America and EU offer free trade olive branch

Offers of farm subsidy cuts to revive global talks· Oxfam says proposals would do next to nothing Larry Elliott and David Gow in BrusselsTuesday October 11, 2005
The Guardian
Washington and Brussels yesterday launched a coordinated attempt to revitalise stalled global trade talks with carefully choreographed announcements of cuts in support for farmers in the United States and the European Union.

Amid concern that talks in Geneva this week provide the last real chance of a breakthrough before a week-long meeting of the World Trade Organisation in Hong Kong in December, the EU and the US announced a series of dovetailed concessions agreed over the weekend.

The US trade representative, Robert Portman, led the way with an offer to cut the most trade-distorting American farm support by 60% by 2013, provided Europe responded with its own 80% reduction.

Peter Mandelson, the EU trade commissioner, responded by calling the US blueprint constructive and announced a plan to cut Europe's farm subsidies by 70% and to set a ceiling of 10% for industrial tariffs.

The joint move was seen as helpful by the WTO, which sees agriculture as the key to making progress in the other areas covered by the round of negotiations launched in Doha almost four years ago. These include industrial tariffs, services and special assistance for developing countries.

"This proposal from the Americans is constructive and we hope that in the coming days it can be used by the ministers and their officials to bridge the differences in agriculture and in all areas of negotiations across the round," said a WTO spokesman.

Developing countries responded far more cautiously to the US and EU announcements, which took place as 23 trade and farm ministers gathered in Zurich to seek common ground ahead of the next round of talks in Geneva later this week. They believe that the cuts proposed by the US and the EU will be less significant than the headline numbers suggest and that the deal offers more to rich countries than to poor countries.

Céline Charveriat, head of Oxfam International's make trade fair campaign, said: "What looks on the surface like a genuine attempt to move the talks forward is in fact a very clever piece of manoeuvring by the US. This proposal would allow them to get away with doing next to nothing in return for some very painful concessions from developing countries. The devil is in the details, and these details are very devilish indeed."

Oxfam added that the Americans and the Europeans were "trying to get a round for free". Washington would be able to get away with cutting agricultural support by less than $2bn (£1.1bn), while the EU would cut by only €3bn (£2.1bn).

Trade sources in Geneva agreed that there was room for deeper cuts in support for western farmers, but said the proposals provided an opportunity it break the logjam. Pascal Lamy, the WTO director-general, is looking for the bare bones of a deal to emerge from a meeting of the organisation's general council next week.

The US and EU made it plain that their offers would have to be matched by proportional cuts in agricultural subsidies among other developed countries, including Japan, and by progress in liberalising trade in manufacturing and services.

Mr Mandelson insisted that "there will certainly be no deal on agriculture unless and until there is a balanced outcome across the board" and that, while the poorest countries should not be forced to open their markets in the current round, the richer developing countries should.

"If we do not advance this negotiation in concrete terms this week ... we will have to acknowledge that we may simply run out of time for Hong Kong. Within the limits of our mandate, the EU will make moves to prevent it and others must do likewise."