On December 20, 2024, the USMCA dispute settlement panel issued its highly anticipated final report in the case concerning Mexico’s limitations on genetically modified (GM) corn imports (Mexico – Measures Concerning Genetically Modified Corn, MEX-USA-2023-31-01). This dispute, involving Mexico and the United States, has drawn attention for its implications on agricultural biotechnology, regulatory sovereignty, and the role of free trade agreements in reconciling science-based obligations with domestic policy priorities.

Below, we provide an expert analysis of the panel’s findings, highlight key legal takeaways, and assess the potential compliance scenarios for Mexico and their implications for the global agricultural trade landscape.

Background: A Legal Dispute over GM Corn

The dispute arose from Mexico’s February 2023 Presidential Decree (the “2023 Decree”), which introduced two controversial measures targeting GM corn:

• Article 6.II Measure (“Tortilla Ban”): Revoked and prohibited new authorizations for the use of GM corn in minimally processed foods for human consumption (e.g., dough and tortillas).
• Articles 7/8 Measure (“Gradual Substitution Policy”): Directed Mexican authorities to gradually replace GM corn used for animal feed and processed food products with non-GM alternatives, contingent on food self-sufficiency and supply sufficiency.

The United States initiated the dispute, arguing that these measures breached Mexico’s obligations under Chapter 9 (Sanitary and Phytosanitary (SPS) Measures) and Chapter 2 (National Treatment and Market Access) of the USMCA, primarily because they were not based on scientific evidence or consistent with international standards.

Key Panel Findings

1. Both Measures Were Deemed SPS Measures Under the USMCA

The panel held that the Article 6.II and Articles 7/8 Measures qualified as SPS measures because they were designed to protect human health and plant life and could affect trade between the USMCA parties. The panel dismissed Mexico’s argument that the measures served non-SPS objectives, emphasizing that the presence of additional goals (e.g., protecting cultural heritage) did not exempt Mexico from its SPS obligations (Panel Report, Mexico – GM Corn, paras. 7.23, 7.156).

2. Lack of Science-Based Risk Assessments

Under USMCA Article 9.6.3, SPS measures must be either:

• Based on relevant international standards, or
• Supported by a risk assessment commensurate with the circumstances.

The panel found that Mexico provided neither. Specifically, the evidence Mexico relied upon—such as the 2020 Scientific Dossier and reports in the SNIB Database—did not meet the rigorous standards required of risk assessments. The panel criticized the “haphazard collection of studies” as failing to evaluate risks systematically or in a manner consistent with international guidelines, such as those established by the Codex Alimentarius (Panel Report, paras. 7.89, 7.136).

3. Premature Judgment in the Gradual Substitution Policy

The Articles 7/8 Measure was criticized for "prejudging" future scientific findings by mandating the substitution of GM corn without completing an adequate risk assessment. The panel dismissed Mexico’s claim that the measure was provisional under USMCA Article 9.6.4(c), citing its lack of time limits and scientific underpinnings (Panel Report, paras. 7.156, 7.215).

4. Critique of a “Zero-Risk” Approach

The panel acknowledged Mexico’s right to determine its appropriate level of protection (ALOP), including adopting a “zero-risk” standard for GM corn consumption. However, the panel stressed that such a standard must still be based on scientific principles and supported by evidence, noting:

“The main thrust of the SPS chapter is that science must come first. Measures may not be imposed based on theoretical risks or public concerns unsupported by evidence.” (Panel Report, para. 7.234)

5. Chilling Effect on Trade

The panel emphasized the trade-distorting effects of the measures, particularly the Articles 7/8 Measure, which created uncertainty for U.S. exporters. It stated:

“The measure sends a powerful signal to the market, creating uncertainty for economic operators and undermining the predictability of international trade in GM corn products.” (Panel Report, para. 7.183)

Potential Compliance Scenarios for Mexico

Scenario 1: Immediate Repeal of the Measures

• Likelihood: High political and domestic resistance.
• Impact: Mexico would have to reopen its market to GM corn for human consumption and industrial uses, a significant reversal of policy. This could face backlash from domestic stakeholders concerned about health, cultural preservation, and indigenous corn varieties.

Scenario 2: Justifying Measures with a Scientifically Robust Risk Assessment

• Likelihood: Medium.
• Impact: Mexico could commission a thorough, internationally compliant risk assessment, aligning the measures with Codex standards and addressing risks through more targeted regulations. This option would maintain some domestic controls while avoiding retaliatory trade measures.

Scenario 3: Trade Compensation or Negotiations

• Likelihood: Low.
• Impact: If Mexico does not comply, the United States may pursue retaliatory tariffs under USMCA rules, potentially targeting sensitive Mexican exports. This would escalate tensions and harm bilateral trade relations.

Implications for Corn Imports into Mexico

If the panel’s ruling is implemented effectively, the decision will likely:

• Reopen the Mexican market to GM corn imports: U.S. exporters of GM yellow corn, primarily used for animal feed, stand to regain significant market access, with annual trade potentially exceeding $4 billion.
• Increase compliance costs for Mexico: To minimize public backlash, Mexico may need to introduce labeling for GM food products or adopt segregation systems to distinguish GM from non-GM corn in the supply chain.
• Set a precedent under USMCA: This ruling establishes a high threshold for risk-based regulatory measures and signals that member states must align domestic policies with international scientific standards or face trade consequences.

Conclusion: A Balancing Act Between Sovereignty and Obligations

The Mexico – GM Corn panel decision highlights the tension between a nation’s regulatory autonomy and its international trade commitments. While Mexico sought to prioritize cultural, environmental, and health concerns, the USMCA framework required science-based reasoning and alignment with established trade rules.

For importers, exporters, and policymakers, this case serves as a reminder that regulatory measures impacting trade must be underpinned by robust risk assessments and consistent with international standards. At its core, the ruling reflects a broader principle: trade agreements like the USMCA aim to foster predictability and transparency in regulatory policies while respecting sovereign objectives.

As potential clients or government actors consider their next steps, legal expertise will be critical in navigating compliance pathways, evaluating risk assessment methodologies, and mitigating trade risks. For tailored strategies aligned with your business or policy objectives, contact our firm to discuss how we can assist you in thriving amid evolving trade landscapes.

Resource

A copy of the panel report is available here.