Inside US Trade | Vol. 19, No. 22
The European Union's chief agriculture official last month signaled that any future agriculture negotiations in the World Trade Organization cannot focus solely on the supports the EU gives to its farmers, but must include U.S. farm subsidies for domestic production and for export promotion. The EU's export subsidies are not the most trade-distorting elements of farm policies, EU Agriculture Commissioner Franz Fischler charged in a May 18 speech to the European Institute.
In comparison, tariffs are the most trade-distorting feature in agriculture, followed by internal domestic support, and then export subsidies, Fischler said. Instead of the dogmatic focus on EU export subsidies, new WTO agriculture negotiations should focus on a pragmatic approach that will allow progress, he said.
This will include going beyond the current focus on EU export policy to other forms of export competition such as food aid and export credits, according to Fischler. He said that the EU is prepared to negotiate a reduction in export subsidies provided that these other aids to exports are on the table, including the practices of state trading enterprises.
Fischler also accused the U.S. of a double standard of jacking up domestic farm supports while insisting in the WTO that trade-distorting supports should be reduced. Beyond that, the U.S. discusses market access in Geneva with a view of increasing exports to other countries, while the EU is trying to open its own markets, Fischler said.
The EU has more reason than ever to doubt the U.S. willingness to reform farm policies, with the proposals in Congress to continue countercyclical support programs which increase support for farmers when market prices are low. This will ensure that farmers will not respond to market signals anymore, he charged.
In terms of existing WTO rules, it is hard to see that such countercyclical support is non-trade distorting, Fischler said in a press conference following his speech at the European Institute. If a program is countercyclical, it is by definition linked to prices or production or both of them, he said.
Fischler held open the possibility that the EU may take a different approach to the next agriculture negotiations than it did in the Uruguay Round, where it presented its internal reforms as a take it or leave it proposition to its trading partners. He said such an approach is not the "best way" to conclude international negotiations.
He said the EU is conducting a mid-term review of its farm policies and is under pressure for reform because of the EU's planned expansion. However, informed sources have pointed out the EU is unlikely to tackle any farm reforms until after the French and German elections in the summer and fall of 2002 at the earliest.
He said both the EU and U.S. want to continue supporting their farmers out of the recognition that farming is not comparable with other sectors of the economy, but they need to try to find ways that are less trade distorting.
Fischler also predicted that a ministerial declaration launching a new round of negotiations in the WTO must be balanced among all agenda items, and not focus on agriculture in great detail while the texts on other negotiating areas are very general. WTO members must know by September at the latest what the agenda for new negotiations is, Fischler said in a May 18 press conference.
He emphasized that the EU would prefer to have a new round, but will continue the current negotiations if that is not possible.
Fischler also said that such a declaration on new negotiations cannot be so specific as to determine their outcome. This would avoid a repeat of the failed 1999 ministerial in Seattle, where much time was spent on developing declaration language spelling out the ultimate result of the agriculture negotiations. At that time, the U.S. and the Cairns Group pressed for language in the declaration that new agriculture negotiations should lead to the elimination of export subsidies, which the EU refused to accept.
If there is agreement on a round at the November ministerial, a declaration for agriculture should reflect the "content" of Article 20 in the Uruguay Round Agriculture Agreement, plus a timeline for concluding negotiations, according to Fischler. He expressed the hope that a new negotiation could be completed in three years instead the eight years of the last WTO negotiations.
Fischler said he did not see a need to review the 1999 guidelines that EU member states extended to the Commission with regard to agriculture negotiations before the next WTO ministerial. These guidelines were based on the Berlin agreement on the Common Agriculture Policy and there is no change from that, Fischler said.
Fischler's press conference followed a meeting with U.S. agriculture secretary Ann Veneman which he billed largely as a get acquainted session with a general discussion, highlighting the commonalities of the two sides. In his public comment, Fischler took pains to emphasize that both the U.S. and EU support their respective agriculture sectors, albeit in different ways.
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