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mine the space in which producers and companies compete. Standard setting is done by government regulatory agencies, firms, international organizations such as Food and Agricul­ture Organisation (FAO) and the World Trade Organisation (WTO) and private voluntary organizations such as busi­ness associations.
     The section that follows looks at different forms of risk regulation and intellectual property regulation in NAE. These two forms of regulation and changes in the way they are implemented and conceived of are particularly impor­tant in relation to agricultural inputs and major new tech­nologies in agriculture such as for example biotechnology.

4.6.1 Development of risk regulation
In developing technology for agriculture, as in other areas of innovation, the products that eventually reach the mar­ket place, their public benefits and their commercial prof­itability depend on a complex set of interactions between scientific developments and industry strategies, policies to promote and to regulate innovation and market opportuni­ties, public and stakeholder attitudes and desires.
     This subchapter illustrates interactions between public risk regulation and innovation, although national regula­tory systems and international protocols are inevitably influ­enced by public and stakeholder pressures. From the broad range of public regulatory actions applied on agriculture and food systems, this subchapter takes two examples: pesti­cide regulation and regulation of genetically modified (GM) crops including intellectual property (IP) rights protection. The examples consider the links between these regulations the similarities and discontinuities in the regulatory systems as they evolved in Europe and the US and the outcomes for the international competitiveness of agriculture on these two continents.

Example 1: Pesticide regulation in Europe and the US
Pesticides are presumptively dangerous under US and also EU laws. Accordingly, each regulatory system establishes conditions under which they can be used without evidence of unreasonable harm to humans or the environment and these become mandatory for users. Scientific analysis of pes­ticide safety has advanced considerably since the 1960s and thus factors that were unknown 40 or 50 years ago are now considered in evaluating pesticide safety.
     More skeptical observers have argued that the regulatory systems that have developed since the 1960s for pesticides have been "reactive" in that the industry and its products are con­trolled by a system set up in response to evidence of adverse, sometimes unexpected, impacts that have been found in prod­ucts. Once a hazard to health or the environment has been demonstrated, new products in development are screened to ensure that they do not give rise to similar hazards. The regulatory system is thus built up slowly as new products exhibit different, sometimes unexpected, hazards. Decisions about the need for and form of, regulation are taken on the basis of the best available scientific evidence and in relation to the relevant costs and benefits (Tait and Levidow, 1992).
     An example of this process is the evidence that ac­cumulated in the 1960s and 70s that commonly used or-ganochlorine insecticides were harming wildlife (Moore, 1987). Thereafter, regulations were introduced to ensure


that chemicals which were highly persistent in the natu­ral environment (previously seen as a desirable attribute) would not be approved for use. Potential persistence in the environment then became a reason to reject a new pesticide from the research and development pipeline at a very early stage. A more recent example was the appearance of pesti­cide residues in drinking water in the EU. Consequently, the Drinking Water Directive (Council Directive on the Quality of Water intended for Human Consumption, 80/778/EEC) prohibited the use of any pesticide, residues of which ap­peared in drinking water at a concentration of greater than O.lug per liter. High mobility in soils, seen as an indicator of the potential of a chemical to reach drinking water supplies, became a reason for early rejection of a chemical from the product development pipeline.
     This intensification of pesticide regulation has contin­ued to the present day, although many other regulatory and policy areas have been subjected to de-regulation initiatives with a view to encouraging industry competitiveness. This has created a barrier to entry for small companies on the pesticide sector. Some interesting contrasts in impact on in­dustry strategies can be found, however, between Europe and the US. The US Food Quality Protection Act (FQPA) 1996 had, according to interviews with agrochemical indus­try managers, fundamentally changed the way companies respond to regulatory signals from the US Environmental Protection Agency (EPA) in the regulation of pesticides (Yo-gendra, 2004; Tait et al., 2006). The new safety standard— reasonable certainty of no harm—that is required to be applied to all pesticides used on food crops is linked to a sys­tem which expedites the approval of safer pesticides (www. epa.gov/oppfead1/fqpa) on a "fast track" basis creating a new competitive advantage as an incentive for development. Such instruments selectively enable some companies (those that have such products in their development pipelines) to gain a competitive advantage over others and can in a very short space of time alter the behavior of a whole industry sector in a positive direction.
     In contrast, the European Drinking Water Directive (80/778/EEC) regarded all new chemical entities as equally hazardous. For an example, while one member of the stro-bilurin fungicides group with a favorable environmental and health related profile was the first product to be registered under the FQPA fast track system, this group narrowly es­caped rejection at an early stage of product development because of the mobility in soils and hence the danger of fall­ing foul of the EC Drinking Water Directive. The regulatory systems currently in operation reflect accumulated evidence over decades as we have learned more about the hazards of different classes of chemicals and removed some chemicals from approved lists, opening up opportunities for companies to develop new products to fill particular market niches.
     In   considering  the   interactions   between   regulatory systems and agrochemical company innovation strategies, the highly onerous regulatory demands on companies de­veloping new pesticides have created a barrier to entry for small companies that might attempt to compete with the in­cumbent multinationals which has been increasing steadily since the 1970s. This means that, in the pesticide sector, there have been no innovative small companies developing products which could compete with the strategies of mul-