Pressure on EU to give ground on farming

Date: 23/11/00

By Warren Giles

DESPITE a rash of proposals, policy papers and preliminary talks, concrete progress at the new round of farm trade negotiations in Geneva this year has been thin on the ground.

But at least the negotiating landscape is clear. World Trade Organisation members seeking better market access for their agricultural products and keen to maintain the diplomatic momentum are aware that the EU stands to gain little in return for uncertain rewards in other sectors. But they warn that unless the Union is willing to make wide-ranging concessions in agriculture, there will be no consensus for broader deals.

EU officials counter that if they allow too much progress too soon in the farm negotiations, they will risk undermining the possibility for trade-offs in other areas, such as environmental standards or competition rules.

So far, the Union has proposed repeating the same formula for cutting farm tariffs as agreed at the end of the 1993 Uruguay Round. The European Commission has suggested a further 36% average cut in agricultural duties, with a minimum 15% reduction for particular products. This is clearly only an informal proposal, however, and not a negotiating offer.

The Commission's draft, to be presented next year in Geneva, argues that the seven-year-old formula is an effective and "well-tested" way of making tariff cuts. But opponents argue that the EU is ignoring the failings of this approach, especially since levies for individual products might remain abnormally high.

In contrast, the US suggested a radical formula to tie spending proportionally to farm output in September and the Cairns Group of 18 exporting nations has called for export subsidies to be phased out - a proposal which the EU insists it will only discuss as part of a wider debate about Washington's use of subsidised export credits.

The Union remains on the defensive. In the face of anger among developing countries and accusations of protectionism, it insists that the cost of meeting high animal-welfare and environmental protection standards must be recognised, and there must be respect for the social role of farming.

Rather than attempting to make dramatic progress in a single step, some WTO signatories have suggested working towards a modest agriculture agreement in the next few years, followed immediately by negotiations on a broader spectrum of issues, before launching yet another round of farm talks.

A gradual, continual model of reform, rather than efforts to achieve a great 'leap forward', might avoid derailing wider trade negotiations. It might also help the EU cope with the potentially drastic domestic spending and structural reforms to the Common Agricultural Policy required ahead of enlargement.

The Cairns Group fears that the current phase of quiet but constructive discussions will come to an abrupt halt next March once all the key players' papers are on the table. To maintain the momentum, working groups on specific issues such as market access, domestic support and export subsidies could be set up - although diplomats say "agreement to go forward in a general, fairly vague direction" would legally be enough.

But the new political balance in these talks should not be underestimated. Developing countries are more aggressive, aware that the Uruguay Round accord committed them to lowering market barriers to imports with little opportunity in return for improved exports in the areas where they have a competitive advantage. "The debate is so much wider now than in the Uruguay Round," said one official. "Now everybody is up and running, it is all much more complex and harder to call."

Egypt appears to recognise this, and is threatening to deliver a potentially large, informal group of net-food-importing states into a loose alliance with the Cairns Group. The EU and US may yet find themselves both defending their highly subsidised farmers against determined and far more united opposition to big spending on agriculture.

Faced with such pressures, the Commission could resort to a series of bilateral agreements on market access, undermining reliance on the multilateral process. But whichever tack it chooses next year, said one trade diplomat, "at the end of the day the poor old European farmer is facing the same scenario - loss of markets."

Article forms part of a survey on trade.