TRADE: EU and U.S. Move Ahead on Farm Talks

By IPS Correspondents Reprint | | Print |

Stefania Bianchi

BRUSSELS, Jul 31 2003 (IPS) - The EU and the U.S. have taken cautious steps towards achieving a common ground on liberalising global farm trade.

The move is a last-ditch attempt to resolve the ongoing row over farm subsidies before the ministerial meeting of the World Trade Organisation (WTO) in Cancun, Mexico, in September.

The two sides have resolved to draft a joint proposal on farm trade as part of the effort to revamp global trading rules in what Franz Fischler, EU Commissioner for Agriculture, called a ”more than respectable offer”.

The draft proposal will be presented August 11 at the WTO in Geneva, where officials from the 146 members will meet in preparation for the September meeting.

During a three-day ‘mini-ministerial’ conference this week in Montreal, Canada, top trade officials from the U.S. and the EU held informal discussions on farm trade disagreements that increasingly threaten to derail the current round of WTO negotiations.

Ministers said the talks had identified more clearly the problems to be resolved and that several governments had indicated they were ready to adopt more flexible negotiating positions.

However, they said they had made no breakthroughs and gaps remained on agriculture and other central issues.

The EU said it was ready to improve on its WTO proposals by reducing its trade-distorting domestic subsidies by 60 per cent. It also offered to eliminate export subsidies on some ‘sensitive’ farm products.

The U.S., meanwhile, said it was willing to respond more fully to EU demands that it reduce agricultural export credits, which the EU says are as trade-distorting as its own export subsidies.

Speaking to journalists after the Montreal meeting, EU Trade Commissioner Pascal Lamy said he believed a compromise could be crafted in time for the Cancun meeting.

”We will try and work on three topics of agriculture, to do that in time for August 11,” referring to the question of domestic subsidies, export subsidies and barriers to farm imports.

Speaking at the closing press conference in Montreal, Fischler said the ministers had made only ”rather timid steps in the right direction”.

”For the first time, we have seen WTO members narrowing down their huge gaps. Admittedly, this was no breakthrough, but rather steps in the right direction. Reason seems to prevail that camping on extreme, unrealistic positions does not lead anywhere.”

Agriculture has emerged as one of the main issues in the WTO talks as exporting countries, such as Brazil, Australia and the U.S., continue to push agricultural importers, including the EU and Japan, for a deeper cut in import duties.

Fischler said that the EU would increase dialogue and ”pro-actively pursue” its talks with the U.S. and insisted that the two ”trading blocks have to lead by example and find common ground”.

He urged other WTO members to follow the EU example saying: ”It is not good enough if the two biggies dance the waltz, in the WTO it takes 146 to tango.”

An EU official said July 28 that the EU proposed to cut its domestic subsidies by 60 per cent as part of its recently reformed Common Agricultural Policy (CAP). The EU was looking for similar moves by the U.S. to respond to that proposal.

EU trade spokeswoman, Arancha Gonzalez, said: ”It’s clear that we now have an extra margin of maneuver, but this is not the EU coming with this big present and putting it on the table. Of course we are ready to move, but we would want to see what the others are putting on the table.”

However, the EU has made it clear that it was unwilling to agree to deeper tariff cuts so soon after reforming its common agricultural policy last month.

Non-governmental organisations (NGOs) have criticised the outcome of the Montreal meeting saying that the EU and U.S.’s proposal does not go far enough.

The international aid agency Oxfam warned that the result of the Montreal meeting bodes poorly for the WTO’s ‘Doha Development Agenda’.

”Evidently, it will take more than pleading to get the U.S. and Europe to give up their unfair trading practices,” said Mark Fried of Oxfam International. ”Defensive measures that effectively counteract continued U.S. and EU agricultural dumping will now likely become a higher priority.”

”Americans and Europeans pointing their fingers at each other will lead nowhere. They are both to blame.”

Earlier this week Fischler said he hoped the meeting in Cancun would lead to drawing up concrete ”modalities”, including numerical targets to lower trade barriers.

”Our preferred option is that we agree modalities in Cancun because this is needed if we would like to finalize the negotiations in due time before the end of 2004,” he said.

In a speech July 28 to a Washington trade association Fischler called on critics to rethink three ”myths” related to the EU’s CAP, rejecting arguments that EU and U.S. farm policies were not harmonised, that recent EU farm reform was ”too little too late” and that it was detrimental for developing countries.

Matt Griffith, a policy researcher for the Catholic Agency for Overseas Development (CAFOD), a development NGO, rejected this claim.

”To say that EU agriculture subsidies are not detrimental for developing countries is just a farce, there is piles and piles of evidence from the World Bank, from the Organisation for Economic Co-operation and Development that European policy is a major cause of distortion on world markets.”

The EU has been under fire from almost all quarters of the WTO to reform its 50 billion euro a year farm subsidies.

In June ministers agreed to reform CAP, cutting some of the links between subsidies and production. However, Griffith says a lot of time and energy has been wasted with some countries blocking any meaningful reform.

”Fischler is in a difficult position; he is having to work hard. he has a weak hand.”

Negotiations will continue at negotiators’ level in Geneva throughout the summer at the WTO headquarters.