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.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
Life and Style
President Obama, one of the more enthusiastic users of the fist bump
science
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
tv
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
Kristen Stewart and Rupert Sanders were pictured embracing in 2012
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

HSE Manger - Solar

£40000 - £45000 Per Annum: The Green Recruitment Company: Job Title: HSE Mana...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Powertrain Design Engineer

competitive: Progressive Recruitment: I hope you are well. My client based in ...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried