US offer of big farm-subsidy cuts wins warm welcome from Europe

An offer by the Americans yesterday to eliminate agriculture export subsidies by 2010 and reduce trade-distorting payments by 60 per cent was welcomed by European negotiators, although officials were yesterday studying the details. Agricultural subsidies have been a crucial obstacle in the negotiations, with developing countries and non-government organisations demanding reductions in subsidies, which are worth $180bn (£102bn) to US and European farmers.

European negotiators know that only if they dismantle export subsidies and reduce domestic payments will developing countries open more of their markets to industrial goods and services.

Crucially, yesterday's offer by the US put a series of figures on the table for discussion. It also appeared to vindicate the EU's strategy, which made an earlier offer to get rid of export subsidies if other sides do the same.

Speaking in Zurich, the US trade representative, Rob Portman, said the US "is willing to take some pain" to revive the talks, which began in December 2001. The EU trade commissioner, Peter Mandelson, said the US offer was the step "we asked them to take". He argued: "The time has come for all of us to put cards on the table; to stop bidding and to start to play the hand." Negotiators are up against a tight deadline, with a deal sought at a meeting in Hong Kong in mid-December.

A spokesman for Mr Mandelson said the US proposals were still being studied but could prove a "shot in the arm" to the talks. He added: "They have encouraged people here, and there is a greater sense of optimism that Hong Kong can produce a meaningful agreement, though there is a lot of work to do."

The European Commission yesterday issued a paper on its position, repeating the offer made to cut trade-distorting subsidies by 70 per cent, and adding details of further proposals. The EU is in a position to do so because of Common Agricultural Policy reforms already agreed.

But Oxfam described the US initiative as a "case of smoke and mirrors", adding: "If this offer goes ahead, trade-distorting domestic subsidies will remain almost completely unchanged and dumping will continue. Meanwhile, harsh concessions on market access will be wrung from developing country members in exchange for illusory progress."

The US proposals build on President George Bush's offer last month at the United Nations to eliminate all trade barriers and subsidies, but this was widely seen as a ploy, aimed at burnishing Washington's free trade credentials while embarrassing Europe.

Pressure to break the deadlock on farm subsidies has become intense, because the conflict is stalling progress on the entire Doha round of trade liberalisation.

The domestic climate in the US for major change is more favourable than for some time. With the budget deficit soaring, the Bush administration is looking desperately for cuts in federal spending. The 2002 farm support bill, which offers $180bn of subsidies over 10 years and comes up for renewal in 2007, is a prime candidate. The question mark is Congress, which would have to approve any changes. The last time the administration called for major reform, it backed off after fierce opposition on Capitol Hill. The 2002 bill, enacted before that year's mid term elections, helped Mr Bush and the Republicans make gains in the Mid-West and the cotton- producing South.

Both the party and the White House would be loath to make major concessions now, unless they could claim the EU had made even larger adjustments. Analysts say hard bargaining lies ahead.

The issues

* WHAT THE US WANTS The US knows its current trade rules are indefensible and is under pressure to make changes. The government has lost several rulings on international trade issues and needs to reduce a federal budget ballooning in the wake of the Iraq war and Hurricane Katrina relief effort. Washington's pretensions to stand up for the interests of Third World countries are at stake.

* WHAT EUROPE WANTS With reforms to the Common Agricultural Policy agreed, the EU strategy is to challenge other countries to match changes being implemented in Europe. It has offered to eliminate all export subsidies if others do the same. If the big First World nations cut farm subsidies, it is hoped emerging nations will open their markets to European industrial products.

* WHAT THE OTHERS WANT Brazil, India and China have grown in influence and their priority is better market access to Western countries and a reduction in those countries' agricultural subsidies. The wider grouping of 90 poorer nations has disparate objectives. This is because the poorest often already enjoy tariff-free deals with the EU on which sections of their economies rely.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Environmental Adviser - Maternity Cover

£37040 - £43600 per annum: Recruitment Genius: The UK's export credit agency a...

Recruitment Genius: CBM & Lubrication Technician

£25000 - £27500 per annum: Recruitment Genius: This company provides a compreh...

Recruitment Genius: Care Worker - Residential Emergency Service

£16800 - £19500 per annum: Recruitment Genius: Would you like to join an organ...

Recruitment Genius: Senior Landscaper

£25000 - £28000 per annum: Recruitment Genius: In the last five years this com...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea