The agreement, which still must be ratified by 50 countries before it goes into effect, establishes an international framework for countries to use when making decisions about genetically modified crops.

It also requires, for the first time under an international agreement, labeling of commodity shipments that "may contain" genetically modified foods. But there is no specific requirement that farmers or the grain industry segregate conventional and modified crops, which the U.S. government said could cost billions of dollars.

"On balance, we think this is an agreement that protects the environment without disrupting world food trade," David Sandalow, assistant U.S. secretary of state for oceans, environment and science, told reporters.

European Commission Environmental Minister Margot Wallstrom said the protocol, signed by more than 130 countries, was a victory for consumers and importers and an agreement of which all countries could be proud.

The pact also won praise from both industry groups and environmentalists, who each feared the other would have more influence over the final outcome of a pact on genetically modified organisms, or GMOs.

GMOs SPARK CONCERN

The term "genetically modified organisms" refers to plants and animals containing genes transferred from other species to produce certain characteristics, such as resistance to certain pests and herbicides.

Although any genetically modified organism planted in the United States is subjected to U.S. government testing and approval, some groups feared the new varieties could have adverse environmental and health effects. Many EU consumers, suspicious of genetically engineered crops, favoured blocking their importation.

To reach an agreement, the United States and Canada had to accept stronger language than they wanted recognising the right of countries to use precautions in making import decisions.

With its language on the "precautionary principle," the proposed Biosafety Protocol agreement could set the stage for countries to close their markets to genetically modified crops without conclusive scientific evidence of harm.

At the same time, the agreement also contains a "savings clause," which emphasises the new pact does not override rights and obligations under other international agreements, including the World Trade Organisation (WTO).

The United States, which negotiated along with Canada as part of the Miami Group bloc and therefore does not need congressional approval of the pact, insisted on that language to ensure science-based WTO rules would still apply to import decisions.

If a dispute arises over a country's decision to close its market to a food product, the WTO will review the protocol before making a ruling, Wallstrom said.

U.S. Undersecretary of State for Global Affairs Frank Loy acknowledged the pact had some shortcomings from the U.S. point of view. "Make no mistake. The agreement is not perfect," Loy said.

LABELING WOULD BE NEGOTIATED

Once the protocol goes into effect, which could take two or three years, commodity shipments that may contain GMOs will have to be labeled "may contain" genetically modified organisms.

At that point, a new round of negotiations on more specific labeling requirements will also have to begin, with the requirement of finishing in two years.

Willy De Greef, director of regulatory and government affairs for Novartis, a Swiss-based company that produces genetically modified corn varieties, said the grain industry is already moving toward segregation.