US 'Disappointed' By Latest EU Farm Trade Offer

by Mike Godfrey, Tax-News.com, Washington

01 November 2005

EU Trade Commissioner Peter Mandelson presented a further offer on farm trade in the WTO Doha Round on Friday, calling it Europe's 'bottom line', but US Trade Representative Rob Portman expressed disappointment with the offer, which would cap tariffs at 100% but allow 8% of products to escape cuts.

The package calls for a reduction the highest farm tariffs imposed by developed countries by 60%, whereas the US has proposed a 90% cut in the highest tariffs. The EU says this level is out of the question, but Mr Portman says that the new EU package amounts to only a 39% cut in tariffs on average due to various exceptions and loopholes in the package.

Barely more than a month remains before crucial Hong Kong talks in the Doha Round, which will collapse if there is no deal on farm trade. Commissioner Mandelson would probably be happy to go further, but he is being watched like a hawk by the French, who have a fanatical attachment to farm subsidies even though agriculture amounts to only 4% of their GDP.

"We are a little discouraged today by the EU proposal," Portman said. "I believe it is a modest step in the right direction, but I just believe it's inadequate to meet the promise of Doha." He said that the EU proposal was far less ambitious even than the one offered by the G20 group of developing countries.

The EU's proposal to allow 8% of all products as 'sensitive' would for instance allow Japan to exclude rice and Europe to exclude poultry and beef. The US, by contrast is proposing exemptions for only 1% of products.

"So this is a big loophole," Portman said. "We will not quit. We will not give up," he added. "The United States is convinced that a successful Doha round is critical to economic growth globally," particularly for developing countries.

"The objective to reach a conclusion of Doha that is successful for everyone ought to prevail over any particular interest," he said, "and clearly the EU proposal today ... still does not meet, in our view, the criteria ... for substantial improvement in market access."

WTO participants are considering holding a teleconference some time next week, and there will be a further meeting in Geneva is scheduled for the following week; but the last one, two weeks ago, got nowhere.

Brazil and India, leaders of the G20, have indicated they would make concessions on industrial tariffs but only on condition that the developed world offers substantial farm tariff cuts, and Mr Portman says that those are not yet on the table.

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