Syngenta case shows US market is not impervious to foreign rules: legal expert

Legal action brought by US farmers last week against the Swiss biotech firm followed suits filed earlier by agribusiness giant, Cargill, and major livestock feed exporter, Trans Coastal Supply, alleging losses in millions linked to China’s rejection of US crops containing Syngenta's corn trait.

Mark Stonacek, president of Cargill’s grain and oilseed supply chain in North America, said last month: “Unlike other seed companies, Syngenta has not practiced responsible stewardship by broadly commercializing a new product before receiving approval from a key export market like China.”​

However Syngenta says the Cargill and Trans Coastal cases are without merit. It claims it was fully compliant with all US laws and regulations, and that it cannot be held responsible for the actions of a foreign government. 

Impact of agri-commodities being traded globally ​

But Andrew Torrance, professor of law at the University of Kansas, told feednavigator:

“It may seem outlandish that a company could trigger legal liability for selling GM seeds in the US that are fully compliant with US domestic laws. ​

However, it is important to consider the context here. The market for many agricultural commodities, especially staples like wheat, corn, and soybean, is now largely global. Seed companies understand this fact well, and routinely apply in major markets like Europe, China, and India for regulatory approval to sell their GM products there. ​ ​

These companies are also quite familiar with the storage and shipping infrastructure that leads to the mixing together of many farmers’ crops. So, it is foreseeable that when seed companies supply domestic US farmers with seeds, their resulting GM crops will end up being exported to other countries,” ​said Torrance. 

So US businesses then, he says, are becoming increasingly subject to foreign regulation.

“The US has effectively extended its laws to other countries for decades. Although this long arm of US law has caused many in other countries to chafe at a perceived violation of their sovereignty, their countries have largely complied in order to gain access to the largest market in the world. Now that China rivals the US in market size, US companies may have to do the same to gain access to the lucrative Chinese market,” ​continued Torrance. 

The US may not like the fact that the legal shoe is increasingly going to be on the other foot, but for a country interested in exporting to China there will be little choice, said the professor. 

The risk assessment factor in GM product purchasing​

But, Anastasia Telesetsky, law professor at the University of Idaho, argues users of GM products and participants in an industry where GM products are common must “share the risk”​ that a certain market may still not be available to them when they are ready to sell. 

And she said that, based on the information that is publically available, the cases against Syngenta seem weak.

“Essentially, Cargill and others are arguing that the GM seeds and products that they purchased came with some sort of implied warranty of merchantability that the grain could be sold anywhere in the world. ​ ​

While additional evidence may still emerge in these cases that Syngenta made legally binding promises to exporters and farmers, the consumers of GM seeds and users of GM crops have to be aware that there are different legal regimes in the world and different levels of comfort in terms of permitting GM crops into a domestic market. ​ 

Not every country needs to operate on the same regulatory time line.  ​ ​

And, thus, because all markets are not created exactly equal, there must be some degree of due diligence on the part of consumers of GM seeds or parties that rely on products from such seeds to investigate the market implications of seed choice. ​ ​

These are simple business risk assessment decisions,”​ said Telesetsky. 

More creative marketing a way out of lost sales?​ ​

While some farmers have lost substantial income because of “the lack of due diligence”​ by others in the industry, it does not necessarily mean that they have a viable legal case, she said.

“I am not familiar with the specific shipments in this case, but presumably, if they are not still in quarantine in China and have been properly stored, the shipments can be sold in a non-Chinese market or in the US. ​ ​

Ultimately, such a setback may simply require more creative marketing on the part of global corn exporters to new or underserved markets,”​ said the law professor. 

She also remarked on how grain exporters and farmers are adopting common law arguments that one might expect from anti-GM campaign groups, and, in effect, are taking similar positions to that lobby on hotly debated topics such as cross-contamination of seed, public nuisance factors, trespass, negligence and liability. 

“Anti-GM activists must be watching these cases carefully,”​ added Telesetsky.