EU challenges US on farm subsidy cuts

Europe’s Trade Commissioner Peter Mandelson today challenged the US to match EU farm subsidy cuts and get stalled world trade talks back on track.

Efforts to reach a deal ended in a bitter blame game between America and the EU over farm subsidies in July.

World Trade Organisation Director-General Pascal Lamy suspended indefinitely the so-called Doha Round of global trade liberalisation negotiations amidst recriminations in Geneva.

Now a “G20” summit of trade negotiators in Rio this weekend marks the start of attempts to revive the talks before time runs out for a vital new world trade accord.

Mr Mandelson told the European Parliament in Strasbourg today that there was no chance of a deal until at least after the American mid-term elections in November.

By then the pressure will be on because a US Congress mandate to President George Bush to continue talking expires at the end of the year.

Washington insisted after last month’s break-down that the US remained committed to a “multilateral” trading system.

Mr Mandelson told MEPs that rhetoric had to be backed up with political leadership: “We are faced with a lack of what I would call 'realistic ambition'. All sides are exporting their domestic constraints into the negotiation – that is perhaps inevitable, but it is not an excuse for failure.”

Agreement on the Doha Round has been one of Prime Minister Tony Blair’s top priorities, to end world trade tensions which have helped deepen the rift between the rich and poor nations.

In return for greater access to western markets for their agricultural produce, the developing world would open its markets to manufactured goods.

America, in turn, wanted swifter and greater access to manufactured goods markets in developing countries.

However, developing countries blame the EU and US for not cutting domestic farm subsidies or lowering import tariffs enough to allow them to compete.

Mr Mandelson insisted that the EU had been and still was ready to accept "the steepest farm tariff cuts ever accepted as part of a multilateral trade negotiation", and slash trade-distorting farm subsidies.

He went on: “In return for these cuts the EU is looking to the US to match the EU in cutting trade-distorting farm subsidies – which the developing world rightly regards as the condition now for any final Doha agreement.”

Mr Mandelson warned that a continued stalemate would hit developing countries hardest, but the Commissioner vowed not to leave poor countries in the lurch while a search for a deal goes on.

“They will lose new trade opportunities, and even more importantly they risk losing out from a weakening of the multilateral trading system. On the EU side, we will try to do as much as possible, under any scenario, for the weaker and more vulnerable.”

He insisted individual deals between countries were no substitute for a comprehensive world trade accord.

“Bilateral and regional deals are not an alternative for multilateral negotiations,” he said. “I remain committed to a successful outcome of the multilateral round. This remains my priority.”