Lamy: EU is reducing subsidies

Date: 11/09/03

The Fifth World Trade Organization ministerial meeting opened in Cancún, Mexico, yesterday. On the eve of the talks, our sister newspaper in Washington, Roll Call, spoke to EU Trade Commissioner Pascal Lamy

Q: WHAT is likely to be achieved at the World Trade Organization (WTO) ministerial meeting in Cancún? Can there be any breakthroughs, or will the discussion be confined to 'modalities'?

EU Trade Commissioner Pascal Lamy:

The discussions at Cancún will be about setting the framework for the next phase of negotiations on the market access side, as well as on the rules side of the Doha development agenda.

Agriculture and industrial market access are no doubt among the hottest issues. But a decision will also be needed on the modalities of the negotiations on investment, competition, transparency in government procurement and trade facilitation.

Decisions are also needed on geographical indications and on environment. And across the whole range of these issues, Cancún will have to integrate the development aspirations of the round.

Cancún must take account of the different needs and stages of development of WTO members - and offer flexibility accordingly - in order to make trade work for all.

Halfway through the Doha round, scepticism abounds that any major world trade liberalization agreement can be achieved by the end of 2004. Is there any reason for optimism?

Obviously, the Doha agenda is huge and ambitious: 146 countries to negotiate more than 20 topics, with a strong focus on development.

The successful outcome of this programme of negotiations is the EU's number one trade priority, and we continue to work hard to achieve this goal. We also remain convinced that the conclusion of the round by the agreed deadline remains fully within our reach if WTO members, in Cancún, are ready to step up to the plate.

But don't underestimate what has been achieved so far: compared to where we were at the same point in the Uruguay round, progress in the Doha development agenda has been positively racy.

Agriculture is a major sticking point on the road to agreement. The EU has expressed willingness to cut domestic subsidies from $70 billion to $28bn (€62.5bn to €25bn) a year, but this is still far above the US level of $19bn (€17bn), which the US is willing cut to $10bn (EUR 9bn). Can't Europe do better?

For more than ten years now, Europe has continuously moved in the reforming direction. This is also the aim of the recent reform of our Common Agricultural Policy agreed to in June: to decouple support from production, further reducing the trade distorting aspect of our support for agriculture.

The difference, to our mind, is that the US has moved in the opposite direction - increasing subsidies in the farm bill. The fact is that support per farmer, and as a percentage of gross national product, is broadly comparable in the EU and the US. And with Europe's enlargement to 25 member states next year, the amount of support per European farmer will dramatically decline.

Enlargement will double our number of farmers and increase our agricultural area by 50%, while the amount of subsidies will remain the same as they are today, with just 15 member states.

How can Europe justify a five-year moratorium on imports of genetically modified (GM) agricultural products when there is no scientific evidence that genetically modified products are harmful and much evidence that they are beneficial, reducing the need for pesticides?

First, let's get the facts right: Contrary to many other countries, there is no ban on the import of GM products in the EU. A large number of GM products have been authorized for importation and cultivation in the EU since the early 1990s.

The EU biotech legislation provides for a case-by-case authorization regime based on scientific assessment.

Many other countries have adopted a similar regime; even the US looks at GM crops on a case-by-case basis.

The EU agrees that biotechnology is not inherently unsafe, but concerns about it have to be addressed seriously and in a responsible manner.

The US had experiences with the GM maize Starlink some years ago. This is something we do not want to repeat in the EU.

Reference is often made to a so-called "moratorium" in the EU on approval of new GM varieties. This relates to the fact that, since October 1998, no new GMOs have been authorized for release into the environment due to the fact that the EU's regulatory regime was incomplete.

This new regulatory framework was adopted in March 2001 and entered into force in October 2002 and has recently been complemented with the adoption of rules on traceability and labeling.

The entry into force of these improved rules on approval procedures has enabled biotech companies to submit revised applications for approval of their innovative products.

A number of new applications for marketing of GMOs are at an advanced stage of examination and may, therefore, be granted over the next months in line with EU legislation.

As to the environmental benefits of GM crops, this is a controversial subject. Currently, 75% of the GM crops' acreage consists of herbicide tolerant crops.

The cultivation of these crops results in a shift of herbicide use rather than in a reduction of herbicide consumption. Whether this is good for the environment is a question for experts; but this is certainly debatable, and many people actually see GM crops as a means to increase herbicide consumption.

The EU is seeking to restrict use of such geographic indicators as 'Feta' and 'Parmesan' by foreign food producers, yet it refuses to honour the label 'Idaho potatoes'. How can this be justified?

We believe that geographical indications are important to reward the quality products of our farmers, and there is large number of developing countries that share this view.

Geographical indications such as parma ham, darjeeling tea, jasmine rice or Antigua coffee are, in a way, the trademark of the poor.

As to 'Idaho potatoes', the EU has never refused to honour that label. What's more, producers of 'Idaho potatoes' have never sought such protection in the EU.

On the non-agricultural front, the US has proposed moving toward elimination of tariffs on manufactured goods by 2015. Is this realistic?

We understand America's ambition in this area. But in a sense the EU's own 'more realistic' stance has been vindicated, in that developing countries would simply not be ready to live with such a radical stance.

Furthermore, for some countries, such as small islands in the Pacific or in the Caribbean, the issue of revenue is not negligible since more than 40% of their resource for government comes from import duties.

http://www.wto.org/english/thewto_e/minist_e/min03_e/min03_e.htm http://www.wto.org/english/thewto_e/minist_e/min03_e/min03_e.htm

---