23 November 2001

Dangers ahead after Doha deal

The new

WTO trade

round

launched in

Doha last

week is

intended to

boost world

trade and

prosperity. But for farmers in

the EU it also contains

many dangers, as Europe

editor Philip Clarke explains

LIKE all good deals, the one reached in Doha last week to launch a new world trade round seemed to contain something for everyone.

For the developing countries there were specific commitments to improve market access for a range of agricultural and industrial goods and services.

For the Cairns group, there was agreement to work towards the eventual elimination of agricultural export subsidies, even though this may not be achieved in one go.

For the US, teetering on the brink of recession, the launch of the new trade round was a reward in itself.

And for the EU, there was the satisfaction of adding certain "non-trade items", such as animal welfare and the environment, to the list of subjects to be covered by World Trade Organisation rules.

But what was in it for farmers? At first sight, little appears to have changed. International negotiations on agriculture have been underway in Geneva for the past 18 months anyway, as required by the last GATT agreement.

But the new declaration does move things on. It spells out more clearly what the aims are, demanding "substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidy; and substantial reductions in trade distorting domestic supports".

Firmer timetable

Furthermore, it sets a much firmer timetable, giving the 143 WTO member countries until late 2003 to make specific offers on how far tariffs and subsidies are to be cut, and until January 2005 to agree them. The changes will then be phased in, probably over the following five years.

The inclusion of "non-trade items" also adds a new dimension. Although it is early days yet, the Doha text paves the way for things like direct payments to EU farmers for meeting higher environmental and animal welfare standards.

It could also deliver a system of mandatory labelling, to help consumers recognise products from areas of the world with lower standards – though this is expected to be fiercely resisted by other WTO signatories.

The biggest target, however, remains the EUs system of export subsidies. Even though negotiators managed to avoid a commitment to eliminate them altogether by the end of the Doha round, that will still be the number one aim of many countries during the course of negotiations.

To some extent, these refunds have a limited shelf life anyway.

Agenda 2000 set the ball rolling, with its systematic cuts in support prices. For cereals this has already made export subsidies effectively obsolete, as EU grain is able to hold its own on world markets unaided.

But the commission, plus a number of "reformist" member states including the UK, wants to go further in areas such as beef, dairy and sugar, which still rely on export aid.

The prospect of EU enlargement from 2004 is a major spur. Brussels simply could not afford to dispose of the surpluses an expanded Europe would generate at current levels of export subsidy.

Balancing the books will require further cuts in support prices, which in turn will mean larger direct payments if farmers are not to lose out.

Sustained attack

These aids are currently protected by the so-called "blue box" agreed under the last GATT round. But, despite EU claims that they are non-trade distorting, they will inevitably come under sustained attack as the Doha round unfolds.

This in turn will put pressure on the EU to shift more of its resources from direct aid to the so-called "second pillar" of rural support, including environmental, organic and woodland schemes. Experience has already shown that this leads to less money in farmers pockets.

There is still a long way to go. But for farmers, it seems, the Doha accord contains many dangers. &#42