WASHINGTON — The United States has taken the next step in trying to resolve a dispute with Mexico over its presidential decree to limit the use of genetically modified corn.

The United States requested on June 2 dispute settlement consultations with Mexico under the United States-Mexico-Canada Agreement (USMCA) on its measures surrounding agricultural biotechnology. This follows technical consultations with Mexico that were requested and held on the same topic this spring. The consultations did not resolve the matter, said US Trade Representative Katherine Tai.

“This is the next step in the process before going to a full dispute panel where arbiters from each side would decide the ultimate outcome,” Ryan LeGrand, president and chief executive officer of the US Grains Council (USGC), told World Grain, a sister publication of Milling & Baking News. “Ambassador Tai was hopeful in her statement that we can resolve this in this round of dispute consultation and not have to go to the panel, and that’s what we’re hopeful for as well.”

The timeline for the dispute settlement consultation is 75 days.

“Mexico signed on the dotted line with USMCA, and when they signed on the dotted line, they agreed to undertake science and risk-based policies in their decision-making surrounding biotechnology,” Mr. LeGrand said. “That’s the failure that happened with this decree and that’s what USTR is going after. We’ve got a violation here on the part of Mexico, and it needs to be fixed. When and what stage that happens, I don’t know, but the sooner the better for everybody.”

Mexico has said it will counter US arguments, Reuters reported, but it is also committed to “constructive dialogue” and believes the countries can “reach a mutually satisfactory agreement.”  

The United States has engaged Mexico in numerous discussions about its biotechnology policies, which it has said are not based on science and threaten to disrupt US exports to Mexico.

On Jan. 1, 2021, a decree by Mexican President Andrés Manuel López Obrador prohibiting the use of GM corn by 2024 entered into force. A later decree published this February pulled back on that initial policy, and calls for banning GM corn for certain uses, specifically consumption by people. Certain uses would include tortillas and dough, which is mainly made from white corn.

Mexico has said the ban was proposed because GM corn may have adverse health effects, even when used as fodder.

Mexico imports about 17 million tonnes of corn from the United States, most of which is yellow corn that primarily is used in feed production. About 5% of that total from the United States is white corn.

“That’s what is banned right now and that’s a big chunk,” Mr. LeGrand said. “We’ve got farmers here that have decided not to plant white corn, a product that they get a premium for, because of this action by Mexico. It’s affecting their bottom lines already.”

Mexico’s overall corn imports in 2022-23 dropped 3.8% year-over-year to 17.4 million tonnes due to export tariffs on white corn and the GM decree, according to a US Department of Agriculture (USDA) report.

The decree also will impact Mexican growers, end users and the general public with an expected increase in tortilla prices and fewer options to procure white corn.

“Mexico imports white corn, which allows them to export their own white corn and get surplus supplies off the market,” Mr. LeGrand said. “It provides optionality for our Mexican counterparts, so it’s not a good situation for them.”

There’s also concern that if the decree on white corn stands, yellow corn could be next.

“It bans white corn for now, but it mentions that all other forms of biotech corn will be substituted as they are able to do so,” Mr. LeGrand said. “You’ve got a livestock industry down there that depends on timely and affordable imports of US yellow corn. They’re very concerned that this is a slippery slope that we’re on. They could be in the cross-hairs next, and I think they are rightfully concerned.”

Mexico produced 40 million tonnes of feed in 2022, according to the USDA. It will need an estimated 27.2 million tonnes of corn for feed production in 2023-24.

For its part, the USGC said it is going to continue to maintain its relationships with producers, the government of Mexico and stakeholders.

“We’re just going to try and be a bridge here and provide the information we can to come to a positive outcome,” Mr. LeGrand said. “We’re thankful to USTR and USDA for standing up and fighting for the US corn farmers. It’s extremely important to us and we’re happy to see them take the next steps.”

As for the possibility of this dispute leading to a full out trade war, Mr. LeGrand said neither side wants to see that happen.

“Our countries are so mutually beneficial when it comes to trade that I don’t think we want to go too much further down the road at all,” he said. “We need to get the problem at hand resolved under the mechanisms of USMCA that allow for this resolution and leave it there. I don’t think either side wants to see this escalate into a bigger thing between our two countries."