Thumbs Up, Thumbs Down on EU Ag Subsidy ''Final Offer''
Sputtering agricultural negotiations continue to threaten the upcoming December Doha Round
PARIS, France - 11/02/05 - The European Union's most recent offer to cut global agricultural tariffs is "serious and deserved consideration," says World Trade Organization head Pascal Lamy, but USTR Rob Portman defers, saying the US is "disappointed" with the proposal.
"Europe and the United States are moving on farm issues…this is good news," Lamy told France's LCI television in an interview over the weekend.
"It's been a long time that this hasn't happened," he said. "This is what allows the rest of the negotiations to be unblocked."
According to Lamy, last Friday's EU proposal on farm goods - strongly criticized by the US and several other major trading nations - was "a serious offer which merits serious discussions."
The EU is offering to nearly halve its average tariff on agricultural imports to just over 12%.
EU Trade Commissioner Peter Mandelson has said that "Europe's final offer" represented a middle-ground solution for trade talks, but it failed to impress the 25-nation bloc's international trading partners.
But, US Trade Representative Rob Portman expressed "disappointment" with the latest EU proposal during a recent teleconference with reporters.
Portman said that, by US calculation, the EU proposal amounts to an average cut of 39%, far less than tariff cuts proposed by Washington or even by a group of developing countries.
Politically difficult agriculture issues have stalled the negotiations, formally called the Doha Development Agenda, almost since they were launched in 2001 and little time remains before December's World Trade Organization ministerial meeting in Hong Kong.
"We are a little discouraged today by the EU proposal," said Portman. "I believe it is a modest step in the right direction, but I just believe it's inadequate to meet the promise of Doha."
Moreover, he said, other parts of the EU proposal would reduce substantially the benefit of even a 39% cut.
For example, he said, cuts would not have to be made in 8% of EU tariff categories, about 160 "sensitive" products. "So this is a big loophole," Portman said.
The US and G20 have each proposed restricting sensitive product exclusions to just 1%.
Portman cited a World Bank analysis that developed countries must cut their highest tariffs by at least 75% for the poorest developing countries to benefit.
The US proposal would cut the highest tariffs 90%, the EU's only 60%.
The US, Brazil, and Australia have repeatedly demanded more effective concessions, while representatives of several developing African nations have said the EU offer fell short of what was needed to break a deadlock in negotiations.
The EU's Executive Commission in Brussels has been caught between demands for more concessions by trading partners, both large and small, and staunch French opposition to weakening protection for its politically influential agricultural sector.
The head of France's main farm union has called the new EU proposal a "provocation," and said the French government should stand up against it.
"I hope that the [French] government, which has showed a lot of firmness in the last few weeks, will not only threaten the use of its veto, but apply it," said Jean-Michel Lemetayer, head of France's FNSEA farm union, on France's Inter Radio network.
France has lambasted Mandelson over his handling of the trade negotiations, accusing him of making too many concessions and overstepping the negotiating his mandate.
French President Jacques Chirac said last week that Paris might veto a deal "if Brussels
acquiesces any further to the demands of the US and its partners."
Lamy - who previously served as EU Trade Commissioner before assuming his current post earlier this year - has said agriculture was "only one of many subjects" for the trade talks, noting that progress on a farm deal was important but not sufficient.
The trade talks had to succeed, he said, "to adjust global trade regulation to the rules of today's world, and so that this opening of trade happens under fair conditions."
If that does not happen, "it is bad news for trade, and therefore for growth, and for reducing poverty," said Lamy.
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