World trade ministers are meeting in Geneva this weekend in another attempt to secure a deal in the ongoing Doha Development Round of trade talks.
Their aim is to finalise the so-called “modalities”, setting the actual level of cuts in domestic farm supports, import tariffs and export refunds, ahead of their self-imposed end-July deadline.
If successful, the consequence would be a further opening of EU markets for foreign food imports and a loss of competitiveness for exports.
Both would put downward pressure on farmgate prices.
Ahead of the meeting, fears were mounting that EU trade commissioner and chief negotiator Peter Mandelson would give too much away, exceeding the mandate given to him by heads of state.
This could lead to further reforms of the CAP, beyond what was agreed in 2003.
Earlier this week Mr Mandelson indicated that the EU was prepared to make more concessions on market access, beyond what was contained in its formal offer to the WTO last October.
That would have seen the EU cutting its top tariffs (for products like beef, dairy and sugar) by 60% and all tariffs by an average 39%.
Not far enough
But that does not go nearly far enough for the USA, which is seeking 90% cuts for the highest tariffs and 66% on average.
Other areas of dispute include the extent to which the USA reigns in its domestic supports and the disciplines applied to food aid and export credits.
Farmer groups are increasingly concerned at the direction the talks are taking.
A consortium of 41 organisations from around the world, including EU farmers group COPA and the US National Farmers Union, this week wrote to the WTO warning of the “huge damage” the proposals would do, both in rich and poor countries.
“We want an agreement which recognises the rights of countries to develop their farming sectors in a way which meets the concerns of their citizens about food security and safety, as well as the environment, animal welfare and rural life.”
NFU chief economist Carmen Suarez said the main concern was market access.
“We know we will face more imports.
What we don’t know is how much we will have to cut tariffs, what flexibilities there will be with respect to sensitive products and how quickly the cuts will apply.
Nowhere in the latest draft paper is there a mention of a timeframe.”
On domestic supports, she said the 2003 CAP reform should accommodate any subsidy cuts agreed in the WTO.
“But it is very important that the USA, and others, apply more discipline to their programmes, especially counter-cyclical payments.”
The expectation is that if a deal is reached, it will be close to a proposal from the G20 group of countries, led by Brazil,
which includes an average tariff cut of 54%.