Spatial economic equilibrium analysis of rice trade: Impact of GM contamination on United States exports on prices and trade flows

In 2006 United States long grain rice stocks were found to be contaminated with LibertyLink 601, a genetically modified rice variety engineered to be resistant to Liberty herbicides produced by Bayer CropScience. Immediately the European Union shut import borders to United States rice without certification of non-contamination. The testing limits on each side of the Atlantic were non transparent leading to shipments being approved for export and denied access at import. This caused trade disruptions not only between the United States and the European Union but also other countries as a residual effect of the contamination. To analyze the effect of the LibertyLink contamination a spatial partial equilibrium model was employed to model the effect of the European policy on bilateral trade flows and prices. Economic losses to the United States and the European Union are estimated.;Key Words: Rice, Genetic Modification (GM), Trade, US, EU...