By Scott Miller and Matthew Newman
Wall Street JournalMay 28, 2003
In what could be the key to untangling global trade talks this year, European agriculture ministers meeting here said France has indicated privately it is willing to relax its opposition to separating European farm production from government subsidies.
A small group of countries led by France has opposed any tampering with Europe's much-criticized farm supports, part of the continent's Common Agriculture Policy, or CAP. That position has gridlocked the Doha round of talks under way at the World Trade Organization. The stalemate comes as Europe and the U.S. also are feuding over Europe's restrictions on genetically modified foods.
France officially made no concessions during a two-day meeting of agriculture ministers here, leading up to a planned vote by the ministers on June 11. French Farm Minister Herve Gaymard on Monday rejected what he called a "tyranny of dates" and the need to reach an accord before the WTO's ministerial meeting in Cancun in September. "We haven't got a knife at our throat," Mr. Gaymard said. "It's not the time frame that counts, but the substance."
Severin Naudet, a spokesman for the French Agriculture Ministry, said late Tuesday that the French are opposed to decoupling subsidies from output. But the French, according to other participants here, now appear willing to see at least a portion of European agriculture output "decoupled" from subsidies, as proposed by the European Commission. "There's a certain movement in France," said Franz Fischler, the European Commission's agriculture minister and lead proponent of the changes. German Agriculture Minister Renate Kuenast echoed Mr. Fischler's characterization, but neither gave any specifics.
As it stands now, Europe spends about €27 billion ($32 billion) a year on subsidies based on how much farmers produce, with an additional €16 billion going toward aid such as price supports, export credits and farmland protection -- a combined €43 billion of the European Union's €100 billion annual budget. That, critics charge, leads to overproduction and depresses world agriculture prices, hurting developing countries.
The proposals made by the European Commission and Mr. Fischler don't attempt to reduce the overall amount of subsidies; that would face too much opposition. Instead, Mr. Fischler has suggested a compromise changing how funds are spent. Rather than linking subsidies to production, he wants to link payments to other objectives, such as protecting the environment, animal welfare or scenic landscapes, as well as reduce some price supports. It is unclear how much of that opponents might agree to.
It is also unclear whether Mr. Fischler's proposal would be enough to please Europe's trading partners. Some argue that European farmers will still get plenty of government money and that the EU is wrong to pursue social objectives under the guise of agriculture support. "Many people are concerned that it's simply shifting boxes," said Shefali Sharma, WTO project officer at the Institute for Agricultural Trade Policy in Geneva. "Many people are skeptical about what impact decoupling will really have." The WTO had given itself a target of March 31 to agree on the outlines of an agriculture deal, but failed to even come close, due largely to uncertainty about the CAP. Developing countries, which rely on agriculture for a large share of their economic growth, argue that if the WTO is unable to agree on a package of farm liberalization, then they shouldn't feel obliged to make concessions in other areas, such as investment policy or services.
Mr. Gaymard's suggestion that France doesn't feel time pressure could mean that any changes would be left hanging until after the WTO's Cancun meeting -- likely stalling that gathering, with countries unwilling to make concessions until they know what the EU will offer in return. "If Europe, and especially France, cannot conclude a CAP reform package along the lines as proposed by Commissioner Fischler this summer, there is, in my view, a near certainty that the round will break down," said Niall FitzGerald, chairman of consumer-products company Unilever PLC, in a speech Tuesday night. Last week, U.S. Trade Representative Robert Zoellick called a CAP resolution "critical" to the world trade talks.
People familiar with the situation said they expect countries such as Germany and the United Kingdom to keep up the pressure on France to accept further changes. Ms. Kuenast, for example, said she hoped to reach a consensus with the French at a Franco-German summit in Berlin on June 10, the eve of the crucial EU farm decision.
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