BIOTECH LEGISLATION ON THE MOVE IN CROATIA

UNCLAS ZAGREB 001451

SIPDIS


SENSITIVE BUT UNCLASSIFIED
STATE PASS USTR

STATE FOR EB/MTA/ATP

USDA FOR FAS/ITP/SHEIKH, FAS/ITP/EAMED, FAS/ITP/OFSTS

USEU BRUSSELS FOR AGRICULTURE

VIENNA FOR FAS PSPENCER

BUDAPEST FOR ENVIRO HUB

E.O. 12958: N/A
TAGS: ETRD EAGR TBIO HR
SUBJECT: BIOTECH LEGISLATION ON THE MOVE IN CROATIA

REF:A) 02 ZAGREB 2102
B) 02 ZAGREB 2253
C) 02 ZAGREB 2576
D) 02 ZAGREB 2977
E) ZAGREB 1061

Summary
--------------


1. (SBU) Over the last several months in Croatia,
several pieces of legislation have been introduced which
seek to regulate the import and cultivation of biotech
crops and foods. The embassy and FAS Vienna have
engaged the government on a number of fronts to stop
to stop
legislation that, in the case of one parliamentary
proposal, would temporarily ban GM products. We are
also trying to soften restrictive measures that are
contained in two pieces of proposed legislation (the
Food Law and Law on Protection of Nature). While the
government has discarded its earlier intention to ban
the import and sale of biotech products, it feels,
probably correctly, that for any law to have chance of
passing it must follow EU's outline for traceability and
labeling. In the meantime, the government and importers
appear to be maintaining an "informal" ban on GMOs,
which is costing U.S. exporters $12-$15 million a year
in lost soybean sales. End Summary.


Temporary Ban Revisited
--------------


2. (SBU) In early May, we learned that two draft bans
on GMOs had appeared on the parliamentary agenda. Both
drafts were submitted by political parties, not the
government. One, a total, indefinite ban on GMOs, was
proposed by the HSP -- Croatian Party of Rights, a tiny
far-right party. Conventional wisdom was that party's
marginal status would preclude the bill from getting
serious consideration. The second bill, which called
for a total ban on the import and sale of GMOs until
legislation regulating its planting, distribution and
sale were in place, was introduced by the HSS - the
Croatian Peasants Party -- the second largest party in
the ruling coalition.


3. (SBU) Drawing heavily upon the points used by the
embassy the first time a ban on GMOs was proposed in
Fall 2001, we urgently demarched Marijana Petir,
Spokesperson of the HSS and prominent environmental
activist (points emailed to EUR/SCE). The HSP bill was
voted down. The HSS bill was voted on and passed its
first reading, but was taken off of "urgent procedure" -
- which would have meant that it would have become law
immediately -- and put on the shelf awaiting a second
reading. While this allows the HSS to have a campaign
issue, in reality the bill is unlikely to come up for a
second reading before parliamentary elections, expected
in the fall.

We'll Protect You!
--------------


4. (SBU) Last year the government told the public that
it would, before the end of the year, pass legislation
to regulate the import and sale of GMOs. The government
told us that it felt the need to address the concerns of
consumers, meet its obligations to bring its laws into
line with EU directives, and divert calls for an
outright ban. A number of legislative initiatives

dealing with consumer protection, food, and
environmental issues are under consideration and they
all touch upon GMOs in some way. While the government
did not make its 2002 deadline for biotech legislation,
it is intent on getting these laws passed by the end of
the current legislative year, partly to make progress
with EU accession and partly to have something to show
the electorate in the Fall (the most likely time for
parliamentary elections).

Consumer Protection Law
--------------


5. (SBU) Last fall, we commented on GM-labeling
requirements in the draft consumer protection law (ref
A). Assistant Minister Spevec assured the Ambassador,
during a meeting with Minister of Economy Jurcic, that
she had reviewed the law, agreed with our assessment
that the labeling requirements went beyond even what the
EU required, and she had ordered the language be deleted
(ref B).


6. (SBU) The legislation finally passed parliament on
June 4th. Our preliminary review of the law indicates
that the Ministry of Economy hedged its position by
deleting all mention of "genetically modified" products.
Instead, the legislation requires manufacturers to
provide consumers with information about the existence
of "transformed" products, including transformed
ingredients and supplements, as well as the type of
transformation, in accordance with "subsequent
regulation." It is unclear whether this is a reference
to the food law (which is generally considered to be the
main legislation on labeling),or subsequent
implementing regulations for the consumer protection
law.

Law on Protection of Nature
--------------


7. (U) This law has passed its first reading and is
undergoing changes in committee before getting a second
reading, probably late in June. We are in the process
of preparing comments for the Ministry of Environment,
which is in charge of drafting the law (we have sought
input from USEU and USDA/W). We had discussed the law
in general last fall during the visit of biotech speaker
Lisa Katic (ref c). The draft legislation would require
licenses for the import, transport and introduction into
the environment, and placing into the market of GMO
products, principally seed. Regulation of food and feed
is specifically deferred to the food law, and GM drugs
to a future law.


