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AGRICULTURE-EU: The Controversy Has Just Begun

Gustavo Capdevila

GENEVA, Jun 27 2003 (IPS) - The agreed reform of European Union (EU) farm policy and its possible influence on the World Trade Organisation (WTO) talks was received with caution by government officials while drawing harsh words of criticism from civil society groups.

The ”shoddy deal” reached by EU farm ministers Thursday only increases the chance of a ”collapse” of the September WTO ministerial meeting in the southeastern Mexican resort town of Cancun, said Barry Coates, director of the London-based World Development Movement (WDM).

The EU agriculture ministers reached agreement on a new policy that revamps the controversial farm subsidies that absorb around 43 billion euros (some 50 billion dollars) a year, nearly half of the 15-nation bloc’s budget.

The reforms, which will redirect subsidies into payments based on the size of farms rather than linked to production levels, was a watered-down version of the original proposal, which would have entailed a complete severance of the link between farmers’ output and subsidies.

The EU Common Agricultural Policy has long been criticised for distorting global trade and hurting farmers in poor nations.

But developing countries should not let themselves be fooled, said political analyst Aileen Kwa with the Bangkok-based Focus on the Global South, who warned that the reforms agreed by the European bloc would have ”grave consequences” for agriculture in the developing world.

Kwa said in Geneva that the EU would make use of the farm policy reform to pressure countries of the South at the WTO meeting in Cancun to keep not only their agricultural markets open, but other sectors of their economies as well, like services, investment, competition, government procurements, and customs procedures.

France, the country that benefits the most from farm subsidies, pressed hard up to the last minute to obtain, with Germany’s support, reforms that contain a number of exceptions as well as lengthy timetables for application.

EU Farm Commissioner Franz Fischler, the main architect of the project that was modified under pressure from France, welcomed the agreement reached in Luxembourg, and said it marked ”the beginning of a new era.”

WTO Director-General Supachai Panitchpakdi described it as ”a work well done,” although he added that ”we need to be able to analyse what is the meaning of all this.”

The ”decoupling of direct payments alone is very valuable,” said Supachai, who preferred, however, not to speculate on how the rest of the WTO members would react.

The EU decision may accelerate the negotiations towards the opening up of trade in agriculture, although ”How far, we can’t tell yet,” Supachai told journalists Thursday.

The overhaul of EU farm policy is ”a step in the right direction,” said Carlos Pérez del Castillo, the chief Uruguayan negotiator and currently the chairman of the WTO General Council, the global forum’s highest-level body when the ministerial conference is not meeting.

However, a deeper analysis is needed to ascertain the effects on the WTO agricultural talks, he added.

Negotiations on the liberalisation of trade in farm products, one of the most heavily protected segments of the global economy, are to conclude by late 2004, according to the agreement reached at the November 2001 WTO ministerial conference in Doha, the capital of Qatar.

But the process has been held up by the profound discrepancies that pit industrialised countries that subsidise farm production and trade against the countries of the South.

Hence, the initial reaction of negotiators in Geneva was circumspect at best.

Argentine representative Alfredo Chiaradia said the true scope of the EU agreement would be seen in the next round of negotiations.

Canadian ambassador Sergio Marchi said the EU reforms were salutary, but added that he could not make a definitive assessment until it was clear what effect they would have on the proposals that Europe sets forth in the trade talks.

Coates, on the other hand, said that ”rather than breaking the log-jam in international trade negotiations at the WTO,” the ”failure to deliver real reform could make a collapse” in Cancun more likely.