ease of weed control. This can
be accomplished with a single, generally recent and
selective product, which is consequently of low
persistence and is relatively harmless to the environ-
ment. Repeated treatment is unnecessary: ‘insurance’
treatments in particular can be avoided. Gains in
terms of cost, time and pollution reduction are
therefore considerable. Difficulties may arise in
destroying regrowth of tolerant plants in subsequent
seasons.

B. resistance to diseases (attacks of viral, bacterial and

fungal origin)

— the advantages of plants acquiring resistance to
disease (by means of transgenesis) are clear:
in
particular, conventional means of combating bac-
teria and viruses are rare: indeed some cannot be
combated. In nearly all cases, the inherent resistance
of the plant means that no treatment is necessary,
and the impact on yields is substantially greater
than that obtained with treatment. Clear gains are
therefore made in this area in terms of
time,
simplification of technical procedures and costs,
provided that transgenic seed is not marketed at a
prohibitive cost.

A. tolerance to herbicides

C. resistance to insects and other pests

— The most advanced applications are in this sphere,
and are very encouraging in terms of agricultural
production, limiting production costs and the impact

— in the instance of transgenic maize resistant to corn
borers, the gene encoding a toxin causing the death
of the attacking insect, generally derived from a

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bacterium (Bacillus thuringiensis), is incorporated
into the plant’s genome by genetic engineering. The
plant therefore becomes more resistant to the insect,
and insecticide treatment is no longer necessary.
Yields would be boosted significantly (by approxi-
mately 10 %), in comparison with crops treated with
a pesticide. There may however be a risk of secondary
fauna being affected by these toxins. Research needs
to be carried out over a period of time.

D. resistance to difficult soil or climatic conditions:
drought, salinity, etc. (Nordic countries, drought
regions, developing countries).

— This facilitates adaptation by plants to less favour-
to
environments and could offer hope
able
developing countries. References are still mostly
experimental.

Results

E. (appreciable) improvement and greater regularity of

yields;

F. control of production costs and economic margins.

3.3.1.2. For

the environment: more environment-

friendly procedures

G. lower level of fertilizer inputs due to improved plant

assimilation

H. reduction or possible halt to insecticide and other
pesticide applications for the crops in question

I. use of non-selective ‘broad-spectrum’ herbicides
which are rapidly degradable, reduction in the
number of treatments.

3.3.1.3. For food product quality

J. enhanced product flavour

K. vitamin or protein content, better balance between
saturated and unsaturated fatty acids and between
different amino-acids, greater content of oil or
certain valuable compounds

L.

length and quality of conservation (tomato, melon)

M. digestibility and elimination of allergenic com-

pounds.

3.3.1.4. For product adjustment to new market require-

ments

New opportunities for the production of highly specific
compounds

N. vaccines

O. antibiotics

P. human factors highly valuable to medicine (haemo-
globin, insulin, the factor VIII which is essential
in treating haemophiliacs, growth hormone; for
example, it is possible to induce the tobacco plant
to produce a pancreatic lipase which is highly
valuable in treatment of serious diseases)

Q. processing aid microorganisms (yeasts, fermenting
agents), enzymes; e.g. producing goats’ cheese using
chymosims of vegetable origin enables vegetarians
to eat cheese;

R. products used in the agrifoodstuff industry (flavour-
ings, additives), GMO response to increasing market
segmentation, use of the niches thereby created.

For

3.3.1.5.
food self-sufficiency of developing
countries, etc. definitely encouraging in theory — in
practice, considerably less promising, and dependent on
the public sector research effort.

S. GMO development costs are high for seed compa-
nies; they are therefore not prepared in the short
term to develop products whose rapid payback on
prime markets is not guaranteed. With the notable
exception of sweet potato, it is unlikely that GMOs
emerging from private sector research concern food
crops relevant to developing countries; public sector
national or international agricultural research centr-
es could fill this important gap. The International
Rice Research Institute (IRRI), for example,
is
currently making the final preparations for trans-
genic rice varieties whose full importance is reflected
in the fact that rice is the world’s leading crop, and
an essential foodstuff. ORSTOM (French Institute
of Scientific Research for Development Cooperation)
is presently working with ILTAB (United States)
to finalize manioc varieties improved by genetic
engineering.

