Export subsidies on the way out after WTO deal

Agricultural export subsidies, used by the EU to make its food more competitive on world markets, are to be eliminated by 2013 as part of an agreement at the recent World Trade Organisation talks in Hong Kong.

Under the accord, reached after six days of negotiation, it was also decided that the process should be “front-loaded”, with steeper cuts in the early years.

The deal was seen as an important step towards completing the Doha Development Round by the end of 2006.

“We have managed to put the Round back on track,” said WTO director general Pascal Lamy at the close of the meeting.

But little progress was made on the more vexed questions of reducing trade-distorting domestic supports and opening up agricultural markets.

The Hong Kong declaration got as far as agreeing that this should involve a “tiered” approach, with the highest supports and tariffs facing steepest cuts.

The level of cuts and the time-scale for achieving them – the “modalities” – have yet to be agreed.

The 150 WTO members meeting in Hong Kong set themselves the target of April 2006.

The agreement on export subsidies did include a provision that there should be “full parallellism” in controlling other forms of export assistance – one of the EU’s key demands.

For example, the export credits favoured by the USA should be limited to a maximum of 180 days and should be self-financing.

EU farmers’ leader Rudolf Schwarzbock of COPA said the deal reached was “incomplete and one-sided”, representing another move by the EU towards meeting its WTO partners’ demands, with little in return.

For British and EU farmers, the loss of export subsidies will put more pressure on prices – especially in the beef and dairy sectors which rely heavily on this assistance.

Irish Farmers’ Association president John Dillon condemned the whole Hong Kong package, saying it did not contain a single upside or opportunity.

It could result in the loss of 50,000 jobs in rural Ireland.