MercoPress. South Atlantic News Agency

US reject latest EU farm tariffs cut proposal

The European Union's offer to cut farm tariffs by as much as 60% falls short of expectations because the proposal allows exemptions that would block key exports said United States officials.

"While in some ways it is a step in the right direction and we acknowledge the European Commission's efforts, much more needs to be done", said US Trade Representative Rob Portman.

Earlier in the day European Union Trade Commissioner Peter Mandelson on making the proposal announcement said that "by any measure this is a very bold move indeed. It goes way beyond anything we've offered before", and "must unlock immediate progress" on other areas, such as services and industrial products.

However United States questions some exemptions which could effectively block the goods most likely to be exported by US farmers to Europe, although the products were not specified.

In the face of fierce opposition from France, the 25-nation European Union offered to trim agriculture tariffs by 35% to 60%, and implement a cap that would limit remaining duties to no more than 100% of the value of an import.

The EU also said it would lower by 70% trade- distorting farm subsidies, locking in reductions it has already made, and would phase out export subsidies.

Friday's offer was an attempt to counterproposal the U.S. offer made earlier this month in an effort to prepare the ground for the December World Trade Organization summit in Hong Kong in the framework of the so-called Doha Round.

The EU said its proposal is contingent on an agreement for cuts in industrial tariffs and for rules to allow more investment by banks, telephone companies and insurance providers.

Portman, Mandelson, and top trade officials from India, Australia and Brazil held Friday a video conference to discuss the EU's plan. The ministers are scheduled to travel to Geneva within two weeks to work out an outline of an accord that would form the basis of discussions at the Hong Kong summit.

"The proposal is a step forward, but it is insufficient," Brazil's Foreign Minister Celso Amorim said.

United States believes the EU proposal holds several unacceptable points: a measure that exempts 8% of imports now subject to tariffs from having those duties slashed; new rules to safeguard geographic place names for food products such as Parma ham and Feta cheese; and the phasing out of food donations to poor nations. According to US sources the 8% of imports exemption means the EU will be able to keep out the primary export interests of the US and with 2,200 agriculture tariff lines, an 8% exemption means 176 products could keep their highest tariffs.

US farm exports to the EU in the last twelve months totalled seven billion US dollars according to the US Department of Agriculture, mainly animal feed, poultry, fruits, nuts, hides and tobacco. However Friday's new proposal could still have other internal effects since France has vowed to block further concessions.

French President Jacques Chirac said on Thursday that he could veto any further concessions, in the face of France's huge and powerful farming lobby.

"It's totally out of the question for us to go a single step further'' in concessions on farm tariffs, said President Chirac. "France would have a veto over any accord", he warned.