TRADE: EU Under Fire Over Doha

By IPS Correspondents Reprint | | Print |

Stefania Bianchi

BRUSSELS, Oct 20 2005 (IPS) - The European Union has come under fire for threatening the progress of the WTO’s “Doha Development Round” of international trade talks by refusing to propose deeper cuts in its farm subsidies.

The European Union has come under fire for threatening the progress of the Doha round of international trade talks.

World Trade Organisation (WTO) members are working on an outline deal this week, ahead of the body’s mid-December ministerial conference in Hong Kong.

Frantic negotiations have been taking place between the leading trade powers in the last few weeks in an attempt to salvage a deal, but progress has stalled over access to the European Union’s farm market.

During trade talks in Geneva on Wednesday, the EU refused to make any new proposals for reducing import duties on agricultural goods, despite increasing pressure from some WTO members to make deeper cuts in its farm aid.

The EU, the United States, Brazil, India and Australia are meeting in a bid to bridge differences that stand in the way of a draft trade treaty for December’s WTO conference, which is considered the last chance for a global trade deal under the current negotiating round, named after the Qatari capital, where it was launched in 2001.

Developing countries condemn U.S. and EU aid to domestic farmers with the argument that the subsidies depress world prices for agricultural produce and make it harder for poorer countries to compete on the globalised market.

EU trade commissioner Peter Mandelson is facing growing criticism from within the European bloc and outside it, with the United States and Brazil pushing him to go further on farm subsidy cuts, while member states such as France, Ireland, Spain, Portugal, Cyprus and Hungary say the trade chief has already gone too far.

These tensions have been simmering since Mandelson put forward plans for cuts in farm aid and trade subsidies.

Last week, the EU offered a 70 percent cut in trade-distorting farm subsidies, largely in line with a reform already agreed by member states, after the United States had outlined a similar offer.

It has also proposed cuts of at least 50 percent in its highest farm import tariffs and reducing the items on its list of “sensitive” goods that it protects the most.

But French pressure not to offer more concessions is preventing Mandelson from going further.

France fears too much has already been given away in principle and wants the European Commission, the EU executive, to take a tougher stance. It formally withdrew its support for Mandelson’s proposals on reducing agricultural trade barriers in a statement from the French farm ministry Wednesday.

The powerful Group of 20 (G20) developing countries is suggesting limiting the number of so-called “sensitive products”, which have higher import tariffs than other farm goods, to no more than one percent of any member’s total, in line with a U.S. proposal.

That would mean that the EU could maintain special protection for about 20 products, but Brussels’ latest offer was eight percent – or about 160 product lines.

U.S. Trade Representative Rob Portman says he hopes to see “much more ambition from the EU”.

However, development groups are also warning that U.S. and EU offers on agriculture will not cut overall spending on farm subsidies.

The non-governmental organisation ActionAid estimates that although the United States currently spends 20.9 billion euros (25 billion dollars) in farm subsidies, it would still give between 19.2 and 21.7 billion euros (23 and 26 billion dollars) in 2008-2012 under the current offer.

Likewise, the EU, which currently spends 64 billion euros (76.4 billion dollars) in domestic farm subsidies, would still give between 55 and 60 billion euros (65.7 and 71.7 billion dollars).

“The U.S. and EU proposals on cutting farm subsidies are an illusion and have only been tabled to gain concessions from poor countries to open up their industrial and services markets,” Tim Rice, ActionAid’s trade policy officer, told IPS.

Aftab Alam, head of ActionAid’s trade justice campaign says their own consultations with WTO delegations from developing countries confirm that the United States and EU are “sidelining” poor countries in the current negotiations.

“Developing countries say this is turning into a market access round rather than a development round. ActionAid believes the current negotiations should be halted and new proposals urgently brought forward to deliver a genuine development trade round,” he added.

CIDSE (International Cooperation for Development and Solidarity) and Caritas International, two global Catholic development networks, say there is a need for a “complete change” in the approach to trade policy to make it deliver on poverty reduction and development.

“It’s all about political will. Under their current mandate, ministers and trade experts are unable to solve the political deadlock, and that’s why negotiations are now stuck in technicalities. Only heads of states and governments can ensure this deadlock will be broken,” they said in a statement Thursday.

The Doha round of trade talks have been progressing at a slow pace since they all but collapsed at the WTO ministerial conference in Cancún, Mexico, in 2003.

WTO members are hoping to get a new global free trade agreement in place for the start of 2006.

The EU and the four countries that met in Geneva Wednesday – Australia, Brazil, India and the United States – were due to be joined Thursday by ministers from six other states, including Canada, Japan and Switzerland.