3.3.1.5.1.
Be that as it may, GMOs represent one of
the only ways of enabling developing countries to
achieve food self-sufficiency, with world food demand
set to double in the coming decades and little opportunity
existing to extend the amount of land under cultivation
the developing
around the world.

is, however,

It

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countries — where farm land is least available and is,
indeed, shrinking — who are generating this increase in
demand.

3.3.1.6. Advantage of molecular engineering over

conventional genetic improvement

3.3.1.6.1.
By its nature, molecular engineering enables
the transfer gene to be isolated, whereas conventional
genetic improvement relies on crossing the entire genome
of the improving organism with that of the crop variety
to be improved. In this case, successive back-crossings
with the target parent is necessary to restore its agro-
nomic characteristics to the full. This leads to a waste
of several years and high costs, for a partial result only.
Genetic engineering allows highly-targeted improve-
ment of plant characteristics. It also allows more
accurately targeted risk prediction.

3.4. Possible or probable risks arising from the use of

GMOs

Cross-breeding with nearby

3.4.1.
adventitious
plants, conferring herbicide or antibiotic resistance: this
risk is only likely with allogamous plants when closely
related species are among adventitious plants present in
the crop region. Only research on colza has currently
revealed any real possibility of crossing with a nearby
adventitious plant — wild radish — which could lead
to treatment difficulties if wild radish acquired resistance
to colza herbicide by this natural cross-fertilization. The
possibility always remains in this case of destroying
resistant wild radish using other herbicides. Such a risk
can practically be ruled out with straw cereal crops,
which are exclusively autogamous, and with maize (an
imported plant with no close relations in our part of the
world). There is a further risk, in particular with strongly
allogamous maize, of contaminating neighbouring fields
by transmitting the transgenically acquired characteristic
— this is not necessarily harmful but would be unintend-
ed and unwanted by neighbouring farmers. Particular
difficulties could arise where neighbouring crops must
meet precise specifications (quality or organic pro-
duction labels, for example).

3.4.2. H u m a n h e a l t h r i s k s

U. risk of allergies: for example, transferring genes from
groundnuts or Brazil nuts to plants which are in
principle non-allergenic could trigger allergies in
persons unable to tolerate these foodstuffs; all these
problems were detected far upstream during the
multiple and rigorous experimental phases, which
are a precondition for authorization. No product
presenting such drawbacks has, of course, been
marketed.

V. transfer of antibiotic resistance to bacteria found on
man. According to GMO production companies, in
the near future it will be possible to dispense with
the marker characteristic provided by the gene for
antibiotic resistance to distinguish those plants on
which transgenesis has been successful, during the
process of creating the variety (the agronomic
characteristic to be transferred to the host plant is
not necessarily an efficient marker). This risk, the
real size of has not been demonstrated, should
therefore soon be eliminated.

3.4.2.1.
According to the specialists consulted, these
risks are real, at least theoretically, but the media have
exaggerated their importance by focusing on them
in recent months and presenting potential problems
detected prior to authorization as problems arising on
the market itself.

3.4.3.

I n c r e a s i n g u n i f o r m i z a t i o n o f
a g r o - e c o s y s t e m

t h e

Although in preparing their new varieties,
3.4.3.1.
seed producers call upon a wide range of preserved
genes for each plant grown, the use by farmers of a
small number of varieties, particularly transgenic ones,
would further limit the already low level of diversity in
the genetic pool of plant populations in areas under
cultivation. The adaptability of cultivated in the event
of attack by pests or mutant adventitious plants would
then be seriously reduced.

