EU Hammered on Farm Subsidy Stance
Criticism comes on the eve of the latest Doha Round of critical trade talks in Hong Kong
BRUSSELS, Belgium - 12/12/05 - With the latest Doha Development Agenda trade negotiations scheduled to begin tomorrow in Hong Kong, the European Union is under fire from all sides to dismantle or, at least, significantly dilute what many of its trading partners charge is its trade-distorting farm subsidy mechanism.
The contentious subsidy issue remains the key to unlocking progress in the parallel negotiations for opening markets in manufactured goods and services.
The European Union "must find a way to lower agricultural tariffs sharply if World Trade Organization (WTO) negotiations ever are to succeed, said US Trade Representative Rob Portman said at a recent press conference in Washington, DC.
"We would hope that the EU would meet its responsibilities," he said, "and if that requires stretching the existing mandate, that's fine. If it requires a new mandate, that's fine. But the point is they need to step up, they need to do what's required in order for the Doha round to be successful."
The negotiations also known as the Doha Round - have languished almost since they were launched in 2001 over politically difficult agricultural trade issues.
In October, the US submitted a new proposal for sharply cutting agricultural tariffs and domestic support payments to farmers by 60% and its tariffs by up to 90%.
The EU responded with what it called a "bottom- line" offer and its deepest-ever cuts in European agricultural import tariffs in a bid to induce other negotiators to move on with the rest of the WTO agenda.
The US and Brazil have rejected the proposals, which would lower the average EU farm duty to 12% from their current 23% level, as "too modest."
Oxfam International, the UK-headquartered consortium of 12 independent non-governmental organizations (NGOs) is also taking shots at the EU over the agricultural subsidy issue.
"In the UK, in Germany, in France, in Spain, the level of farm subsidies and the amount of subsidies for farmers do not go towards protecting the environment, or small farmers or the European countryside," said Oxfam spokesman Louis Belanger recently, adding that "the bulk of the subsidies goes to large agro-business, we've proven that in five member states."
Malaysia's outspoken trade minister has also slammed the European Union for stalling progress in global free trade talks and said the WTO summit in Hong Kong could turn into nothing more than a shopping trip for delegates attending the meeting.
Rafidah Aziz has urged the EU to concede to widespread demands for it to make deeper cuts to farm tariffs beyond the levels it laid out in its October proposal so that the 148-member WTO could strike a trade deal.
"Everyone talks about moving forward but you can move an inch or a yard. We want a yard," she told reporters on the sidelines of a regional business conference here.
"But if the EU doesn't change its position, then Hong Kong will just be a shopping trip."
The latest comments from EU trade negotiators on the growing criticism have offered little comfort.
EU Trade Commissioner Peter Mandelson is reported as saying that the EU could make no further concessions on tariff reductions, although it might be able to move on broadening the number of sensitive products that would be exempt from trade liberalization.
The EU, he said, "will 'flesh out' its offer to cut farm tariffs and aid…but cannot go further until more work on industrial goods and services is more complete, EU Trade Commissioner Peter Mandelson.
Mandelson has said he would be "open'' to making the EU's October offer "more interesting" to other negotiators in Hong Kong, though he's now at the "outer limit" of his mandate and has been given no signals from any of the EU's 25 members that they want him to make a new offer.
According to some press reports, officials in Brussels fear that whatever happens in Hong Kong, the EU may become the political scapegoat, blamed by all sides for rejecting what it firmly believes would be irresponsible reforms and what some are calling "pure Brussels bashing."
"People think of Europe's agricultural policy as a policy of the 1970s and 1980s, where there were butter mountains and wine lakes and we had all those problems," Michael Mann, a spokesman for the European Commission's Agriculture Panel said recently.
"That is the past, we have now reformed the policy. And I would really like to firmly rebut this idea that we're the bad guys. I mean, we seem to have that role, unfortunately. But I would say that is absolutely not the case," he added.
The Hong Kong meeting is likely to produce a package of "trade capacity building measures" aimed at helping the 49 poorest, least-developed countries integrate into the global trading system, said USTR Portman.
Providing real market access to developing countries "would do more for development than all of the checks that our governments can write for trade capacity building ... or even for aid," he said.
"If the developed countries can open their markets more to agricultural goods and developing countries can open their markets to manufactured goods and services, that is ultimately where the agreement is to be found," concluded Portman.
Washington has pressed hard for conclusion of the Doha Round by the end of 2006, to give the US Congress enough time to consider any negotiated agreement before the president's trade promotion - or so-called fast track - authority - expires in July 2007.
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