MercoPress. South Atlantic News Agency

EU stands firm ahead of WTO meeting

France and Finland said Monday in Paris that the European Union will make no new tariff reduction proposals for farm produce at the World Trade Organization (WTO) meeting next Thursday in Geneva.

"The EU should not make any new concessions, and any further offers must have a similar flexibility and willingness from others" said Finnish Agricultural Minister Juha Korkeoja, whose country will hold the EU presidency beginning July 1.

Speaking next to his French counterpart Dominique Bussereau, Mr. Korkeoja said that "the reform of the EU Common Agricultural Policy, or CAP, marks the limit" of the concessions that Brussels can make to other parties in the WTO round.

According to the latest report from the Organization for Economic Cooperation and Development, OECD, developed countries spent 283 billion US dollars on agricultural support in 2005. The sum is equivalent to 29% of farm earnings and 59% of the support was directed to boost prices of agricultural products.

Korkeoja insisted that at the coming WTO talks a balance must be reached between concessions on agricultural produce and manufactured goods, underlining that the EU proposal was subject to similar concessions from the other parties involved in the talks.

"We expect similar flexibility from the G20 and United States" said French minister Bussereau. France has resisted the concessions included in the EU proposal of last October arguing they went beyond the limits of CAP reform.

Next Thursday some fifty Trade and Economy ministers will try to get Doha Round negotiations moving again. For the past six months talks have stalled as the US and Europe defended calls for tariff and subsidy cuts.

As well as demanding lower tariffs for manufactured goods, the EU also wants developing countries to free up their trade in services such as IT and finance.

Without a deal, the World Trade Organization will not be able to complete its so-called Doha round by its end of year deadline. Another issue is defining cuts to export and agriculture subsidies paid out by rich countries to their farmers and one of the basic demands from developing countries.

Ahead of the meeting, WTO chief Pascal Lamy called on the ministers to take urgent action. "We need big political decisions to be taken now".

Meanwhile, developing nations from the G20 such as India and Brazil insist they cannot take any action on industrial goods if questions remain on agriculture.

"Despite the EU and US "good intentions", little or virtually nothing has been done to remedy the situation argues the G20. "The billions of dollars in subsidies that the EU and the US hand out to their farmers every year distort international trade and punish farmers in poor countries".

Although the overall figure is 283 billion US dollars, the OECD report found wide variations in the level of government agriculture support among the 30 member countries. While in Australia it represented 5%, in the US was 16% and in the European Union 32%. But in Switzerland that percentage balloons to 68%.

The report also shows that the average OECD domestic price for farmed goods in 1988 was 57% higher than the world price and the gap has since fallen to 27% in 2005. But OECD farmers have not necessarily suffered since these reductions have been replaced by an increase in agricultural payments based on the area or number of animals being farmed.

The European Union was the biggest spender, paying 134 billion US dollars in farm support, well above the 47 billion handed out by Japan or the 43 billion spent by the US.