US: EU must scrap farm subsidies

US: EU must scrap farm subsidies

A global treaty to boost the economy by cutting barriers to international trade is only possible if the European Union agrees to scrap subsidies on farm exports, U.S. Trade Representative Robert Zoellick said Friday.

"Let's quit fooling around. Let's eliminate them all," the Associated Press quoted Zoellick as saying in Geneva, where the World Trade Organization is based. "Our position is that we would be willing to eliminate them tomorrow."

The 15-nation EU - by far the biggest user of export subsidies in the world - has stopped short of agreeing to a total elimination as part of the current round of trade liberalization negotiations.

The EU says it is prepared to scrap subsidies on products that are of great importance to developing countries but insists it cannot go further than that.

Last August, the U.S. and the EU - at the request of WTO members - produced a joint proposal that set no deadline for the elimination of export subsidies. Zoellick said that proposal was "as far as we could go" in the short period of time that was available, but did not mean the U.S. had softened its position.

The U.S. uses far fewer export subsidies than the EU, but has massive domestic subsidy programs for its farmers that producers in developing countries also claim have depressed prices and left them unable to compete on the world market.

Their biggest concern is the $3 billion per year that the U.S. pays to cotton farmers, payments that some African countries say have devastated their economies.

Zoellick said the U.S. was ready to reduce its cotton subsidies, but "it has got to be part of the package" - meaning the EU and its allies such as Japan and South Korea have to make commitments to reduce subsidies and import duties first.

Zoellick, who has been on a 12-day, 25,000-mile world tour meeting commerce ministers to discuss how to reinvigorate the global trade talks, said he still believed major progress can be made this year.

"I have a sense that there is an opening to achieve forward progress in 2004, but it will not be easy," he said.

Negotiations on the trade round broke down last September in Cancun, Mexico, primarily because of disagreements over agriculture, as well as proposals by the EU and some of its allies for talks in four new areas of rule-making - simplifying customs procedures, transparency in public tendering, investment rules and competition policy.

Zoellick said he believed poorer nations could only agree to start talking about one of those areas, customs procedures, and the other three should be dropped.

"If we can clear the decks (of these issues) then we can really focus on the agriculture text," he said.

When WTO members launched the round in 2001 in Doha, Qatar, they set themselves a deadline of the end of this year to complete negotiations. However, they are well behind schedule, and many trade experts now accept that the deadline will be missed.

The problems are compounded by the fact that a number of major WTO countries face elections this year -- particularly the U.S. - and the European Commission also will change. Nevertheless, Zoellick wrote to all members last month urging that 2004 should not be a "lost year."