Seeking common ground

ON the face of it, Ireland has more to lose than any other EU country from the current round of World Trade Organisation talks on agriculture.

The country has received more per person from farm subsidies than any other EU member over the past few years, despite the country’s growing prosperity.

Although EU ministers have agreed to dismantle much of the Common Agriculture Policy over the next few years, the country’s farmers are rapidly adapting to ensure they benefit from the new EU policies.

However, there is a danger this plan, so carefully crafted by former Agriculture Commissioner Franz Fischler in 2003, could now fall apart.

Under the current agreement, farmers will receive money for non-trade factors such as maintaining the environment, increasing food quality and animal welfare. None of these are seen as barriers to free trade under WTO rules.

A strong and wily politician, Mr Fischler succeeded in convincing the EU member states to change the CAP before they were forced to by the WTO.

The gamble was that these changes did not become the starting line for negotiations under the WTO talks designed to open up world trade through getting rid of subsidies, import tariffs and other trade-distorting measures.

IFA chief economist Con Lucey, at the time of the Cancun WTO round two years ago, said: “The challenge for the new commission will be to maintain a unified EU position, and insist that the recent CAP reforms are the outer limits of the union’s negotiating position in the future.”

But the first blow to this strategy was struck by British Prime Minister Tony Blair last December when he insisted the CAP must be abolished much more quickly than he and the other EU leaders agreed to just a year before.

Mr Blair’s good friend, the EU’s Trade Commissioner, Peter Mandelson, has the lead role in the ongoing WTO negotiations on behalf of the union with Mariann Fischer Boel taking the lead in agriculture.

Over the past few months it has become obvious that even in agriculture matters she has been relegated to the back seat as Mr Mandelson sets the pace.

The WTO Doha round is not just about agriculture, but agriculture has become the key that can unlock the other areas to be negotiated, according to the experts.

The talks over the last four years have been fraught with difficulties, but last week saw the US and the EU making carefully choreographed moves to break the impasse.

First the US announced it will cut farm subsidies by between 60%-70% over five years and eliminate all trade distorting subsidies by 2010.

Then Mr Mandelson proffered EU farm subsidy cuts of 70% plus and a cut of up to 60% on EU customs duties on farm goods - an offer many believe leaves the EU close to its bottom line.

There was an immediate outcry, not least from the Agriculture Minister Mary Coughlan.

She and a number of other EU agriculture ministers, led by the French, have been in close contact over the past few months watching the WTO progress with growing concern.

Ms Coughlan was one of the signatories to a letter calling for a special EU meeting to warn Mr Mandelson he was going beyond his mandate which required him to consult member states before making any significant concessions on any issue.

The result is an emergency meeting of EU Foreign Ministers tomorrow, to be attended by Commissioners Mandelson and Fischer Boel.

Many of the EU’s experts in Brussels are worried about Mr Mandelson’s approach to the WTO talks scheduled for Hong Kong in mid December.

“This is a big battle for the EU and at the moment we are losing,” says one insider.

Agreement on the depth and scale of CAP reform was hard to get from member states. If Mr Mandelson’s strategy puts the EU in a position of being forced to go farther, his job could well be on the line.

Taoiseach Bertie Ahern has made several scathing attacks on his otherwise good friend Tony Blair over attempts to dismantle the CAP prematurely.

It’s unusual in Brussels to see the Irish adopt such an aggressive stance against Britain.

However, while Ireland argues for the maintenance of farm protections, it acknowledges that WTO trade liberalisation is a key factor behind the country’s economic transformation

Trade Minister Michael Ahern acknowledged this when he paid a special visit to Trade Commissioner Mandelson in Brussels on Friday.

He also asked the former Northern Secretary to ensure the markets on other goods will be further opened up given that Ireland exports up to 90% of its products and needs market liberalisation.

The internal EU row masks the realities of the current Doha WTO round. The US says its offer of farm subsidy cuts is dependent on the EU, Japan and other developed countries reducing theirs by 80%.

The US offer however is not final as it will need congress and the senate to agree to it also - something many believe will not happen as the big sugar, cotton, grain and other interests will lobby hard against it.