EU proposals for labelling genetically-modified (GM) foods announced in July have run into fierce opposition from the US. Officials from the Bush administration have lobbied the EU to water down the proposed regulations or drop them altogether, amidst claims that they could cost US firms as much as $4 billion a year and trigger a fresh transatlantic trade dispute.

The US government has warned the EU that the labelling proposals would unfairly discriminate against US products and may breach World Trade Organisation (WTO) rules.

Undersecretary of State Alan Larson told the Washington Post: "It's a very important trade and one that's of vital interest to a very important constituency in the United States, which supports free trade." The US government may bring a legal case to the WTO if lobbying fails to persuade EU ministers to amend the proposals.

The proposed regulations would require the labelling of all food containing GM ingredients. Processed goods would require farm origin trace ability but there would be one per cent tolerance level for accidental or unauthorised contamination. Refined products such as corn and soya oil would also require labelling, even if there was no longer any detectable GM DNA present. The proposals are due for further debate in the European Parliament and the Council of Ministers and are unlikely to come into force before 2003.

The US agriculture lobby has also made its opposition clear. The American Soybean Association told Reuters the traceablilty requirements were impractical, and the one per cent contamination threshold to should be raised to five per cent.

Reports suggest that the EU is determined to defend the proposals, seeing them as vital to regaining consumer confidence. But the US government does have European allies on the issue. Despite staunch public opposition, UK Prime Minister Tony Blair has continued to take a pro-biotech line, claiming that the labelling proposals are "unscientific, unworkable and expensive". The UK Food Standards Agency also expressed scepticism about the labelling proposals, saying they raised questions of "practicality, affordability and enforceability."

Although the labelling requirements could theoretically affect the export of some US organic products, the organic industry supports the EU proposals. "The US organic industry is not against these labelling proposals," said Katherine DiMatteo, Executive Director of the US Organic Trade Association. "In fact we are campaigning for labelling in the US. GMOs are not allowed in US organic foods and we are facing the same problems as our European counterparts with the issue of inadvertent contamination."