8. (SBU) Labeling of GM seeds would be required, which
may not be an issue for the seed companies, since GM
seed usually attracts a higher price, and is a selling
point for those that wish to purchase it.


9. (SBU) Encouragingly, GM seed imports could be
approved by a shortened procedure if there is enough
data and experience with release of the product into the
environment. Hopefully, this would mean that products
already approved in the EU (and we would argue, in the
U.S.) would be quickly approved in Croatia as well.

Food Law
--------------


10. (SBU) We regularly raise the issue of biotechnology
in our discussions with the Ministry of Agriculture,

including in a discussion between the Ambassador and the
Minister ref D). When we learned that the draft law was
soon to be introduced into Parliament, we sent
preliminary comments on June 4 to the Ministries of
Agriculture (principal sponsor of the bill),Economy,
Foreign Affairs, Environment and the advisor to the
Deputy Prime Minister, and expanded comments June 16th.
The provisions of the law concerning GMO (covered as a
"novel food" in the draft) and our comments were:

-- Special permits, issued by Ministry of Agriculture,
will be required to put GM food and feed products on
market. The permit should be issued based on a
scientific opinion of a biotech committee in the new
food agency (the details of this committee will be
spelled out by the Minister of Health with consent of
the Minister of Agriculture in future regulations).

US Embassy Comment: Any "committee" system should be
transparent. It is important that non-scientific
prejudices not be allowed to block applications. We
encourage the inclusion of industry representative on
this committee.

-- Novel food can be banned from market entry if it is
scientifically determined to harm human health. Novel
foods may also be temporarily banned if there is
scientific uncertainty (decision by the Ministry of
Health with consent the Ministry of Agriculture).

U.S. Embassy Comment: We are concerned that this could
lead to the non-scientific application of the so-called
"precautionary principle" for novel foods. There is
"scientific uncertainty" in even the most respected and
widely applied food safety rules. The degree of risk is
what matters, not the fact that risk is present. All
foods, additives, processes, etc., contain an element of
risk. Why are novel foods being treated under a
separate regulatory framework? (Please also see the WTO
SPS Agreement, Article 5, Paragraphs 1 and 2, to
determine Croatia's international obligations on this
point.)

-- Novel foods will have to have a label that states
specific information that informs the consumer about
differences of novel foods comparing to standard food,
and about the process of change. Food containing GMOs
must be labeled with "this product contains GMO." Foods
that derive from GMOs but that do not contain GMOs must
be labeled as "this product derives from GMOs."

U.S. Embassy Comment: We note that the proposed labeling
does not convey any health related information. The
label will essentially be ideologically-based and will
not provide consumers with any science-based conclusions
about the product.
The labeling provisions will also be technically
impossible to enforce and will be open to fraud. For
example, how will Croatian authorities know if soybean
oil from Brazil was made from GM soya? There is no
reliable scientific method to test soybean oil to
determine if it has been made from GM plants. Also, it
is unclear what the threshold level will be for
labeling.

Labeling of all foods that are made with GM-derived
vitamin supplements, GM-derived enzymes (cheese),GM-
yeasts (beer),etc., is also not feasible and will and
result in many unintentional violations. In many
instances, there is no scientific way of proving whether

foods are derived from GM-plants or bacteria.
Enforcement of the law will necessarily be very
selective and aimed at imported products.

However, we note that exempting domestic manufacturers
from labeling because they are currently widely used or
because non-GM varieties are not available (as has been
proposed recently in Parliament) could be a violation of
the WTO's principle of national treatment.

The U.S. Government believes that labeling should convey
material facts. We are concerned that requiring
labeling when there is no material difference in the
product will lead to discrimination. We support
voluntary labeling (such as the "organic" label used in
the United States, or "GMO-free") when the manufacturer
believes that the customer puts a premium on that
characteristic.

-- Feed containing GMO would have to be labeled
accordingly, but details will be prescribed by the
Ministry of Agriculture.

Embassy comment: similar to comment for food.

-- Penalties for the violation of the law are from
100,000 to 500,000 Kn for a company and 5,000 to 10,000
Kn for any responsible individual or employee. (Note:
currently the exchange rate is approximately 6.5 kunas
to the dollar.)

U.S. Embassy Comment: These are the highest penalties
contained in the draft law. Given the fact that other
food safety issues are actually harming consumer health
in Croatia (e.g., trichinosis, lysteria, etc.) it is
interesting that other violations of the law do not
result in such strong sanctions.


11. (SBU) We spoke to Assistant Minister Miroslav Bozic
shortly after we sent the Ministry preliminary comments.
He said he generally agreed with our comments, except in
the areas of labeling and testing. He believed that
consumers demand labeling, and fraud in declaration can
be prohibited. Bozic appealed for understanding. He
noted that Minister Pankretic (who is a member of the
HSS -- the same party that proposed a ban) has withstood
considerable pressure from his party in allowing the
food law to be drafted in a way that "opens the doors to
GMOs." Bozic reported that he had appeared on
television the night before to defend the food law, and
had to rebut ridiculous arguments such as "why do we
need GMOs?"