3.4.4. D e p e n d e n c e o f

f a r m e r s o n p l a n t

h e a l t h a n d s e e d m u l t i n a t i o n a l s

3.4.4.1.
Since most seed companies around the world
have been bought by multinational plant health com-
panies, the current picture is one of the same firm
obliging farmers to buy both herbicide-resistant seeds
AND the herbicide in question. In the US, contracts exist
under which farmers earmark part of their production for
the company in question, which are highly restrictive for
farmers. This practice may spread, furthering reinforcing
the small number of all-powerful plant health product
multinationals.

3.4.5. A t w o - f o l d n e e d :

n i z e d a n d c r e d i b l e
m a r k e t e d G M O s u p s t r e a m o f
m a r k e t ;
s u b s e q u e n t
r i n g ’ o f p r o d u c t s

s t r i c t , h a r m o -
c o n t r o l s o n
t h e
‘ b i o m o n i t o -

3.4.5.1.
This need is acknowledged by all those
concerned with GMOs. It is the only way of giving
consumers the confidence which is necessary if they are

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to accept these products. According to recent FAO and
OECD recommendations, controls must, as a minimum,
apply to:

— differences between GMOs and ‘conventional’ prod-
ucts in terms of nutritional make-up (differences
which might, amongst other things, clash with
religious or cultural obligations);

— absence of allergens;

— total product non-toxicity, which must be guaran-

teed by controls.

3.5. European rules on GMOs and labelling (see

Appendix I)

3.5.1.
Consumer confidence must be strengthened by
labelling which matches the information required for
product marketing, as stipulated in Articles 14 et seq of
Directive 90/220/EEC.

3.6. Consumer protection and information

3.6.1.
Consumers, who are the final destination of
GMO products, must have a dual channel of infor-
mation: firstly, information issued by the competent
bodies, at both EU and Member State level, in accordance
with their powers to authorize the marketing of such
products and, secondly, the necessary data which must
appear on product labels, in order to avoid a negative
system resulting in confusion on the market, particularly
with regard to combinations of GMO and naturally
grown products.

3.7. Assessment of current GMO access to the Euro-
pean market today: separation and labelling prob-
lems

3.7.1.
It is certain that an undetermined proportion
of US soya and maize imported into the European Union
today is made up of GMOs. The US, however, does not
separate GMO and non-GMO grains. Under these
conditions, clear and unambiguous product labelling
(‘contains’/‘does not contain’ GMOs) — even if an
agreement were to be reached at European level (see
point 3.5) — would in practice be impossible for
imported produce. There is a fundamental divergence
between public opinion in Europe and in the US.
American consumers are entirely unconcerned about
consuming transgenic products.

3.8. Need for international harmonization of GMO
experimentation and authorization conditions

The conditions under which research is sup-
3.8.1.
ported, and administrative requirements for GMO

authorization and experimentation, appear considerably
less favourable in the EU than in its main competitors,
the US and Japan. Harmonization should be sought at
international level to prevent distortions of competition
putting the EU even further back in research terms.
Possible acceleration of procedures must not of course
under any circumstances jeopardize authorization credi-
bility. The ESC calls upon the Commission to ensure
that the WTO recognizes the need for GMOs to be
authorized.

3.9. Possible consequences of expanding the use of
GMOs on the CAP, which is currently being
reformed (Agenda 2000 proposals)

3.9.1.
The rules governing the Common Agricultural
Policy are currently the object of reform proposals by
the Commission, as set out in the Agenda 2000 document.
Without wishing, at this early stage, to prejudge the
outcome of these proposals over coming months and
pending the adoption of any regulations by the Council,
it is noted that the proposals tend generally towards a
reduction in support prices and some de-linking of direct
aid and production. They would lead to an alteration in
the nature and objective of the CAP, moving away from
market guidance towards income support. They also
aim to forge a closer connection between support
and the achievement of environmental objectives. The
development of GMOs does not in principle appear to
contradict these aims.

At this stage, we can only look at the possible links
between the development of GMOs and each of the six
new CAP objectives proposed by the Commission for
after the year 2000:

— Improving the competitiveness of European farm
produce: increased use of GMOs would appear to
help largely achieve this objective where plant crops
are concerned. GMOs would allow losses due to
pests and diseases to be limited (leading to increased
yields) and should contribute to lowering production
costs, if GMO prices come down (fewer treatments
required).

