1. Program for Biosafety Systems – http://pbs.ifpri.info/
“Low Level Presence, Trade, Biosafety and
Decision Making: Issues for Developing
Countries”
José Falck Zepeda
Senior Research Fellow
International Food Policy Research
Institute (IFPRI)
Leader PolicyTeam for the Program
for Biosafety Systems (IFPRI - PBS)
ContributingTeam
Guillaume P. Gruère*
Patricia Zambrano
Antoine Bouet
Dedbdatta Sengupta
Daniela Horna*
*Departed IFPRI

2. Program for Biosafety Systems – http://pbs.ifpri.info/
IFPRI’s Mission and Expertise
• IFPRI mission as an international non-governmental organization
“To Provide Research-Based Policy Solutions That Sustainably Reduce Poverty
and End Hunger and Malnutrition”
• IFPRI conducts research in policy relevant topics:
– Trade related impacts
• Impacts of labelling and low level presence policies
• Private contracts and standards
• Compliance ability
– Ex ante and Ex post socioeconomic impact assessments of adoption
– Regulatory issues
• Effects of cost of compliance with biosafety regulations and regulatory delays
• Coexistence, segregation, identity preservation
• Regional harmonization approaches
• IFPRI provides operational and research based policy support to
biosafety regulatory agencies and competent authorities in their
decision making

3. Program for Biosafety Systems – http://pbs.ifpri.info/
Sources of LLP
• Asynchronous: at least one cultivating country has
already authorized a GM crop while other countries have
not approved for importation
• Asymmetric: a cultivating country has authorized a GM
crop, but its developer does not seek approval in
potential or unattractive importing countries
• Accidental admixture: a country has authorized the
cultivation of a GM crop in field trials only. Traces of the
commodity end up in the commercial crop supply
Source: Stein, A. and E. Rodriguez-Cerezo. 2010.

4. Program for Biosafety Systems – http://pbs.ifpri.info/
GM food trade and asynchronous approval
• Growing market shares and trade
of GM commodities
• Increasing pipeline of new GM
crops and events
• Lack of policies and definitions
– Slow down import regulations
– 0% tolerance for imports of unapproved
GM products
• Focus on implementation issues
– Codex Annex: simplified procedure
– Incentives to move forward
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mexico
Canada
Chile
Taiwan
Australia
Peru
Japan
USA
Philippines
Russia
Korea
Indonesia
HongKong
Malaysia
Thailand
Brunei
NewZealand
Vietnam
Pop.Rep.China
Singapore
PapuaNewGuinea
Percentage of imported maize with potential LLP
issues
0%
20%
40%
60%
80%
100%
Pop.Rep.China
Taiwan
Korea
Canada
Mexico
Australia
Philippines
Malaysia
Japan
HongKong
Indonesia
USA
Peru
Chile
Singapore
Russia
NewZealand
Brunei
Thailand
PapuaNew…
Percentage of imported soybeans with
potential LLP issues
Source: Gruere 2011

5. Program for Biosafety Systems – http://pbs.ifpri.info/
Policy options and decision making
variables affecting economic welfare
Policy Options
1. 0% tolerance
level for
unapproved GM
products
2. A threshold (t %)
low level
presence policy
3. 100% tolerance
Optimal Policy Option
The cost of
enforcing
the
regulation
The
potential
risk of the
product
The price
of the
product
Source: Gruere, G. 2011.

6. Program for Biosafety Systems – http://pbs.ifpri.info/
Some issues identified for consideration on the
evaluation of economic welfare of LLPs
Price
Tolerance level
Probability of
rejection
Timing of
approval
Premium
differentials
Cost of
compliance
Tolerance level
Import
volumes
Cost structure
enforcement
Approval delays
Enforcement
capacity
Risk
Tolerance
level
Trust in exporter
regulations
Availability
Type of product
and use

7. Program for Biosafety Systems – http://pbs.ifpri.info/
Qualitative implications for key decision parameters
identified in assessment studies of economic welfare
1. Tolerance level
2. Approval delays
3. Degree of confidence in domestic and exporter’s regulation
Best outcomes with high confidence & low delays, but the optimal tolerance
level depends on tradeoff cost versus relative risk perceptions.
Increase in Price Risk Cost of
implementation
Total economic
welfare
Tolerance level ↓ ↑ or → ↓ ↓ or ↑
Approval delay ↑ → ↑ ↓
Confidence → ↓ → ↑
Source: Gruere, G. 2011.

8. Program for Biosafety Systems – http://pbs.ifpri.info/
Limitations to studies on the impact of
low level presence policies
• Complex issue that requires extensive data to estimate
impacts
• Data issues
– Production, prices, trade volumes, shares of affected imports
– Testing costs relative to volume…
• Many available studies based on assumptions and relatively
simple models
• Obtain an idea of qualitative direction and a sense of the
magnitude of impacts…with known limitations

9. Program for Biosafety Systems – http://pbs.ifpri.info/
Example from Developing Countries-
soybean imports in Vietnam
 In average across simulations and range of
assumptions, implementation cost for
different tolerance levels are:
• 0% $18million,
• 1 % $4.1million,
• 5 % $580,000 per year
 Some, but not limited to, relevant question
for a regulator could be:
Is maintaining a 0% tolerance level -
costing an average of $14 million more-
in order to address perceived safety
concerns better than a 1 % presence of an
unapproved event that has gone through
safety authorization in the country of
export?
Is the 0% level worth roughly $17+ million
more than a 5 % level?
Source: Gruere, G. 2011.
Economic welfare effects of a single unapproved GM
soybean event in the United States and Canada only
-20000
-18000
-16000
-14000
-12000
-10000
-8000
-6000
-4000
-2000
0
N(0.1,0.1) N(0.5,0.5) N(1,1) N(2.5,2.5)
ThousandsUSD
τ=0% τ=1% τ=5%