12. (SBU) In this conversation with A/M Bozic, we noted
that while labeling sounded reasonable in theory, in
practice, in other European countries, labeling had led
to a lessening of consumer choice, since "environmental"
NGOs had frightened grocers out of carrying GM products.
In Croatia, importers of soy products had told us that
they were not buying US soy beans, because of the fear
of being stigmatized, yet were buying Argentinean and
Brazilian soy, much of which was probably GM, despite
certificates to the contrary (see para 15).

Media Announces Victory for GMOs
--------------


13. (SBU) While the Embassy has a number of concerns
with the proposed Food Law, the press has proclaimed
that the legislation will "open the doors to GMOS."
This has caused a gnashing of teeth from the more

strident NGOs. A producers' NGO, the Community of
Farmers Assembly from Slavonia and Baranja (ZUSSB),held
a press conference last week to express their shock at
Government decision to allow import of GM food. They
invited consumers not to buy such products and even to
go a step further by "throwing" such products off the
shelves.

But Victory not in Sight
--------------


14. (U) Prominent environmental NGO, Zelena Acija
(a.k.a. Green Action, which is associated with the U.S.
NGO Earth First),also published a "black list," "white
list" and "green list" for foods. The "black" list is
for companies that could not or would not certify that
they did not use or import GMOs; the "white" list is of
companies that expressed a desire to be GM-free but
could not certify all their sources; and, on the "green"
list are companies that feel they could certify their
GM-free status. This is the second such attempt by
Zelena Acija to create such a list. In a visit last
year to the food industry committee of the Croatian
Chamber of Economy, Zelena Akcija's activities were
cited as a factor in the Croatian industry's fear and
distrust of biotech.


15. (SBU)_ As mentioned above, a major food and feed
importer told us that it had stopped importing US soy
products as part of an "informal ban" on U.S. products
which could contain GMOs. This "informal ban" was also
acknowledged by a Croatian public health official.
While the Croatian official maintained that soy imports
from Brazil (the leading source country for soya for
Croatia) were tested for GMOs in Slovenia, the Croatia
importer told us that there was no testing being done;
he and his counterparts simply requested and got "GM-
free" certificates from their suppliers. U.S. soybean
and soy meal exports to Croatia went from $12-$15
million annually to zero today. The decline mirrors the
adoption of GM-soybeans in the United States.


16. (U) Prominent weekly magazine Globus conducted a
poll of 600 respondents to determine the attitudes of
Croatians towards GMOs. 66 percent said they would not
accept GMOs in Croatia, and 16 percent said they would
not mind. 60 percent feared that such food would not be
properly labeled and only 15 percent said they would buy
it.

Mission Outreach
--------------


17. (SBU) The Embassy and USDA/Vienna are working
together to change those numbers, by countering the
grotesque misinformation campaign against biotech. As
mentioned earlier, the Embassy hosted a roundtable with
a biotech speaker from the grocery industry last fall.
The speaker also visited associations and government
officials to answer often-hostile questions. We sent a
group of four parliamentarians (two of them from the
HSS) on a biotech study tour of the U.S. in March (ref
E). These parliamentarians, all from farm areas, came
back more inclined to believe our assurances that the
environmental and health risks of biotech are minimal.
We plan a repeat for next year, focusing on some of the
people most opposed to biotech, including the president
of Zelena Akcija.


18. (SBU) In February, USDA/Vienna brought in one of
the FDA's chief regulators, Dr. Jim Maryanski, to give a

lecture at a biotech conference and participate in a
lunch for regulators and trade groups. This month,
USDA/Vienna sponsored Richard Sellers from the American
Feed Industry to speak at the annual Krmiva feed show --
the largest event of this type in the region. Mr.
Sellers met with a number of industry representatives
and described how the U.S. feed industry has taken
advantage of the current generation of GMO crops. The
Embassy currently seeks funding to help a local biotech
ally (the head of the Croatian Association of Bio-
geneticists and a passionate critic of "junk science")
produce a home-grown pro-biotech public information
pamphlet.

Comment
--------------


19. (SBU) It is tempting to look at the headlines
decrying the "opening of Croatia to GMOs" and declare
victory. Unfortunately, it would be illusory. It is
difficult to see a breakthrough soon. The chances of
Croatia passing laws that depart from EU norms on GM
labeling and licensing are negligible. If the current
proposed laws pass, most if not all grocers and food
producers may well be afraid to source and sell biotech
products because of public perceptions and threats of
NGO protests in their stores. And the status quo -- no
restrictions on paper yet an informal but effective
shunning of U.S. products is hurting U.S. farm
exports.

Rossin
NNNN