Sunday, January 14, 2007

Top level push on Doha Round may not work

An attempt by President Bush and Commission President Barosso to re-start the stalled Doha Round trade talks may not succeed in the face of rising protectionist sentiment in the new Congress and intransigence over subsidies in the EU. Meeting in Washington last week the two leaders instructed their chief trade negotiators to come forward with a deal 'as soon as possible'. Talks involving the EU, US, Brazil and India are likely to take place in the margins of the World Economic Forum in Davos, Switzerland at the end of January.

However, a top level steer may not be enough to overcome the gap between the two sides. The EU does not appear to be willing to offer any flexibility on market access beyond the average 51 per cent on farm tariffs already suggested and the US is not willing to give ground either on its demands on tariffs or on domestic subsidies. The subject of sensitive products which would be exempted from cuts also remains a difficult one, although potentially amenable to compromise.

France has meanwhile declared itself shocked by an interview that farm commissioner Fischer Boel gave to the Financial Times making the not unreasinable point that the CAP faced substantial cuts after 2013. Although this is hardly a relevation, French farm minister Dominique Busserau, no doubt without an eye on electoral manoeuvrings in France, called her suggestion 'an insult to the social model to which European citizens are profoundly and legitimately attached.' Whether they are so profoundly attached to subsidies to prosperous farmers is open to question.

Nevertheless, he defended the CAP as the 'cornerstone' of the EU and said that 0.5 per cent of the bloc's GDP was a small price to pay for food security. He got short shrift from Fischer Boel who sent a robust reply declaring 'It is no insult to the future of ariculture to say right now that the anount of funding dedicated to it will probably not remain at the current level. It would be irresponsible not to make preparations for this.'

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