Scaling Down Nanotech's Trade War Potential

The development of nanotechnology -- the ability to engineer matter at the molecular and submolecular level to enhance consumer goods and medical products -- may revolutionize global commerce someday. But at the moment, nanotechnology faces a more immediate and mundane hurdle to its widespread application: persuading the world's most influential government regulators, mainly those of the United States and Europe, to adopt similar and welcoming approaches to the rules of nanotech trade.

In framing a regulatory approach to the expected explosion in commercial nanotech applications, both European and American industry analysts say they will be sure to heed the lessons of the often-fractious debate of the past decade about a kindred sort of technology: bio-engineered food. The early trade battles concerning genetically modified -- or "GM" -- foodstuffs didn't start out on a promising note. Nine years ago, several European countries essentially blocked imports of GM crops, which were mainly grown in the United States. And U.S. efforts to contain the fallout from that action continue -- most recently, via a congressional appeal this winter to the member states in the European Union, insisting that they permit the WTO to settle international disputes over biotech applications in agriculture.

The sort of draining and deep-seated rancor that's gone into that fight is just what the nanotech industry wants to avoid as it prepares to push broadly into the global market. And that sentiment is expressed on both sides of the Atlantic. Mark Mansour, a nanotech regulation specialist at the international law firm Foley & Lardner, says trade officials in Europe don't want to duplicate the "restrictive paradigm" that galvanized the dispute over GM foods. "They don't want to create a consumer scare," he said. "They are trying to find a middle ground. We are, too. That militates against a trade war."

Consumer activists, meanwhile, are drawing their own parallel between the existing regulatory regime for high-tech food and the prospective regulation of nanotech commerce. In their view, the former should serve as a warning, and the pace of worldwide acceptance of nano-enabled products should be slowed significantly. "Genetically engineered crops and food have never been adequately tested, regulated or labeled, yet the U.S. government has allowed them on our farms, in our supermarkets and in our kitchens for more than a decade," said Wenonah Hauter, executive director of the advocacy group Food and Water Watch. "And now, unbelievably, both the government and the overlapping biotechnology and nanotechnology interest want to unleash microscopic robots into our food, cosmetics and household products."

Hauter and other activists say a moratorium on commercial nanotech applications is in order. "The technology must be confined to a laboratory until repeated independent, third-party studies have proven its safety beyond a reasonable doubt," Hauter said.

The European branch of Hauter's group and other foes of GM crops on that continent, such as the Soil Association and Friends of the Earth Europe, largely won their case in the court of public opinion by raising alarm over the coming wave of what they derided as "frankenfoods" sent over from the United States after minimal testing following their creation in laboratories financed by agribusiness conglomerates. Europeans became increasingly agitated at that description during the 1990s, and advocates of bio-engineered food were unable to mount an effective case for the safety of their products. So in 1999, several EU nations imposed an import moratorium, which served as an end-run around the conventional product approval protocols under the authority of the WTO, the global trade governance authority.

There have been some steps toward acceptance of GM crops in European markets. Between 1994 and 1998, for example, the EU approved nine bio-engineered products and plants for commercial use. But biotech advocates say complying with the regulation of such products in Europe since then has been halting and cumbersome alongside the more straightforward, and liberal, North American standards. In 2004, for example, the EU set conditions for approving GM crops, foods and livestock feed -- rules that don't apply in the U.S. market. In addition, EU rules call for such items to be clearly labeled so that their origins can be traced from manufacturing through distribution.

There's one simple reason European nanoA-tech players are hoping to dial down the perceived cause for consumer alarm early on in this trade debate: European interests are taking on a much bigger role in the nanotech sector than they had in the bio-engineered food. "Because it is such a big investor, the European Union is going to approach the oversight of this technology very carefully," said Julia Moore, deputy director of the Project on Emerging Nanotechnologies, a venture of the public-private Woodrow Wilson International Center for Scholars in Washington.