— GMOs will also help improve product quality (richer
in valuable compounds, enhanced flavour, better
preservation, etc.). Product quality, particularly for
European farm and food products, is a decisive
factor in their competitiveness. Competitiveness is
not, it should be remembered, simply a matter of
price.

— Safety and quality of agri-food products: if biotech-
nologies are used sensibly and in full accordance
with the precautionary principle, they can make a
positive contribution to achieving this objective,

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since they permit higher quality foodstuffs to be
produced. GMO safety and consumer information
guarantees must be applied with the utmost rigour.

— Integration of environmental goals into the CAP:
transgenic crops need fewer plant-health treatments
and can therefore make a substantial contribution
to a healthier interaction between farming and
the environment. However, the potential risks of
spreading
characteristics
through the environment must be studied with the
greatest care before any authorization is granted to
market GMOs, and biomonitoring must continue
after authorization.

genetically-introduced

— Stabilization of farm income:

insofar as,

in the
Commission proposal, the proceeds of sale of prod-
uce account for a falling share of income compared
with direct support, the impact of more regular
yields is lessened. However, the development of
GMOs would still have a positive influence on
income stabilization, by reducing crop-related uncer-
tainties.

— Source of supplementary income and employment
in agriculture: GMOs can contribute to this aim by
the improvements they can bring to the ever-growing
range of dietary and non-food applications for
energy or medical purposes.

3.10. Social effect of producing GMOs

An initial estimate, based on econometric
3.10.1.
studies (1), suggests that growing GMOs will increase
farm employment, on account of the increase in land
under cultivation and, above all, the positive impact of
obtaining a large quantity of value-added products such
as medicines, additives, perfumes, etc., as well as new
fuels or biodegradable plastics.

3.10.2. Despite the highly positive attitude of the
European authorities regarding increased employment
through GMO production, a number of clarifications
need to be made. Firstly, there are differences in national
attitudes, meaning that production will not be uniform
throughout the EU; and secondly, the lack of dedicated
research, combined with the slowness of authorization
and patent procedures for discoveries, could delay
production and result in seed prices having a negative
effect.

(1) Carried out by the Science Policy Research Unit, University
of Sussex, UK, and presented at EuropaBio 97, Amsterdam.

3.10.3.
As part of the broad debate generated by
Agenda 2000 on farm policy, the ESC must not lose
sight of the need to investigate whether GMO crops
might represent a remedy for employment losses, as
expected from certain COM reforms.

4. Conclusion: if GMOs are to be acceptable, there is
a need for more, and transparent, communication

GMOs are necessary for the development of

4.1.
European agriculture.

4.1.1.
The above assessment indicates that GMOs
are one among a range of indispensable factors for the
development of European agriculture over the coming
years. The expected gains in terms of guaranteed yield
levels, the environment, lower costs and product quality,
together with diversification into non-food applications,
represent an asset which European agriculture cannot
afford to go without. GMOs are one tool amongst
others, not a panacea, but are nevertheless essential.

Authorization trials should be rigorous but not

4.2.
unduly obstructive.

4.2.1.
In view of the presently imperfect knowledge
of the potential negative effects of GMOs on the
environment and public health, and the absolute need
to apply the precautionary principle to this question,
pre-authorization trials must continue to be carried out
with the utmost rigour. Harmonization of international
rules in this sphere should however be pursued in order
to avoid the distortions of competition which would
arise if one country applied stricter and more restrictive
rules than others. Harmonization should be up to the
highest common denominator, since public health is at
stake.

Product performance monitoring must be carried

4.3.
out by a biomonitoring organization.

4.3.1.
As the long-term effects of the spread of GMOs
are inherently unknowable at present, it would appear
necessary to monitor approved products by regular
checks over a period of time. Such checks would not
relate to any major faults which must of course be
detected before release for marketing and would prevent
authorization. Their aim would be to guard against
minor but undesirable effects of products emerging with
time. This supervision is proposed by national labelling
bodies under the title of ‘biomonitoring’.

