BRUSSELS, Belgium (AP) - The European Union's head office wants to allow foods with trace amounts of genetically altered ingredients to escape new labeling requirements, an idea criticized Monday by some politicians and consumer groups.

The proposals, to be taken up by the European Commission on Wednesday, would expand tracing and labeling requirements as part of a push to end the EU moratorium that has angered U.S. exporters and hamstrings European biotech companies.

However, one article in the draft would exempt products that may have picked up trace amounts of genetically modified material during harvesting, transport or processing.

The exact level has yet to be determined but may be "no higher than 1 percent," according to the draft seen by The Associated Press.

Producers also must be able to show that the traces were "technically unavoidable," and the material must have been approved in a third country for use in food.

German Environment Minister Renate Kunast attacked that idea Monday during a visit to Brussels, insisting the current system of "zero tolerance" was the safest course.

EU officials call that an impossibly unrealistic goal in today's mechanized food-processing industry.

The United States currently does not require any labels for products with gene-altered ingredients.

But genetically modified organisms, or GMOs, are highly unpopular in Europe, where they are often referred to as "Frankenstein foods" in news headlines.

Despite assurances from producers, surveys show most Europeans see them as a health hazard, and recent scares about mad cow and foot and mouth diseases have only heightened sensitivity to food safety.

The Commission's proposed new rules for GMOs would tighten regulations in one area to require labeling even if genetically altered material can no longer be detected.

Current regulations do not require labeling in cases such as, for example, where oil made from genetically altered corn or soybeans is used for cooking another product and the proteins and DNA are broken down by high temperatures.

EU Health Commissioner David Byrne is backing labeling in such cases despite resistance from industry groups, according to an EU source who spoke on condition of anonymity.

"It's the only way we think consumers will have confidence," the source said.

Jim Murray, director of the European Consumers Organization, called the proposals "overall a good thing," although he expressed hesitancy about allowing trace amounts of GMOs to go unlabeled.

"We're prepared to look at it," he said, adding that a final judgment depended on how the proposal develops when it is sent to the European Parliament and national governments for approval.

That process will probably take a year or more, meaning no new rules until 2003 at the earliest.

The Commission's proposals are intended to implement rules approved in February by the European Parliament that would enable the lifting of a 3-year-old moratorium on approving new GMOs in Europe.

Commission officials say the ban has led to Europe's biotech industry falling behind that of the United States and exposed the EU to industry lawsuits.

However, several EU governments want provisions in the new rules to hold GMO makers liable for any damages they may cause to public health or the environment with such organisms.

That means the moratorium may well remain in effect, since EU governments would have to sign off on any new product the proposed new European Food Agency clears for approval.

Those who remain opposed - France, Italy, Denmark, Austria, Luxembourg and Greece - have enough votes to block them.

Copyright 2001 The Associated Press. All rights reserved.