Eliminating agricultural subsidies a priority

By FRAN O'SULLIVAN assistant editor


US Trade Representative Robert Zoellick has made the elimination of agricultural subsidies a priority in a fresh attempt to invigorate the global trade agenda.

The US Ambassador has also put the European Union on the spot, singling out its system of export subsidies as the principal obstacle to successful trade talks.

Zoellick this week sent letters to 148 members of the World Trade Organisation (WTO) promoting a "common sense" approach to advance negotiations on the Doha development round which stalled last September amid claims by poorer countries that they were being disadvantaged by wealthier nations.

Yesterday, WTO director-general Supachai Panitchpakdi welcomed the US move.

But Zoellick's decision to break a joint US/EU joint negotiating position at the WTO has attracted fire from Brussels: "The EU had already proposed the total elimination of export subsidies on products of interest for developing countries," said a spokesperson.

Key elements of the Zoellick agenda also include substantial increases in trade-distorting domestic support and real market access opportunities in developed and developing nations.

An ambitious tariff-cutting formula for manufactured goods and "meaningful" services liberalisation are also on the list.

Trade Negotiation Minister Jim Sutton is positive the US has seen fit to "lift the level of ambition" again.

"Zoellick has got himself more clearly back on the side with those who advocate a fairly ambitious level of trade liberalisation - especially in agriculture. It was a position that had been pretty clear - but got distinctly muddied when they reached a common position with the EU."

He contends that US farmers will accept reduction in domestic subsidies if there is also radical liberalisation of world markets "so that they can get into them and sell into them".

Zoellick's plan will be explored at a WTO "mini-ministerial" meeting to be held on the outskirts of the World Economic Forum meeting in Davos next week.

Sutton leaves for Switzerland on Tuesday.

But some big-hitters like EU trade commissioner Pascal Lamy will not be present. His spokeswoman says he has prior engagements.

There are also doubts over Zoellick's attendance - he plans a tour of four key capitals next month to "meet with ministers, listen to ideas and work for progress".

Says Sutton: "If Zoellick and Lamy and the Japanese and the Chinese and Indian ministers all announce that they are going to have a mini-ministerial in Switzerland, and at the end of that day of talks they can't announce a breakthrough understanding, it will be written up as a failure and just detract from what small amount of momentum is there."

The Cairns Group of agricultural exporting countries - to which New Zealand belongs - will also meet next month in Costa Rica. The hope is a consensus can be gained before a full WTO ministerial meeting is held in Hong Kong this year.