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4.4.
Full and transparent communication is a sine
qua non for the restoration of European consumer
confidence.

Labelling and the separation of distribution

4.5.
chains lie at the heart of the debate.

4.4.1.
GMOs have been coming onto the market for
several years. It is however clear that farmers and final
consumers in Europe are reluctant and have voiced fears
about these products in the absence of the necessary
thoroughness and transparency in communicating their
advantages and potential risks. Full, clear and completely
transparent information — on the potential disadvan-
tages too — would certainly increase consumer accept-
ance of GMOs. At present, consumers have the feeling
that they are not being properly informed, and this fuels
their legitimate fear of being misled.

4.5.1.
At both EU and Member State level, the various
actors of civil society (administrations, politicians,
farmers, consumers and GMO producers) are currently
engaged in a debate on how to label products. The
Commission’s proposal that products be labelled ‘con-
tains GMOs’ or ‘may contain GMOs’ is unacceptable
and has not met with the Council’s support. Moreover,
on 26 May 1988 the Council adopted a regulation
abolishing the ‘may contain GMOs’ option for processed
products. The debate also concerns the necessary sepa-
ration of GMO and non-GMO distribution chains, the
only way of allowing satisfactory labelling.

Brussels, 1 July 1998.

The President

of the Economic and Social Committee

Tom JENKINS

APPENDIX

to the opinion of the Economic and Social Committee

GMOs — Current state of Community legislation

— On 23 July 1997 the Commission presented its general guidelines on the labelling of products derived
from GMOs. These guidelines aim to provide consumers with coherent information, by creating a
framework for planned legislation in this field.

— Community legislation on GMOs comprises four legal bases, some of which have been or are

currently being amended, covering the following fields:

• the contained use of genetically modified micro-organisms;

• horizontal legislation, deliberate release of genetically modified organisms into the environment:

‘living’ GMOs;

• sectoral legislation: new foodstuffs (novel foods regulation of 15 May 1997), animal feed (in

preparation), seeds (in preparation), pesticides (under examination);

• a specific regulation on genetically modified maize and soya.

— Lastly, it should be pointed out that product safety and labelling are two separate aspects of
regulation. Labelling cannot substitute proper safety assessment (risk analysis) prior to each
marketing authorization.

Guidelines for a Community labelling system

On 23 July 1997 the Commission put forward general guidelines for labelling GMOs, whether ‘living’
GMOs, processed GMOs or products based on them, whether of Community origin or otherwise. These
guidelines will provide a framework for proposals for new legislation or amendments to existing
legislation:

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— the guidelines are based on the following principles:

• science-based labelling, throughout the food chain;

• labelling aimed to provide consumers with clear, honest and neutral information on the genetically

modified origin of products;

• labelling in accordance with the European Union’s international obligations.

— the guidelines propose three categories of label:

• ‘contains material of GMO origin’: mandatory labelling for products which can be proven to

consist of, contain or be derived from GMOs;

• ‘does not contain material of GMO origin’: voluntary labelling for products not containing GMO

or derived substances;

• ‘may contain material of GMO origin’: mandatory labelling of products where the presence of

GMO cannot be excluded (as in cases of mixing).

With regard to the principle of voluntary labelling for non-GMO products (‘does not contain material
of GMO origin’ formula), the Commission is currently considering a framework for Community
certification and labelling.

Contained use of genetically modified micro-organisms

Council Directive 90/219/EEC, adopted on 23 April 1990, is the basic Community text on the contained
use of genetically modified micro-organisms.

The rules set out in the directive are highly technical and only concern the use or handling of genetically
modified micro-organisms within research centres or laboratories. Its content is therefore not analysed
in this document.

It should nevertheless be noted that on 6 December 1996 the Commission proposed to amend this
directive to bring it into line with technical progress and new knowledge in the area of risks.

