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TRADE: EU Farm Disputes Put Brakes on Doha Round

Gustavo Capdevila

GENEVA, Jun 20 2003 (IPS) - The repeated breakdowns in the European Union’s efforts to reform its Common Agricultural Policy (CAP) are keeping the entire multilateral trade system on edge and could stymie the Doha Round of international trade negotiations.

For the second time in two weeks, the EU agriculture ministers adjourned – without reaching an agreement – discussion of a proposal by the bloc’s Agriculture Commissioner, Franz Fischler, for ”decoupling” farm subsidies from production levels, and instead issuing direct payments to farmers to be used for rural development.

This reform, which would cut European farm spending and reduce the practice of exporting farm commodities at prices below production costs (known as dumping), is exactly what EU Trade Commissioner Pascal Lamy is looking for.

The EU farm subsidy system costs over 50 billion dollars a year, nearly half the bloc’s annual budget.

Lamy said Friday in Geneva that alterations of the CAP, the set of standards that regulate the EU’s farm-related expenditures and other agricultural areas, would improve the bloc’s negotiating capacity at the World Trade Organisation (WTO).

The Doha Round of trade talks, launched in November 2001 by the WTO ministers meeting in the Qatar capital, in large part revolve around the liberalisation of farm trade, a sector in which the process lags far behind that of the two other key trade areas, manufacturing and services.

The Doha agenda includes other important issues, such as poor countries’ access to medications, special and differentiated treatment for less-developed economies, and the implementation of agreements pending from previous rounds, mostly to the benefit of the countries of the South.

But the stakes involved ensure that agriculture is at the centre of the debate.

Mark Vaile, Australia’s trade minister, voiced the opinion of many when he said that without progress in farm trade talks, ”there can be no Doha Round.”

The message is clear from all fronts that agriculture is essential for progress in the negotiations, said Peter Allgeier, deputy U.S. trade representative, ”and the group that holds the key is the European Union.”

Lamy recognised that a serious battle is underway in the EU about the PAC reforms, and described a climate of nervousness and vehemence in which people are fighting to defend their demands for compensatory prices.

Nevertheless, the trade commissioner remains optimistic. He told the Friday press conference in Geneva he is confident an agreement will be reached, although anyone can see it is a ”painful process”

”The substance is more important than the timing,” he said.

Sources from the EU farm ministers meeting, which lasted until late Thursday in Luxembourg, said French President Jacques Chirac stepped in and requested the meeting’s adjournment, reportedly so it would not drag down the EU Summit of heads of government, underway in Greece.

Chirac would likely reject the proposed PAC changes because they conspire against the national interests of his country. France fiercely defends the practice of subsidising the agricultural sector.

U.S. official Allgeier believes it is essential that the CAP reform being discussed grant the EU enough flexibility to allow the WTO farm talks to move forward.

The status of those negotiations will be under scrutiny at the WTO ministerial conference to take place Sep. 10-14 in the Mexican resort city of Cancún.

All of the deadlines in the Doha Round negotiation agenda have come and gone without concrete progress in any area.

Representative from the group of 20 to 30 countries that tend to play leading roles in matters at the WTO will gather on the weekend at the Egyptian resort of Sharm-Al-Sheik to try to dig the process out of the quagmire.

Another smaller ministerial meeting, also informal, is slated for late July in the Canadian city of Montreal, with the aim of re-energising the Doha Round.

The EU farm ministers, meanwhile, are to take another stab at the CAP reforms next week.

Beyond the obstacle that the agricultural subsidy debate pose for the WTO talks, the issue of the poor countries’ access to essential medications is proving to be a thorn as well.

Lamy blamed the United States for the lack of consensus within the WTO to recognise the right of poor countries to enact legislation on drug patents authorising production or imports of generic medicines in case of public health crisis, such as for HIV/AIDS and malaria.

The U.S. trade delegation vetoed in December the text of a resolution that was backed by the rest of the WTO member states and would have resolved the matter of drugs access for poor nations.

Despite Lamy’s guarded optimism, trade negotiators warn that failures to reach agreement on the agriculture and health issues could be the demise of the Doha Round and the Cancún ministerial conference.