US subsidies set to thwart Geneva talks

Published on Wednesday 23 July 2008 21:54

LITTLE progress is being made in Geneva by the representatives of 35 countries at the World Trade Organisation's discussions aimed at liberalising international commerce.

These negotiations, part of the so-called Doha Round, which involves all 152 WTO member states, date back to 2001.

Agricultural subsidies and tariffs are a key issue, with many of the world's developing economies taking the view that the EU's Common Agricultural Policy and the support for farmers in the US work against both their farmers and consumers.

The Scottish farming industry receives about 450 million a year through the "single farm payment", which was introduced as the major element of the Cap reform negotiations in 2003 and became operational on 1 January 2005.

Jim McLaren, president of NFU Scotland, has been watching the situation closely. He said yesterday: "For Scottish farmers and growers there is unlikely to be any good news if a deal is done in Geneva.

"It is tragic that the fate of EU agriculture has been left to Peter Mandelson, who appears to be acting simply as an extension of the UK government in his efforts to seriously undermine agriculture and food production in Europe.

"By his own admission, EU farmers will be the major losers from the deal he has brought to the negotiating table. The possible loss of tens of billions of euros in support of EU agriculture is certain to hammer production and slash the workforce in both agriculture and food production."

Farmers in Scotland are generally of the view that the world would be a better place with fewer trade restrictions, but there must be a level playing field.

McLaren added: "Farmers elsewhere should not only meet our standards of animal welfare and environmental protection, but must also be forced to jump daily through the same costly bureaucratic hoops as EU farmers. The biggest travesty is the fact that standards of production are not a trade issue for the WTO. Until that position changes, it is hard to foresee any trade deal that would be acceptable."

The US looks set to be the major obstacle in Mandelson's path following the passing last year of the Farm Bill, which gave increasing handouts to farmers and virtually gives them guaranteed prices. This legislation is diametrically opposed to the whole ethos of the WTO and would have to be totally rewritten for any deal to be struck this week in Geneva.

However, with both presidential and congressional elections looming in the US, it is hard to see how much stomach politicians would have for taking on the powerful farm lobby.

That poses the question of what will happen if no deal is struck this week. The consensus among most commentators is that if the Doha proposals are put on ice, then major trading nations will seek to arrive at further bilateral deals with important partners, most of which will inevitably fall outside the remit of the WTO.