Horizontal legislation: deliberate release into the environment of genetically modified organisms (‘living’
GMOs)

— Scope

Council Directive 90/220/EEC of 23 April 1990 represents a horizontal type Community legislative
framework, intended to guarantee market conditions as well as human health and environmental
protection for ‘living’ OGMs (such as cereals). It does not apply to processed or derived products, but
provides for the development of sectoral legislation (of the novel food type) to be adopted in line with
technical progress. Directive 90/220/EEC does, however, apply to products not covered by sectoral
legislation.

— Labelling

Initially, Directive 90/220/EEC was virtually silent on labelling. The Commission acted in two stages to
remedy this situation:

• to meet immediate needs, on 18 June 1997 the Commission adopted a directive (97/35/EC) amending
an annex to Council Directive 90/220/EEC, introducing compulsory labelling if a product is composed
of or contains GMOs. Indication of the ‘possibility that genetically modified organisms may be
present’ is required in the case of products containing mixtures of GMOs and non-GMOs. Since this
amendment to Directive 90/220/EEC is not retroactive, it does not cover the two products (soya and
maize) notified before 18 June 1997.

• to provide a more complete framework, on 26 November 1997 the Commission presented a proposal
to amend Directive 90/220/EEC. The proposal aims to adjust the current directive in line with technical
progress, to clarify its scope and to make up the shortcomings observed in implementation, concerning
both authorization procedures for placing GMOs on the market and labelling rules. It lays down
precise labelling measures incorporating the Commission’s guidelines adopted in July 1997. However,
since the text is not yet available, the planned terms for the labelling and the detail of certain regulatory
aspects remain unknown. The Commission was to present its proposal officially on 23 February. The
proposal is then to be discussed with a view to adoption by the European Parliament and the Council
(Environment Council meeting, 23 March 1998).

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Sectoral legislation: novel food, animal feed (in preparation), seeds (in preparation), pesticides (under
examination)

— Scope (novel foods)

European Parliament and Council Regulation (EC) No 97/258 on novel foods, which came into force on
15 May 1997, concerns final products. It applies to novel foods and food ingredients, including those of
genetic engineering.

— Labelling (novel foods)

The novel foods regulation is the first item of European legislation to have incorporated a specific
labelling framework for biotechnology products. It establishes compulsory labelling and requires
consumers to be informed of the differences between novel products and equivalent existing products.
This regulation, which preceded the guidelines adopted by the Commission in July 1997, is not based on
the three labelling categories proposed by the guidelines.

— Animal feed, seeds and pesticides

The Commission is to submit proposals, including labelling rules which tally with the guidelines adopted
in July 1997, during the course of 1998.

Labelling: the specific case of soya and maize

One variety of genetically modified soya and of maize was authorized under the terms of Directive
90/220/EEC before it was amended on 18 June 1997, and before the novel food regulation came into
force. It was therefore necessary to lay down labelling rules for these two varieties and products derived
from them, which were not initially subject to compulsory labelling. The Commission negotiated the
possibility of voluntary labelling for these two varieties with the producers in question. In contrast, in
order to rectify the specific situation of products derived from the two varieties, and so as not to give
rise to a contradiction between these products and those which in future will be authorized under
Directive 90/220/EEC, as amended, and/or the novel food directive, the Commission has taken the
following steps:

• to meet immediate needs, on 19 September 1997 the Commission adopted Regulation (EC) No 1813/97
which, with effect from 1 November 1997, provides for labelling for products containing genetically
modified soya or maize or derivatives, similar to that imposed by the novel food regulation. This ad
hoc measure states that the detailed arrangements for labelling are to be specified at a later stage.

• to provide a more complete framework, on 3 December 1997 the Commission submitted a proposal
for a Commission regulation laying down labelling arrangements, on the basis of the novel food
regulation and the July 1997 guidelines, for foodstuffs based on genetically modified soya or maize
(i.e. processed products). In the proposal, the Commission proposes scientific criteria for labelling.
The presence of modified DNA was selected as a criterion, since the Commission believes that it will
enable a larger number of foodstuffs to be labelled than the modified protein criterion. However,
where the DNA criterion is not decisive, a comparison will be carried out between the proteins of
modified and of conventional products.

