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EU offers to drop subsidies on farm exports

The European Union's top trade negotiators proposed Monday that rich nations, including the United States, Japan and Canada, drop all forms of subsidies on farm export products.
/ Source: The Associated Press

Aiming to boost world trade talks, the European Union offered Monday to drop billions of dollars in subsidies on farm exports — but only if the United States, Japan, Canada and other rich nations make similar concessions.

EU trade commissioner Pascal Lamy said the EU was ready “go the extra mile” to get a midterm deal by July at the World Trade Organization.

“We are ready to show flexibility,” Lamy told reporters. “Everything is on the list, everything is on the table.”

But he added a further dismantling of EU export subsidies would depend on a “mutual disarmament” from other key agricultural exporters like the United States, Australia and Canada.

U.S. trade representative Robert B. Zoellick in Washington welcomed the EU announcement and expressed cautious optimism about prospects for a deal.

“We are beginning to see the shape of a foundation upon which to build in the coming weeks and months,” he said.

With a key WTO ministerial meeting on Thursday in Paris, Lamy and EU agriculture commissioner Franz Fischler sent a letter to all 147 members of the WTO outlining three areas where the 25-nation trade giant was willing to compromise.

It said the EU would cut “all export subsidies” on condition Washington and others do the same with their farm support programs.

The EU wants Washington to do away with subsidized export credits on farm products, and the practice of buying farm surpluses to provide food aid for poor countries.

It also pointed to Canada’s monopolistic marketing of crops though its wheat board, which regulates production and prices.

“Our American, Australian or Canadian partners have to make clear that they will fully match the EU on the forms of export support they use,” said EU Farm Commissioner Franz Fischler.

Zoellick noted Washington “already offered to eliminate U.S. export subsidies” and would agree to negotiate “a parallel elimination of the subsidy element within export credits, and to negotiate disciplines on food aid to preclude displacement of commercial sales.

“We look to others to show a similar spirit by stating their willingness to end monopolies in state trading enterprises and differential export taxes,” he added.

Lamy also suggested a special trade package for the WTO’s 90 poorest members and expressed willingness to compromise on other issues, including competition rules, investment and government procurement policies.

With elections in the United States looming in November, and the current European Commission term set to expire in October, Lamy said it was time to push ahead at the Paris meeting.

“We have a window of opportunity which a number of us want to take advantage of,” Lamy said. “We want to be more open, simpler and clearer.”

Agriculture is the major stumbling block in the WTO trade round, which is already months behind schedule. WTO members have set themselves a deadline of July to agree on the framework for negotiations, including the formula for tackling agricultural tariffs.

The so-called Group of 20 developing countries, led by Brazil, South Africa and India, have long demanded the EU and the United States get rid of the what they see as unfair subsidies.

Lamy said the EU has already moved to slash export subsidies to 3 billion euros ($3.5 billion) a year from as much as 15 billion euros a year over a decade ago.

The international relief organization, Oxfam called for the EU to act unilaterally and set an example.

“If the EU is serious about showing real leadership in a genuine development round, these concessions should not be made conditional on progress in market access and domestic support, and should not require reciprocal action by the U.S.,” said Jo Leadbetter from Oxfam.