DTN staff writersDES MOINES, IA (DTN)--China's new GMO regulations potentially could impact Brazilian soybean exports--but probably won't.

Last year, China became Brazil's largest soy buyer, importing 15 million metric tons. However, the new rules regulating GMO imports may not facilitate this volume of trade in the future, since it's widely accepted that 20% or more of Brazilian soybeans are genetically modified varieties--despite that country marketing their beans as GM-free.

In addition to China, another large buyer of Brazil's "GM-free" soy is the European Union (EU), which currently is debating labeling and other issues related to GM products. However, without any labeling laws in effect yet in either the EU or China, authenticity of products hasn't had to be verified.

On March 20, when China's new rules are effective, that could all change. Even though the rules are a bit unclear, it is understood that all imported GM products, including soybeans and soyoil, will have to have safety certificates and proper labels.

That shouldn't be much of a problem for countries like the U.S. and Argentina, whose GM soybean crops are regulated by their respective governments--as long as the rules for the certificates and labels are spelled out clearly. But what of Brazil, where black market GM soybeans make up to a fifth or more of total soybean production?

It would seem logical to believe that Brazil would be greatly worried by the new Chinese GM import rules. After all, since there is no official acknowledgment of GM varieties being planted in Brazil, there would likely be little in the way segregation or identity preservation of GMO versus non-GMO soybeans--raising the risk Brazilian bean exports to China would turn up positive for GMOs if tested by the Chinese. And since Brazil's government hasn't acknowledged its farmers are planting GMO soybeans, providing appropriate safety certificates and labels is a moot point.

But DTN's South American correspondent Anderson Galvao Gomes disputes those assertions, and believes little impact on Brazil's soy exports to China because of the GMO rules is likely. Indeed, Gomes characterized the new Chinese regulations as "favorable" to Brazil's soybean industry.

Gomes said that the Chinese decision to impose rigid rules for GM soy imports could work for Brazil. He explained that the new regulations could provoke a definite prohibition of GMO production as a way to win the Chinese market. Brazil will have to produce what its clients want, Gomes said.

"While China and Europe aren't clear on what rules of the game are, the Brazilian industries and exporters continue developing ways to guarantee the quality of Brazilian soy," he said. "Several Brazilian industries have been implementing, on their own, processes of soft and hard identity-preservation (IP). Those companies are undertaking these efforts even though so far the market hasn't been paying a premium for IP beans," Gomes reported.

Gomes added that what GM soybeans are planted in the country are restricted to Brazil's southernmost state, Rio Grande do Sul, which borders Argentina--from which the black market supply of GM soybeans flows into Brazil. "In spite of GM soy existing in Brazil, most of the Brazilian soy is GM-free," Gomes said.

Nor does Gomes see the Chinese GM import rules as influencing Brazil's decision-making process regarding the legality of GM soybeans. "A decision of a federal court blocks the production and the commercialization of GMOs until an environmental impact study of GM soybeans is completed," Gomes reported.

Despite support for legalizing GM soybean plantings by some officials of Brazil's federal government and key Brazilian ag-interest groups, Gomes doesn't see the law changing until at least 2003.

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