EU a moderate on farming support

By FRANZ FISCHLER and PASCAL LAMY*

During the World Trade Organisation (WTO) negotiations under the Doha Development Agenda just over a year ago, participating countries undertook to open their markets and update the WTO rule book to give developing countries a better deal.

Now, at a time of geopolitical turmoil and economic difficulty, the WTO is more necessary than ever to provide stability, transparency and predictability to world trade.

The European Union (EU) has made substantial and concrete proposals across the board, but always putting the development dimension first.

Agriculture is no exception. Our proposal represents a middle way between extreme positions. It goes a long way to meet all interests in the WTO, offering greater market access for all, lower farm subsidies and sharp reductions for all export aid.

It takes into account non-trade issues such as food safety and the environment, as well as giving preferential treatment to developing countries. It also contains hard figures on how to achieve these goals.

Listening to some WTO members, one could easily think that all farm spending was wrong and should be abolished. We do not agree.

The common objective in the WTO is to reduce farm subsidies, including - but not solely - those of the EU, which distort trade and harm the interests of developing countries. But not all parties have moved in the same direction, or are even being pushed in the same direction.

In recent years, the EU has introduced reforms to make farm support much less trade-distorting. So far, EU negotiations have failed to recognise this.

The Cairns group of exporting countries continues its crusade in the name of free farm trade, which means nothing more than an unlimited right to exploit a comparative advantage. Fair enough, one might say, but where does this leave the rest?

For societies from Mauritius to Malta, farming is also about concerns for the environment, food safety, a secure food supply and the rural way of life. The main exporting countries refuse to accept these concerns, conveniently ignoring that the Doha Declaration clearly states that they have to be addressed.

The WTO talks have to provide for substantial reductions in those farm subsidies that distort trade or harm developing countries. It is not for negotiating countries to dictate to others how to achieve a sustainable farming sector in social, environmental and economic terms.

There cannot and will not be a Doha deal unless developing countries can see that they have been treated fairly. But on market access, most of the proposals risk undermining developing countries, which rely on their preferential market access to European markets in particular.

Market access must not become a blunt instrument for powerful agricultural exporters to use against the developing world.

Hardly a surprise then, that 74 WTO members, counting the EU as one, have signed up to a different approach, tried and tested in the Uruguay Round.

Back on the farm in Europe, there has been steady movement towards reform, such as the recent decision to freeze our farm budget in real terms, despite the pending arrival of four million new farmers through EU enlargement.

The EU is the largest importer of agricultural products and the main importer of food from developing countries. We take more food imports from developing countries than the US, Japan, Canada, and Australia put together.

Meanwhile, others have gone in the opposite direction and increased their farm expenditure. Despite this, the proposals coming out of Geneva have not seriously tackled the schemes these countries use to support their agriculture.

It is crucial that all trade-distorting farm spending is disciplined, even if only to ensure that we do not suffer unfair competition from the United States, the other big farm-support spender.

We are working hard for agreement on so-called "agricultural modalities" by the deadline of March 31.

But if we fail, we need to keep a cool head. More important than the precise deadline is the need to inject a new momentum into the negotiations, to keep working constructively to narrow the differences and make the Cancun ministerial meeting in September a success.

The substantial discussions over the past weeks have led to a deeper understanding of each other's position that will be crucial for reaching future compromises.

There are at least four perspectives in this game: countries and groups that believe agriculture is about more than purely economic concerns and which support the sector, such as the EU; big exporting countries, led by the Cairns Group, which reject any support for the farm sector; the US, interested in opening other countries' markets but which spends as much, if not more, on farm support as the EU; and the more fragile developing countries, which believe in the non-economic concerns of farming but have little money to support farming.

It is time for all of those who are prepared to find solutions that do not undermine the interests of the other participants, to work together to find the highest common denominator. As the EU finds itself in the middle on most of these controversies, it is uniquely placed to try to broker a compromise.

We in the EU want a substantial outcome on agriculture, but everyone has to be ready to contribute to that success.

* Franz Fischler is EU Commissioner for Agriculture. Pascal Lamy is EU Trade Commissioner.