17 May 2002

EUand USset for trade clash

By Philip Clarke

Europe editor

EUROPEAN and US negotiators are preparing for another trade clash, this time over oilseed plantings under the 1993 Blair House agreement.

The EU maintains that, with area payments for oilseeds set at the same level as cereals from July this year, the subsidy is no longer "crop specific". As such, the 4.93m ha (12.19m acre) maximum guaranteed area (MGA), above which aid is scaled back, no longer applies.

"Weve always said that under Agenda 2000 we would no longer have to take plantings into account," said one EU civil servant. "Blair House may continue to exist, but the aid is not crop specific."

This is challenged by the US which says that, even though the oilseed aid has been brought down to the cereal rate, producers still have to grow oilseeds to claim it.

"Blair House was written into the Uruguay round of the last GATT agreement," said US agricultural councillor in Brussels, Mary Revelt. "The MGA was bound in that agreement and the EU is obliged to honour it. The only way to unbind it is to renegotiate and our position is that it stays."

But the commission source said the EUs case was strengthened by the fact that small producers operating under the simplified scheme are already excluded from the plantings calculation because they receive a single area payment.

"We accept that for non-food oilseed crops the existing limit of 1m tonnes of soya meal equivalent by-products will continue to apply, as that is a specific condition of Blair House."

Some observers suggest the arguments are academic as EU plantings have fallen well short of the MGA for the past three years, at around 4.5m ha (11.1m acres).

But Brussels says this could change quickly, with cereal prices looking depressed for 2002, oilseed production still evolving in parts of the EU and demand for non-GM vegetable proteins set to increase.

Merchants body COCERAL believes the prospects of the US mounting a challenge have increased significantly since President Bush signed off the new multi-billion $ US farm bill. This will give a boost to soya production and Washington will be keener than ever to protect its EU market share, said a spokesman. &#42