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Articles: EU Offers to End Farm Subsidies

Posted by admin on Monday, May 10, 2004 - 11:48 PM

Prospects for a global agreement to lower trade barriers got a significant boost yesterday as the European Union offered concessions on some major sticking points, in particular the issue of subsidy payments to farmers.
In a move that drew objections from France, EU officials offered to eliminate European subsidies for exports of farm products as part of the "Doha Round" of international trade negotiations, so long as other nations took comparable steps and lowered tariffs for agricultural goods. "Provided we get a balanced deal . . . we are ready to put all [of Europe's] export subsidies on the table," Franz Fischler, the EU's agriculture commissioner, said in a statement. Pascal Lamy, the European trade commissioner, added: "With today's move, we show we are ready to go the extra mile to ensure we conclude 50 percent of the round by 2004." The announcement was aimed at reviving the Doha Round, which was launched at a World Trade Organization meeting in 2001 with an overall goal of cutting tariffs and reducing other government interference in commerce among the WTO's 147 member nations. The talks, which were originally supposed to be finished by the end of this year, suffered a serious setback last September when a meeting in Cancun, Mexico, collapsed amid rancor between rich countries and developing countries. One of the biggest bones of contention was the farm subsidy programs of wealthy nations, which sometimes help create gluts of certain crops and other agricultural goods, driving down world prices and hurting Third World farmers in the process. The EU initiative does not foretell an end to aid for European farmers; various types of assistance other than export subsidies would be unaffected. Nor does it ensure that the Doha Round will produce a deal. But trade experts said it bodes particularly well for meetings scheduled for July in Geneva that are aimed at producing a "framework" for the negotiations, bringing the round back where it was supposed to be before the Cancun debacle. To further spur the talks, the Europeans formally stated their intention to stop pressing for new WTO rules concerning antitrust policies and investments by multinational companies. Many developing countries had complained they were ill-prepared to administer the proposed rules. "This is very encouraging," said Jeffrey Schott, a scholar at the Institute for International Economics in Washington, because it "removes an excuse that many countries had for not engaging in the negotiations." Numerous hurdles remain, because it is far from clear that the countries that have been complaining about the EU's position are willing to make sufficient concessions of their own. Reaching a deal requires that all WTO members feel they are gaining more economically from the package than they are sacrificing by lowering protections enjoyed by powerful domestic interest groups. In agriculture alone, a number of problems besides the subsidy issue must be resolved, chief among them how countries will cut tariffs and quotas for farm products. Last week, a group of middle-income developing countries led by Brazil and India rejected a joint proposal by the E.U. and the United States. "Negotiators have been trying to advance formulas that cut everyone else's barriers and leave their most sensitive barriers intact," Schott observed. Still, yesterday's EU initiative drew positive reactions from some of the most fervent critics of rich-country subsidies, including Pedro de Camargo Neto, a former top official of Brazil's agriculture ministry. "It is a very important step," he said in an e-mail, adding that "it now shifts the pressure to the U.S." to offer additional concessions of its own. Camargo was the chief instigator of a Brazilian WTO complaint against the United States, which resulted two weeks ago in a preliminary decision that U.S. cotton subsidies violate international trade rules. Many trade experts said that decision would increase pressure on Washington and Brussels to be more flexible in the Doha Round negotiations, but an EU official maintained that the cotton case was not related to yesterday's announcement. U.S. officials also warmly welcomed the EU announcement. "It is a demonstration of the potential of all to contribute to the success of the Doha Development Agenda," U.S. Trade Representative Robert B. Zoellick said in a statement. "I hope this will provide a shot in the arm to the overall negotiations." He noted that he has already indicated a willingness to put all forms of U.S. export subsidies on the chopping block. One dissonant reaction came from France, the biggest beneficiary of the EU farm program, whose agriculture minister, Herve Gaymard, criticized the EU proposal as "dangerous" and a "unilateral concession," according to Bloomberg News. It is unclear how far the French may be willing to go to derail the initiative. But "we are now 25" countries, said Anthony Gooch, spokesman for the EU mission to Washington, referring to the EU's recent expansion. "Obviously a country like France has a powerful voice, but France isn't Europe."

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