/javascript" src="../static/js/analytics.js"> CalTrade Report - US Is Only Moderately Thrilled by Europe's Farm Reforms farm subsidies, USTR, European Union - US Is Only Moderately Thrilled by Europe'../">CalTrade Report Asia Quake Victims The US is giving only polite applause to the European Union's measured overhaul of the hugely expensive agricultural subsidy program that Washington has blamed for major distortions in the global trade in agricultural products. - The US is giving only polite applause to the European Union's measured overhaul of the hugely expensive agricultural subsidy program that Washington has blamed for major distortions in the global trade in agricultural products. - US Is Only Moderately Thrilled by Europe's Farm Reforms farm subsidies, USTR, European Union - US Is Only Moderately Thrilled by Europe'../i/shim.gif


Tuesday, June 13, 2006


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US Is Only Moderately Thrilled by Europe's Farm Reforms

French agricultural workers union claims the EU has abandoned the assurance of farmers? incomes.?

WASHINGTON, DC - The US has reacted with polite applause to the news that the European Union has overhauled its hugely expensive agricultural subsidy program, reports the Agence France Presse.

European farmers had long resisted changing the program, which was introduced in the 1950s to make Europe self-sufficient in food after the devastation of World War II virtually destroyed the continent's capacity to feed itself.

However, pressure mounted to reform the system before the EU takes in 10 new members next year because the cost of subsidies to farmers in countries such as Poland would strain EU resources.

In reforming the system, European ministers broke a four-decade link between agricultural production and subsidies, which the US and Canada had blamed for massive surpluses of butter and grain dumped on world markets.

But breaking the link between subsidies and farm production could inject life into stalled global trade talks, which World Trade Organization ministers must confront in Cancun, Mexico, in September, policymakers told the news service.

"Today's decision by the EU to reform its Common Agricultural Policy is a necessary step forward that we hope will provide a useful impetus to the WTO negotiations," said US Trade Representative Robert Zoellick.

European officials had to surrender ground to get a deal on reforming the more than 40-year-old Common Agricultural Policy (CAP), which consumes $51 billion a year, or fully half the entire EU budget.

In a sop to France, EU member states can wait until 2007 before completely dropping the subsidies if they fear that farming might be abandoned in disadvantaged areas.
And the subsidies will only be partially "decoupled" from production levels, rather than the complete severance of the link sought by EU Agriculture Commissioner Franz Fischler.

"Today is the beginning of a new era," Fischler said, pledging that European "consumers and taxpayers will get more for their money."

He urged the US to match the EU by reforming its own "highly distorting" agricultural subsidies. "We expect others to respond in kind. Now it's up to others to do their homework and I don't see them studying very hard."

The EU worries about the farm bill President Bush introduced last year that would authorize $180 billion in spending over the next 10 years, a $73.5 billion increase over existing programs.

?"We hope that the compromises that altered the original Commission proposal do not limit the EU's ability to contribute to global reform in agriculture," Zoellick said.
The next "critical step" for Europe is to make proposals in key areas that the WTO had agreed to tackle during a ministerial meeting in Doha, Qatar, in late 2001, he said, adding that the core reforms call for lowering trade-distorting domestic supports, eliminating export subsidies, and improving market access by cutting tariffs.

The Doha Development Agenda, he said, "offers the world a once-in-a-generation opportunity to spur economic growth and development."

"There is a broad consensus among WTO members that reforming global agricultural trade is key to Doha, because of agriculture's vital importance to so many countries, particularly developing countries," Zoellick said.

Canadian Finance Minister John Manley said the Europeans "must do more."
"We're not there yet," he told reporters at a lunch with business leaders in New York.

Manley took the opportunity to take a backhanded swipe at the US.

"The tendency to subsidize by the US and EU - which we believe is in great excess compared to what Canada does - needs to be addressed," he said.

"We will be encouraged by any positive developments but there needs to be real change and a real reduction in the level of subsidies."

Jean-Michel Lemetayer, head of the French farmers union FNSEA, accused the EU of "abandoning assurance of farmers' incomes."

German farm groups estimated that the reforms will cost their members $1.14 billion to $2.3 billion a year.

Oxfam, the international development organization, complained that the reforms did not go far enough. Many organizations say the EU's subsidized food exports to Africa have prevented African farmers from expanding their own production.
"They will not stop [the EU from] exporting at prices below the cost of production, destroying the livelihoods of farmers in poor countries," the group said in a statement reacting to the reform measures.
The reforms were announced after extensive talks led to a compromise between pro-subsidy France, Spain, and Ireland and reformists led by Britain and the Netherlands.
According to the EU farm officials that negotiated the reforms, the measures also impact subsidies that can be withheld if farmers violate food safety rules, animal welfare and environment protection.

In addition, more money will go to rural development, improvements to food quality and protecting the environment, while limits will be placed on subsidies to the biggest, richest farms, which have previously received most handouts.

The EU will reduce the amount it pays farmers to prop up prices of butter, powdered milk and cereals when market prices fall below minimum levels.

The officials said the reforms would bolster the bloc's position in September's world trade talks in Cancun, Mexico, by neutralizing long-standing criticism of overproduction and dumping of foodstuffs on world markets.

The bloc's farm budget is fixed around current levels until 2013, they said.

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