The draft must be approved by a qualified majority of the Standing Committee on Foodstuffs in order
to become a final regulation, replacing that of 19 September.

However, differences of views between the Member States have rapidly emerged on the Standing
Committee: only Austria, Germany, Denmark and Sweden have expressed support for the Commission
text. The proposal’s most controversial point has proved to be the criterion selected by the Commission
for detecting GMOs, i.e. the presence of modified DNA. Most other Member States consider that the
detection of modified proteins alone should serve as the criterion for labelling.

In the absence of a qualified majority opinion on the Standing Committee at its meeting of 15 January
1998, it fell to the Agriculture Council to decide on the matter.

Following a number of examinations and consultations with the Commission, the latter finally backed
the British Presidency’s counter-proposal, which enabled the Council to reach a decision on 26 May
1998 [Regulation (EC) No 1139/98 (1)]. The regulation specifies that it is modified DNA or modified
proteins which will be subject to detection and will require labelling.

(1) OJ L 159, 3.6.1998.

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In contrast to the Commission’s initial stance, based on its report of 23 July 1998, the regulation of
26 May 1998 abolishes the ‘may contain GMOs’ option.

Moreover, it establishes a list of foodstuffs not subject to labelling (the list is initially empty, and will
gradually be built up on the basis of opinions from the scientific committees) and in the preamble
introduces the concept of a threshold for DNA or protein presence, below which labelling will not be
necessary. No threshold value is set.

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Directive on
a common system of taxation applicable to interest and royalty payments made between
associated companies of different Member States’ (1)

(98/C 284/09)

On 30 March 1998 the Council decided to consult the Economic and Social Committee,
under Article 100 of the Treaty establishing the European Economic Community, on the
above-mentioned proposal.

The Section for Economic, Financial and Monetary Questions, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 9 June 1998. The
rapporteur was Mr Pelletier.

At its 356th plenary session on 1 and 2 July 1998 (meeting of 1 July) the Economic and Social
Committee adopted the following opinion by 136 votes to seven, with four abstentions.

1.

Introduction

1.1.
The ESC welcomes the Commission’s move to
rectify a tax discrepancy which is an obstacle to
completion of an integrated single market.

Abolition of the withholding tax levied by some
1.2.
Member States on interest and royalties has long
been recognized as being of major importance for a
Community-wide market.

1.3.
The Commission’s first initiative in this direction
dates back to 20 April 1990. In 1992 the Ruding report
— broadly approved by the ESC (2) — prioritized this
reform. Unfortunately the Commission, in the absence
of consensus within the Council, decided in 1994 to
withdraw its proposal. Eventually, in December 1997,
the Ecofin Council gave the Commission the go-ahead
to draw up the proposal on which the ESC is now
consulted.

displayed concerning the plan — approved by the
Council and referred to in the explanatory memorandum
— for a directive ‘to ensure minimum effective taxation
of income from savings’ while bearing in mind the need
to preserve the competitiveness of European financial
markets at international level, which presupposes exten-
sion to non-EU countries and to the Member States’
dependent or associated territories (3).

1.5.
The purpose of the draft directive is to exempt
interest and royalty payments made by a company of
one Member State to an associated company (in which
the first company has directly or indirectly a minimum
holding of 25 %) of another Member State from any
withholding tax in the Member State from which the
payments are made. Hence tax on revenue deriving from
such payments shall be levied solely by the Member
State in which the beneficial owner is located.

2. Financial justification for the draft directive

1.4.
The ESC acclaims the Commission’s persistence,
not to say obstinacy. The same persistence should be

2.1.
From the financial angle, the aim is to avoid
double taxation — which is undesirable per se — or, at

(1) OJ C 123, 22.4.1998, p. 9.
(2) ESC opinion of 24.11.1992; OJ C 19, 25.1.1993, p. 65.

(3) Conclusions of the Ecofin Council meeting on 1.12.1997

regarding fiscal policy (OJ C 2, 6.1.1998).