1. Stuart J. Smyth, William A. Kerr and Peter W.B. Phillips Accelerating adoption of GM crops through a trade liability regime <Or how to fence-out Europe in the trade of GM products>

2. The story so far Smyth, Kerr & Phillips—a trilogy in 4 parts:  2009: rent seeking by producers supplemented by consumer and citizen protectionism  2010: scale and scope of the problem  2011: Managing Trade in Products of Biotechnology: Which alternative to choose—science or politics? CPB Article 26.2 discussions

3. First best solution: negotiate Locus of SEC discussions/processes: – CBD, Art. 8j, traditional knowledge – ITPGR, Art. 9, farmers rights; Art. 13, benefits sharing – CPB, Art 26.1, diversity; Art 26.2, socio-economic considerations – WTO, Art 20, SPS Art. 5.3, risks to plants and animals take into account economic factors and TBT

4. Second best solution: compensate Paarlberg (2008) concludes fear of market loss at root of reluctance to adopt Failures happen: LL 601, CDC Triffid 2 forms of compensation fund: – long-term, self-sustaining: funded by premiums from the purchase of insurance contracts (i.e. crop insurance) – short-term specific incident: created and funded by governments, such as for natural disasters

5. DK has fund for those affected by the production of GM crops (Smyth et al. 2010)— yet no GM production yet 'The Compact' is an industry-funded scheme, launched in 2010 by the leading firms, agrees to compensate any state that can prove biodiversity damage due to the release of a LMO (CropLife International, 2010). Ex ante commitments best?

6. What needs indemnifying? Total African Exports? US $ Millions

7. African corn & cotton exports to EU? ($US Millions)

8. Size of the ‘at risk’ trade Total Africa-EU trade in commodities with GM varieties (corn/cotton) less than US$10M in 2010—50% lower than in 1995 So, if US$10 million trade is rejected likely cost is marketing and transport to next best market—10% or $1 million?

9. African banana exports to EU? ($US million) 10/25/20159 Country 200120022003200420052006200720082009 Cameroon 424567666563588170 Ghana 44.62315421310 Ivory Coast 6263768574898298100 Uganda.06.02.04.08.16.3.6.9.3 Total 108111144153142168183192179

10. Potential maximum $ requirement African trade in bananas worth more than $200 million per year GM bananas approaching (Kikulwe 2010) If all banana’s rejected, cost could rise to US$20+US$1M = US$21M Unlikely all product would be rejected at once—so US$21M is worst case—US$10-11 million most likely 10/25/201510

11. Type of fund? Long-term or short term? Needs to be credible, so long-term, funded Who pays? – Biotech companies: they earn rents – Farmers: they benefits from accelerated research – NGO (esp. Gates, World Bank, et al) concerned about food security – Governments: food security and technological change all priorities Type of a fund

12. Long-term, funded: – Amortized over some set period (say 15-30 years until full acceptance) – Endowed: If the likely annual liability is US$10-12 million, a fund of US$600M $600 million could be raised by: – 3-year, $1.00/acre levy on GM crops in Canada, US, Australia – Shared four ways? Dimensions of a fund

13. Levy 25 cents on see sales then each other partner would match based on that data Process: – Base would be binding trade contract with EU – RASFF would trigger the event – Onus on African to find alternate market—new contract would determine compensation – Need to avoid fraud, moral hazard, rent seeking  Residual could be used for R&D on food Administration

14. Global food security will require sustained R&D—GM crops are likely to been continually needed In absence of first-best negotiation, second- best market solutions offer an alternative The benefits of facilitating diffusion and adoption positively match the moderate costs of funding a liability system. Conclusions

15. Stuart J. Smyth, William A. Kerr and Peter W.B. Phillips Accelerating adoption of GM crops through a trade liability regime <Or how to fence-out Europe in the trade of GM products>