Some U.S. meat and dairy producers are finding new reasons to be nervous about their export prospects after federal regulators gave backing this week to food from cloned animals.

The final ruling on Tuesday from the U.S. Food and Drug Administration, which found that food from cloned animals and their offspring poses no special health risks, capped years of debate over the technology.

Proponents say animal cloning, replicating prized livestock that can breed highly productive offspring, is a windfall for consumers. But critics say greater testing is needed and want closer examination of the technology's ethical implications.

Even as the FDA cleared the way for those goods to go to market, the Agriculture Department asked firms to hold off on selling food from clones, but not their offspring, for now.

That ban may postpone, but not eliminate, some agribusiness concerns about how the newly endorsed technology will affect efforts to convince trading partners to ease import restrictions that have kept out U.S. goods for years.

The timing couldn't be worse ... For a million different reasons, this is going to be a sensitive issue, one industry official said, asking to remain anonymous.

USDA estimates that the United States will export 6.6 percent of its beef production in 2008 and 16.2 percent of its pork.

The FDA decision comes as the Bush administration continues to lean on several important Asian nations -- China, Japan and South Korea -- to drop beef import restrictions in place since mad cow disease was discovered in the United States in 2003.

Washington remains mired in a case at the world trade court over Europe's slow approval of genetically modified crops, and another drags on related to European imports of meat from cattle treated with growth hormones. Both technologies are common in the United States.

The U.S. rice industry is still recovering from the accidental leak in 2006 of a then-unapproved strain of biotech rice, which crippled exports.

Canice Nolan, who heads food safety affairs at the European Commission's delegation in Washington, does not expect the new U.S. policy to cause any trade wrinkles with Europe, at least right away with the voluntary ban in place.

Europe is taking its own tentative steps on cloning. Regulators have found food from clones safe, but more steps are needed before sales would be allowed. A European Commission advisory group weighed in on Thursday, saying it doubted that cloning was ethically justified.

CAUTIOUS REACTIONS

Chris Galen, a spokesman for the National Milk Producers Federation, said producers don't want the U.S. to go too far out on a limb in a way that would restrict our ability to sell. That is a common refrain among dairy producers, who export about 11 percent of their production.

Several major food brokers, including Tyson Foods Inc (TSN.N: Quote, Profile, Research), the country's largest meat company, and Smithfield Foods (SFD.N: Quote, Profile, Research), a giant pork producer, moved quickly this week to announce they would shun cloned animals for now.

But Gregg Doud, an economist with the National Cattlemen's Beef Association, does not expect U.S. livestock producers to rush out and buy cloned animals, mostly because of the high cost -- they go for $13,000 and up -- and because existing reproductive technologies seem to work well.

It isn't going to be anything of real commercial value to our industry for a long, long time, he said.

Given the divisions among producers and widespread wariness among consumers, the enthusiastic response from the American Farm Bureau Federation, the biggest U.S. farm group, to this week's decision was surprising.

If they can breed out things like E. coli or mad cow disease ... then all the better, said Russell Williams, who follows biotechnology for the group.

DEVIL IN THE DETAILS

The regulatory details may determine how the newly sanctioned technology affects exporters' bottom line.

Thad Lively, a trade analyst at the U.S. Meat Export Federation, wants to see some sort of verification plan that would provide customers information related to cloning. Cloning companies are setting up a voluntary registry of cloned animals, but it would not track offspring of clones.

To me that's an important question: what are we going to be able to say to customers overseas who want to know (what) they're going to be buying? he asked.

Bruce Knight, USDA's undersecretary for marketing and regulation, said a transition period -- in which older, cloned animals would be voluntarily kept from slaughterhouse -- would give U.S. officials a chance to allay people's doubts.

Trade issues are always complicated, he said.

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