- The Washington Times - Friday, December 27, 2002

The recently announced European Union (EU) proposal on global farm subsidies could nobly serve as European fertilizer. Identifying other reasonable uses for the document, however, could prove elusive. Under Europe's grand plan for dismantling its trade-distorting policies, nothing would change until 2006. Then, over six years, EU countries would lower their payments to farmers by 55 percent, export subsidies by 45 percent and import tariffs by an average of 36 percent. As insufficient as this scheme looks on the face of it, the fine print further highlights just how weak Europe's will is to reform its agricultural policies.
Although the European Union is proposing a cut in export subsidies, it won't be increasing its quotas on imports. And the reduced payments to farmers, which currently total about $43 billion a year, won't include subsidies given for compliance with environmental and animal-welfare guidelines. Under the program, these payments could even be increased. Also, while Europe has proposed cutting its tariffs an average of 36 percent, the minimum decrease in tariffs is just 15 percent. So, EU tariffs which are currently quite high, such as those applied to sugar, dairy and meat could continue to be punishing.
Unsurprisingly, the proposal hasn't been well received around the world. "It is absurd that farmers in the world's poorest countries should have to wait until 2013 for the EU to halve export subsidies," said Justin Forsyth, policy director for the British charity Oxfam. The proposal is "a vacuous public relations document designed to paper over differences between member states," he said.
The White House, meanwhile, scarcely concealed its displeasure. The EU "proposal, while welcome, does not embrace fundamental reform in world agricultural trade," said Richard Mills, spokesman for the Office of the U.S. Trade Representative. "We need to cut subsidies substantially and move away from distorting production. We need to slash tariffs."
Europe's plan flies in the face of the commitment it made during the World Trade Organization (WTO) meeting at Qatar last year to broaden poor countries' access to rich countries' markets. WTO negotiations on freeing farm trade are due to begin around the second half of next year, but Europe's unwillingness to liberalize its agricultural policies will undoubtedly stymie the trade round.
EU bureaucrats undoubtedly felt compelled to recommend some agricultural reforms, given the global plan floated by the White House in July. Under that plan, members of the WTO would cut their production-linked farm subsidies to 5 percent of their country's total farm output. This scheme would have set a uniform standard for payment reduction, and would have forced the United States to cut its farm payments from $19 billion to $10 billion, Japan to slash its farm aid from $33 billion to $4 billion and Europe its subsidies from $60 billion to $12 billion. Also, the U.S. proposal called for capping agricultural tariffs at 25 percent and reducing the global average tariff to 15 percent from 62 percent. Although the United States lost credibility on agricultural reform by adopting the $100-billion-plus farm bill in May, the White House has floated a credible plan which, if adopted, would revolutionize agricultural industry worldwide. EU Agriculture Commissioner Franz Fischler has conveniently dismissed the U.S. guidelines as being "unilaterist."
And perhaps they are, since the United States stands alone among rich countries in floating an ambitious plan. However, the EU proposal surely merits a more disparaging characterization.


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