Farm subsidies come under scrutiny in trade talks

Ministers from the largest trade powers gather in Switzerland tomorrow to tackle once more the thorny issue of US and EU farm subsidies, with just two months remaining before a deadline for a framework global trade treaty.

Both US Trade Representative Rob Portman and European Union Trade Commissioner Peter Mandelson, among the ministers from World Trade Organisation members expected to meet in Zurich, are under pressure to make difficult concessions, trade officials said.

WTO Director-General Pascal Lamy has said that the EU and the US will have to make adjustments in agriculture policy if progress is to be made in the present round of global trade talks, which is already well behind an original December 2004 deadline.

Lamy, who will also be at the Zurich talks, believes “the EU needs to move on market access and the US needs to move on domestic support,” his spokesman, Keith Rockwell, said. “Movement in those two areas would be helpful not only for the agriculture negotiations overall, but for the entire round.”

A ministerial meeting in Paris last month failed to break the deadlock, although the EU took a step in that direction, presenting a detailed but tentative tariff-cutting offer at talks with Portman and ministers from India and Brazil.

That move put the US under pressure to make concessions of its own, but Washington has so far has resisted demands to come up with an offer to cut market-distorting farm aid, saying it first wants to see moves by trade partners to reduce agricultural import tariffs.

“We have responsibilities as large as the EU has,” a senior US government official, who refused to be named because the US was still formulating its response, said ahead of the talks. “But we have to (make concessions) in a context where other countries also have to make the appropriate contributions.”

At a Hong Kong summit scheduled for the end of the year the WTO’s 148 members are supposed to agree on an outline for a global trade deal.

EU farm reforms adopted in 2003 will convert the bulk of the bloc’s production subsidies into animal welfare and environmental management grants to farmers - deemed far less trade-distorting under WTO rules. Washington envisages no such change to its current subsidy regime, which provides payouts to farmers when prices fall, allowing US producers to charge artificially low prices.

The Doha round, set to conclude next year, sets out to boost the global economy by lowering trade barriers across all sectors – with articular emphasis on developing countries.