Fischler turns up heat on Lamy over trade deal for poor nations

Date: 11/01/01

By Peter Chapman

TRADE chief Pascal Lamy is fighting demands from his agriculture counterpart Franz Fischler to give EU rice and sugar growers more time to prepare for the elimination of tariffs on imports from the world's poorest countries.

The European Commission meets to consider the politically-charged proposal next week and Lamy refuses to say whether he will agree to push back the date for ending duties on imports of rice, sugar and bananas from three years to five in a bid to win support from EU countries. Diplomats expect a deal to be struck, but add that several member states continue to oppose the plans, which would free up trade in 'everything but arms' to 48 least-developed countries.

Opponents of the measure argue that it would create mayhem in Union markets for rice, sugar and bananas by letting in a flood of cheap imports - damaging not only European producers but also those in the Caribbean which are heavily reliant on exports of these crops.

Lamy originally envisaged a three-year phase-in period to allow time for growers in these sectors to adapt to the measure but Fischler voiced fears from day one about their inclusion in the proposal. The two Commissioners have waged a behind-the-scenes battle over the issue ever since.

Studies published on the farm chief's website late last year in response to member states' demands for more evidence of the possible financial impact of the measures appeared to back up his concerns. But Lamy's supporters question their validity.

"The concern is understandable but misplaced," said one. "Of course farmers are worried but it's very irresponsible. Anyone who can plausibly argue that Sudan or Mauritius [can flood the EU market with sugar or rice] needs their head examined."

Fischler's aides also point to political fears that Lamy's proposals could de-rail efforts to scale back Union handouts to the rice and sugar sectors. The Austrian Commissioner wants to eliminate EU rice subsidies altogether - a move fiercely opposed by Spain and Portugal. Burdening European suppliers too soon with the effects of the 'everything but arms' proposal would make it much more difficult to win support for this.

"If at the same time you have something that additionally increases imports, then in political terms it's impossible," said one Fischler aide, explaining his boss's need to secure a watering down of the Lamy plan.

But Fischler's team this week said he would be ready to accept a five-year delay in exchange for his approval of the proposal instead of calling for the troublesome sectors to be removed from it altogether.

Lamy's aides are not saying whether their boss would be willing to allow an extra two years for the phase-in period. Diplomats insist that a compromise deal would be acceptable to the northern member states which are the keenest supporters of the 'everything but arms' package. But they also claim it would do little to assuage Spain, Portugal and Greece, which want sugar, rice and bananas taken out of the equation.

If the Commission buries its internal differences as expected, Lamy and his officials will still have to struggle to convince member states that the proposals would not lead to a deluge of imports from countries such as the Sudan, Nigeria or Uganda.

"Changing from three years to five years would be a gesture, giving industry longer to adjust, but there would still be a lot of complaints," said one diplomat.

Trade chief Pascal Lamy is fighting demands from his agriculture counterpart Franz Fischler to give EU rice and sugar growers more time to prepare for the elimination of tariffs on imports from the world's poorest countries.