Global Policy Forum

By Larry Elliott and Charlotte Denny

The European Union has drawn up secret plans aimed at prising open service sector markets in the world's poorest countries in return for cutting its lavish farm subsidies, it was revealed last night.

The demands under the World Trade Organisation's service sector talks target 109 countries, including the 50 least developed, and would allow European firms to charge for providing water to some of the 1.2bn people living on less than a dollar a day.

Details of the blueprint leaked to the Guardian yesterday showed that the EU has demanded a high price for allowing developing countries access to its highly protected farm markets. Brussels is determined to win large gains for its highly competitive banking, telecoms and business service firms in the new round of global trade talks launched 14 months ago.

Brussels is under intense pressure to axe export subsidies which depress global food prices and impoverish farmers in the developing world. Reform of the common agricultural policy is the top demand from the EU's trading partners.

"The EU is explicitly linking these requests to agriculture and saying we have to get something for our service sector companies, before we give up our farm subsidies," said Barry Coates, head of the world development movement. "It reveals why they keep these demands secret - their agenda isn't pro-development. This is what they regard as their goodies from the new trade round."

Development campaigners say that poor countries would have their hands tied if they agreed to the EU's requests and be unable to respond in the way Labour did in the UK when it effectively renationalised a failing Railtrack. "These commitments are effectively irreversible, if privatisations get botched there is no way out," said Mr Coates. "By making such commitments, developing countries would be affecting generations to come."

Campaigners believe that faced with the batteries of industry lobbyists the EU is wielding to make its case, countries could end up signing deals they will later regret.

Among its demands, the EU is demanding that Bolivia let in more foreign water companies despite outrage after a multinational company increased water prices by 200% in the country's third largest city.

The EU is also targeting Panama where water privatisation plans were scrapped in 1998 after strikes and demonstrations, and Trinidad where UK company Severn Trent lost the contract for managing the water authority four years ago.

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