Bush says can end farm aid, EU says 'let's see'

GLENEAGLES, Scotland - US President George W Bush said on Thursday that Washington was willing to work with the European Union (EU) to abolish farm subsidies as early as 2010, but European officials responded sceptically.

Top EU trade negotiator Peter Mandelson said it was time for all to deliver now in the Doha Round of international free trade negotiations, but his spokeswoman said 2010 looked unrealistic for a phase-out of farm subsidies.

"We want to work with the EU to rid our respective countries of agricultural subsidies," Bush told reporters at a meeting of world leaders, where Britain was pressing rich nations to commit themselves to fairer trade with Africa.

"I hope that by 2010 the Doha Round will achieve that objective," Bush said.

That is a date Britain floated ahead of the Group of Eight summit that Prime Minister Tony Blair is chairing in Scotland -- but the British idea concerns export subsidies rather than aid for farmers as whole.

French Farm Minister Dominique Bussereau defended the EU's Common Agricultural Policy, which eats up about 40 per cent of the centralised EU budget, while a European Commission farm spokesman said the EU was already overhauling the CAP system.

"In recent years we have been moving towards a much more trade-friendly farm policy and the Americans have been moving in the opposite direction," spokesman Michael Mann said.

Mandelson, who negotiates on behalf of the 25-nation EU on trade issues and also says US farm aid is rising, told BBC radio that people should stop posturing and agree on the next phase of trade liberalisation.

"Everything is far too urgent for plodding," he said. "I'm afraid there is too much circling around each other."

The United States and the EU constantly spar over farm aid and even dispute what is aid and not, while Africa and many other countries say they are being shut out of world markets.

According to calculations by the charity Oxfam, state aid allows US farmers to export cotton and wheat at 35 to 47 per cent of the cost of domestic production, and helps EU farmers export sugar and beef at a discount of 44 to 47 per cent.

The Organisation for Economic Co-operation and Development says the EU spends US$133 billion ($199.81 billion) a year on farm support and the United States around US$47 billion.

Mandelson's spokeswoman Claude Veron-Reville, speaking in Brussels, said US proposals on the matter would be welcome, but that a phase-out in five years was not possible.

"We have said that 2010 was not credible, but that 10 years would be too long," she said, reiterating the EU line that any deal on the abolition of farm export subsidies depended on agreement in other domains.

There was some confusion in Brussels about what exactly Bush was talking about, but US officials confirmed he was referring to the phasing-out of farm aid in general, not merely subsidies for farm exports.

Supachai Panitchpakdi, head of the Geneva-based World Trade Organisation, also urged the leaders meeting at the Gleneagles hotel in the Scottish countryside to make a renewed commitment to wrapping up the Doha Round negotiations.

"We need the leaders of the world economy to make a strong announcement and commitment that we should finish the round in time, meaning in 2006," he told the BBC.

His appeal went to leaders from the United States, Japan, Germany, France, Italy, Britain, Canada and Russia, who were joined at their G8 summit by leaders from China, India, Brazil, South Africa and Mexico.

Blair says the G8 push on debt relief and aid for Africa and the rest of the developing world makes little sense if wealthy countries are subsidising their farm produce and squeezing out poor African countries as a result.

The Doha round of trade talks reaches a critical point in December, when ministers meet to negotiate in Hong Kong.

- REUTERS