Genetically modified foods (GM foods or GMF) offer a way to quickly improve crop characteristics such as yield, pest resistance, or herbicide tolerance, often to a degree not possible with traditional methods. Further, GM crops can be manipulated to produce completely artificial substances, from the precursors to plastics to consumable vaccines. Although different classes of vectors are distinguishable on the basis of the mainframe genetic material, practically all of them are chimeric, being composed of genetic material originating from the genetic parasites of many different species of bacteria, animals, and plants. Important chimeric shuttle vectors enable genes to be multiplied in the bacterium Escherichia coli and transferred into species throughout the plant and animal kingdoms. What Are the Hazards of Horizontal Gene Transfer? Most artificial vectors are either derived from viruses or have viral genes in them, and they are designed to cross species barriers and to invade genomes. They have the potential to recombine with the genetic material of other viruses to generate new infectious viruses that cross species barriers. Such viruses have been appearing with alarming frequency. Both the artificial vectors used in genetic engineering and the genes transferred to make transgenic organisms are predominantly from viruses and bacteria associated with diseases, and these are being brought together in combinations that have never existed in billions of years of evolution. Unless we find better ways to grow food, we'll need to find ourselves another planet, warns the CEO of the Monsanto Company. Today there are more than 5.9 billion people in the world. About 1.5 billion of them live in conditions of abject poverty - a subsistence life that simply can't... Pros of Genetic Engineering With regard to the agricultural industry, transgenic farm animals can be created, that are better able to resist disease, grow faster, and more efficiently reproduce than current species of animals. Transgenic sheep can be created to produce better wool and cows can be engineered to more efficiently convert grain into higher quality milk and meat. Also, transgenic animals, like goats, sheep, and cattle, have been engineered to produce large amounts of complex human proteins in their milk, something very useful in the creation of therapeutic drugs. By engineering these animals to release these and other proteins in their milk, the mass production of high quality therapeutic drugs is made less costly, easier to manufacture, and at the expense of fewer animal lives than what was formerly the case. The current debate about the use of genetic engineering in agricultural production reveals substantial differences in perception of the risks and benefits associated with this new biotechnology. Farmers in North America and a few large developing countries such as Argentina, Mexico, and China are rapidly adopting the new genetically modified (GM) crop varieties as they become available.1 Producers benefit from increased productivity and reduced chemical use, consumers benefit from lower prices., 2 Citizens in these countries are generally accepting this development. In the US, regulators view GM varieties as substantially equivalent to the conventional variety — they are viewed as being as safe to consumers as the conventional counterpart. However, consumers in other parts of the world, especially Western Europe and Japan, are concerned about the environmental impact of widespread cultivation of GM crops and the safety of foods containing GM organisms., 3 Regulators in the EU view GM and conventional varieties as differentiated products because of the perceived risks. In response to consumer skepticism, the EU formalized a moratorium on the approval of additional GM crops for consumption in June 1999., 4 Reliable labeling of non-GM varieties, accounting for the use of non-GM intermediate inputs to produce the final good, is one way to address consumer concerns. Most OECD countries already have instituted or are discussing some type of mandatory labeling. The situation is fluid and labeling rules differ across countries., 5 At one extreme, the US and Canada require labeling only when the nutritional or allergenic composition has been altered through genetic engineering. Otherwise, labeling food containing GM ingredients is voluntary. At the other extreme, the EU has mandatory labeling for all food and food ingredients containing genetically engineered DNA/proteins above a 1% tolerance level. Given the US–EU differences, trade in agricultural biotech products is likely to become a controversial issue within the World Trade Organization. On the one hand, the US might accuse the EU of using this issue as an excuse for replacing price-support policies, which are being phased down following the Uruguay Round agreements, with technical barriers to trade. On the other hand, European countries claim they have the right to adopt the precautionary principle given the scientific uncertainties associated with GM use — an argument that may be strengthened if the Biosafety Protocol negotiated in Montreal in 2000 is ratified by 50 countries to come into effect. Should a dispute settlement case be launched on the WTO-consistency of banning imports of GM products, along similar lines to the food-safety issue of the EU–US beef hormone case, a clean result is unlikely. The EU may keep import bans in place pending not just the panel report but also the appeal process and possibly arbitration hearings — the life span of which could be several years., 6 As an alternative to trade restrictions, segmented markets could emerge with GM and non-GM varieties that are reliably labeled. In this environment, GM-critical consumers can purchase precisely what they want, a guaranteed GM-free product. Since the non-GM segment of the market is in response to consumer demand, consumers would be willing to pay a premium for the non-GM variety, similar to the premium paid for organic foods. Other researchers have analyzed the effects of a segmented market on the price differential and on consumer welfare. For example, [James and Burton, 2002] use consumer choice modeling to estimate consumer willingness to pay for non-GM varieties. [Giannakas and Fulton, 2002] consider the effects of GM food on consumer welfare and purchasing behavior in a model with differentiated consumers.