CAP reform deal faces pressure at talks

Chief Business Correspondent

Top American trade official Shaun Kelly warned that in coming to Cancun with the CAP reforms decision already taken, the EU was making it difficult for open negotiations to take place. Mr Kelly made it clear, in a conference call from Washington in advance of the talks, that the US had “ambitious plans” to advance the cause of free trade around the world at this mid-point in the negotiations by opening up access to markets across the globe.

Mr Kelly also rejected the suggestion that the serious taxes imposed on imported steel into the US was against the spirit of the WTO.

Mr Kelly said it was part of the WTO pact that where individual nations saw their interests severely threatened they could impose import restrictions to protect their domestic markets.

All of the 146 countries linked to the WTO have the same rights to protect their interest in the event of a serious threat to their markets, he said.

While Mr Kelly said both the US and the EU had major roles to play in advancing the current round of WTO talks, he made it clear that the two were not totally at one on how the next moves towards free trade ought to progress.

On the CAP question in particular, Mr Kelly made it clear that as far as the US is concerned it was up for further negotiation. Under CAP reform, the EU has decided to reduce subventions by 36% in the coming years.

But Mr Kelly said such decisions reached outside the WTO made negotiations on further open trade deals “difficult for other member countries.”

The fact that the EU has already decided its upper limit on supports for exports out to the year 2013 was not at all helpful, and he made it clear that the US will be pushing for further reform on top of that decided under Agenda 2000.

Basically, Mr Kelly said the EU is coming to the talks with a clear opinion that “we have decided on our own” how far we are prepared to go in the further reduction of supports for their goods.

But there are issues other than agriculture on the table and in particular Mr Kelly stressed the importance of the services sector that accounts for a substantial portion of the US economy.

On the possibility of strong protests at the talks, Mr Kelly said it was fully understandable that people have serious concerns.

Decisions will be made at these talks “that touch people’s lives and it is to be expected,” he said.