Farm export subsidies to be cut

15 November 2001

Farm export subsidies to be cut

By Philip Clarke, Europe editor

EXPORT subsidies on agricultural goods are to be reduced – though not necessarily eliminated – under a new round of world trade talks.

Known as the Doha Development Round, the multi-national negotiations are scheduled to last three years.

Trade ministers from 142 countries launched the new trade on Wednesday (14 November), following six days of talks in Doha, capital of Qatar.

As expected, agricultural export subsidies proved one of the main sticking points as delegates tried to find an acceptable form of words.

Most countries want a commitment to “reductions of, with a view to phasing out, all forms of export subsidies”.

France and Ireland in particular said the words implied that eliminating export subsidies is the pre-determined outcome of the negotiations.

The European Union will need export subsidies to bridge the gap between EU prices and world prices, even after the Agenda 2000 reforms.

As a compromise, a final text from the World Trade Organisations meeting included the words “without prejudging the outcome of the negotiations”.

This effectively means the main protagonists – the EU, USA and the Cairns Group of south Pacific countries – can continue haggling for years to come.

In return for a “concession” on export subsidies, the EU is pressing its demand for “non-trade” issues to be considered in future trade talks.

This will make it easier to reward farmers for environmental services, bolster food safety and protect specialist products from cheap imitations.

The agreement also calls for “substantial improvements in market access” and “substantial reductions in trade-distorting domestic supports”.

EU farm commissioner Franz Fischler described the launch of the new trade round as “a slap in the face for isolationism”.

The free world prefers trade to terrorism, he said.

Depending on the extent to which export subsidies have to be cut, the EU may have to reduce support prices further and increase direct payments.

This wont start to bite for at least three years, although the EU must adjust to take in low-cost producers from central and eastern European countries.

As well as agriculture, the Doha round will also focus on liberalising trade in the service sector and reducing industrial tariffs.

US president George Bush said the deal had “the potential to revitalise the global economy”.

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