Global Policy Forum

EU Offers to Halt Farm Subsidies

May 10, 2004

The European Union has offered to stop subsidising farm exports in a move aimed at reigniting world trade talks. European trade commissioner Pascal Lamy has written to members of the World Trade Organisation outlining the plan. An agreement will depend on other WTO countries such as the US, Canada and Australia being willing to follow suit.

Poorer nations have long complained that subsidies give farmers from more developed countries an unfair advantage by keeping prices artificially low. The EU spends about 43bn euros (£29bn; $51bn) annually on farm subsidies.

Sticking point

The issue has come increasingly into focus during recent years as economic growth slowed worldwide, prompting job losses and calls for greater protection of domestic industries.

WTO talks in Cancun, Mexico, last year were dogged by violent demonstrations and eventually collapsed amid allegations from all sides of intransigence over state handouts to agriculture.

Since then politicians have been trying to breathe new life into the process and want to hammer out by July a framework that will allow them to deal with the more sensitive issues. Trade ministers from about 30 countries are scheduled to meet in Paris on Thursday and Friday.


The EU's agriculture commissioner, Franz Fischler, said the time was right for them to sort out their differences.

"We feel that a breakthrough is possible and the EU is ready to do its part," he told reporters at a meeting of agriculture ministers in Killarney, Ireland. "All our export subsidies are effectively on the table."

According to Mr Fischler, "this means that our international partners have to make clear that they are ready to fully match the EU on their forms of export support such as export credits, abuse of food aid or state trading enterprise". For its part, the US indicated that it would be willing to negotiate on export subsidies.

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