10. Program for Biosafety Systems – http://pbs.ifpri.info/
Option Probability
trade
disruption
Price Risk Cost Conclusions
0% LLP 100% High until
approval
Some variability Very high Valid if high perceived risk
and no trust in export
t % LLP Moderate Moderate Some variability
and possible low
risk
Moderate
to high
Best solution from an
economic perspective
100% pass 0% 0 Larger variability
and potential risk
None Valid if prices matter more
than anything else
Low level presence policies (e.g. Codex Annex) are valid intermediates between 0%
tolerance level and 100% pass.
Summary selected issues and policies
related to economic welfare impacts of LLPs
Source: Gruere, G. 2011.

11. Program for Biosafety Systems – http://pbs.ifpri.info/
Broader regulatory cost of compliance: Issues
and Implications identified in existing studies
• Regulatory delays have a negative impact on returns to
investments
• Projected trigger point is year 6 of regulatory delays for
suspending a typical investment of$136 million in new R&D
projects
• Average regulatory approvals of 48 months implies reaching
suspension point likely
• Regulatory delays increase investment risk
• Uncertainty increases likelihood that an investment will not
be made
Source: Smyth, McDonald and Falck-Zepeda, 2013

12. Program for Biosafety Systems – http://pbs.ifpri.info/
Implications increases of cost of compliance for
public goods in developing countries
• Cost are not as important,
exceptions
– National research organizations
– International research systems
developing “public goods”
– Small private firms
• Impact on the number/type of
technologies
• More “higher return” products
and less public good products?
Source: Beyer, Norton and Falck-Zepeda 2010

13. Program for Biosafety Systems – http://pbs.ifpri.info/
Black Sigatoka Resistant Bananas in Uganda
 Considered irreversible
and reversible costs
and benefits for
estimation
 With one year delay,
forego potential
annual (social) benefits
of +/- US$200 million
Photos credits: Kikulwe 2009 and Edmeades 2008
Source: Kikulwe, Birol, Wesseler and Falck-Zepeda
2011.

14. Program for Biosafety Systems – http://pbs.ifpri.info/
Summary
• LLPs are becoming an important trade issue
• Need to understand better asynchrony sources and the
various (pragmatic) approaches to manage LLPs
– Critical need for reliable information and data to make the best
possible judgment on the way forward
• Different thresholds have different impacts
– More cost/benefit studies are needed
– Existing studies indicate that lower thresholds tend to have higher
costs
• Cost of compliance with regulations can impact potential
stream of technologies available to developing countries
especially those of a public good nature

15. Program for Biosafety Systems – http://pbs.ifpri.info/
Potential issues for discussion
• How can we reduce asynchronicity?
– What are regulators and/or decision makers roles and responsibilities?
How about developers/industry? Other stakeholders?
– Building trust in the system including regulations
• How can information sharing improve our ability to make decisions?
– Food/feed and environmental safety information sharing mechanisms and
approaches
• Use of Codex Alimentarius guidelines?
• Use of FAO GM Foods Platform to share information for LLP situations? Other
knowledge platforms i.e. Biosafety Clearinghouse?
– Finance additional data/information collection needed to examine relevant
policy issue in more detail?
• Exploring the adoption of implementable LLP management
approaches

16. Program for Biosafety Systems – http://pbs.ifpri.info/
José Benjamin Falck-Zepeda,
Ph.D.
Senior Research Fellow / Leader Policy Team
Program for Biosafety Systems
IFPRI
2033 K Street NW
Washington, DC 20006-1002
USA
j.falck-zepeda@cgiar.org
Brief bio/pubs: http://www.ifpri.org/staffprofile/jose-falck-
zepeda
Blog: http://socioeconomicbiosafety.wordpress.com/
Follow me on Twitter: @josefalck

17. Program for Biosafety Systems – http://pbs.ifpri.info/
References
• Bayer, J. C., G. W. Norton, and J. B. Falck-Zepeda. 2010. Cost of compliance with
biotechnology regulation in the Philippines: Implications for developing countries.
AgBioForum 13(1): 53-62. http://www.agbioforum.org/v13n1/v13n1a04-norton.htm
• Gruere, G. 2011. Asynchronous Approvals of GM Products and the Codex Annex: What Low
Level Presence Policy for Vietnam?. International Food and Agricultural Trade Council
Discussion Paper.
• Kikulwe, E.M., E. Birol, J. Wesseler, J. Falck-Zepeda. 2011. A latent class approach to
investigating demand for genetically modified banana in Uganda. Agricultural Economics.
• Smyth, S. and J. Falck-Zepeda. 2013. Socio-economic Considerations and International Trade
Agreements. Estey Centre Journal of International Law and Trade Policy by 14(1): 18-38.
http://www.esteyjournal.com/j_pdfs/smythfalck14-1.pdf
• Stein, A. and E. Rodriguez-Cerezo. 2010. Low-Level Presence of New GM Crops: An Issue on
the Rise for Countries Where They Lack Approval. AgBioForum. 13(2): 173-182.