2 August 2002

UShypocrisy over aid policy lashed in Europe

By Philip Clarke

Europe editor

EUROPEAN farmers have attacked the "unprecedented hypocrisy" of new US plans for liberalising world markets at a time when Washington has just boosted subsidies to its farms by billions of $s.

The proposals, unveiled at a meeting of farm ministers from the EU, US, Japan, Canada and Australia last weekend, call for a reduction in import tariffs on food from a world average of 62% to a maximum 25% by 2010.

It also demands a sharp cut in trade-distorting subsidies, including price support, to just 5% of a countrys agricultural output and the elimination of export subsidies over the same period.

"We need to level the playing field by reducing and eliminating the unfair trade barriers that not only hurt our farmers, but other countries around the world," said US agriculture secretary Ann Veneman.

In particular, she points to the fact that, under the terms of the last GATT round, the EU can spend up to $60bn on trade-distorting support, while the US, with a similar agricultural output, is only allowed $19bn. In addition the EU is allowed to spend $20bn on so-called "blue box" measures, such as area aid and headage payments, which the US also wants to eliminate.

But EU farmers group COPA has accused the US of "unprecedented hypocrisy". "Just a short time ago, the multi-billion $ US Farm Bill introduced a guarantee for American farmers that amounts to the highest level of support per farm in the world," said president Gerd Sonnleitner.

EU farm commissioner Franz Fischler has also voiced his opposition to the US proposals, which have been submitted to the World Trade Organisation in Geneva as its opening gambit in the new round of trade talks.

"My initial impression is that they are unbalanced. They require a great deal more effort from other countries than from the US," he said. "They require the elimination of export subsidies while avoiding any real commitment on trade-distorting export credits or on abuse of food aid the US uses. It is also hard to see how this proposal adds up with the US Farm Bill."

But the US is adamant that the new package is consistent with its WTO obligations and will not break the $19bn limit on trade-distorting supports.

The EU is not so sure. It believes that, as US production rises and world prices fall, the US will have to increase its counter-cyclical spending, a key component of the Farm Bill.

It also rubbishes the US claim that it is only allowed up to $19bn, while the EU can spend $60bn. It points out that EU spending is already well below this ceiling and falling, while US spending is increasing. And the EU has to spread the money among 7m farmers compared with 2m in the US.

But Australian agriculture minister Warren Truss welcomed what he saw as "a genuine attempt by the US to engage in liberalisation.

"The pressure is now on the EU to come out with similar constructive negotiating proposals." &#42