That means, among other things, that would-be regulators in the EU are closely coordinating work within the existing regulatory regime with their counterparts in the United States. "The key message is that we have a very similar appraisal of the situation on both sides of the Atlantic in terms of the need for regulation and the applicability of existing regulations," said Phillippe Martin, who heads the nanotechnology policy office of the Health and Consumer Protection Directorate-General of the European Commission.

There's also a greater sense of urgency on both continents about sidestepping trade feuds, because after more than two decades of research and development, the nanotech industry is now poised for commercial takeoff. In 2006, $50 billion in nanotech-enhanced products were on the market; by 2014, that figure will soar to $2.6 trillion, or 15 percent of all global manufacturing output, in the estimation of Lux Research, a commercial research firm.

Should that come to pass, nanotech applications will turn up in virtually every industry. Medicine, electronics and manufacturing are already adopting such applications on a broad scale; energy production, defense and environmental cleanup operations will probably soon follow suit.

Still, it's not clear how U.S. and EU interests can best coordinate their regulatory approaches in the brave new nanotech market. With pharmaceuticals and chemicals, existing regulations on the pre-nano generation of products will still apply to their nano-sized successors, according to Martin. Even so, that could set up disparate standards, as the Bush administration has already decided that neither sector should see regulatory upgrades to address nanotech breakthroughs -- but European countries will probably weigh such upgrades more seriously.

That's because the EU has largely adopted a "precautionary" model of new-product regulation -- that is, before a product enters the market, its makers must show that it will not harm human health or the environment. U.S. regulators, while still mandating extensive product testing, can still come up short of European expectations for precautionary pre-market measures. For example, the Food and Drug Administration has no authority to review most cosmetic ingredients before they go to market and limited power to intervene after a cosmetic has been shown to be harmful. Cosmetics are one of the largest groups of products with nanomaterial claims on store shelves today.

What's more, the EU grants member countries a good deal of latitude in framing their own, more stringent regulatory regimes. France, Austria, Greece, Hungary and Poland have pursued independent regulations for GM crops; Romania is considering a similar course of action.

The regulatory picture grows yet blurrier when China, also a major investor in nanotech applications, is factored in. Lax export regulations have already spurred consumer scares over lead paint in Chinese toys and contaminants in Chinese pet food, and in March, contaminants in Chinese-made heparin, a blood-thinning drug, were linked to at least 19 deaths in the United States.

Product safety advocates argue that if global trade means manufacturing is looking backward toward 19th-century-style oversight, it can scarcely be trusted with a production method as far-reaching and comparatively untested as nanotech. "The American public had to worry about lead in toys again," said David Rejeski, director of the Project on Emerging Nanotechnologies. "I think they thought that was a problem they took care of a while ago."

The search for a workable regulatory trade accord won't get easier as nanotech applications continue to mature and gain in complexity, experts warn. "We are in the first phase of nanotechnology, when so-called passive nanostructures" -- superfine substances used in the making of goods --"can be addressed by existing rules," said Mihail Roco, a senior scientist at the National Science Foundation who specializes in nanotech development.

But as the technology develops, with innovations such as nanoscale drugs that control brain behavior already on the drawing board, international trade rules will probably be altered significantly. Meanwhile, nanotech policy hands will continue focusing on how to apply those rules with minimal global friction, even if that means surrendering some turf early on in the process. "Industry is asking for more regulation," said Foley & Lardner's Mansour, "and working with governments so we don't end up where we did in biotech."

FOR FURTHER READING: FDA regulation, p. 868; Bush's fiscal 2009 nanotechnology budget, CQ Weekly, p. 375; background, 2007 CQ Weekly, p. 1180, 2006 CQ Weekly, p. 648; genetically modified food, 2006 CQ Weekly, p. 2021.

Source: CQ Weekly The definitive source for news about Congress. ©2008 Congressional Quarterly Inc. All Rights Reserved.