EU And US Both Put Forward Proposals To Cut Farm Subsidies

by Ulrika Lomas, for LawAndTax-News.com, Brussels

12 October 2005

Both the European Union and the United States have this week pledged to reduce subsidies for their farming communities in order to restart international talks on trade liberalisation which have stalled as a result of disagreements on this issue.

Writing in the Financial Times and speaking in Zurich on Monday, US Trade Representative Rob Portman revealed that the US is prepared to cut certain types of farm subsidy by 60% over the next five years, eventually bringing subsidies thought to distort world trade down to zero.

Meanwhile, in a statement also delivered on Monday, EU Trade Commissioner Peter Mandelson announced that the 25 nation bloc would be prepared to reduce aid to European agriculture by 70%, and to decrease import duties on farm produce by as much as 60%.

However, he stated that such a move would be "entirely contingent on satisfactory reciprocal gestures" from other World Trade Organisation members, a seemingly unlikely scenario given Japan's lukewarm response to the American gesture.

Speaking to reporters following Mr Portman's announcement, Japan's Agriculture Minister, Mineichi Iwanaga announced that:

"Japan is not able to accept the US proposal on domestic support as a basis for further discussion because the extent of the reduction the US is willing to make on its own domestic support is insufficient, in our view. There is a very big gap between the US proposal and our own position."

There is also likely to be disagreement within the European Union regarding the EC's proposal, as a group of countries, including France and Poland, have written to the Commission laying down what they called "red lines" regarding the reduction of farm subsidies.

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