Until now EU has been unwilling to eliminate farm subsidies.

KILLARNEY, Ireland The European Union is ready to eliminate its
lavish subsidies on farm exports to galvanize sluggish world trade talks
provided its main partners do the same, EU trade chief Pascal Lamy said on
Monday.

Details of the proposed move, long demanded by critics of its generous farm
subsidies, have been sent to members of the World Trade Organization (WTO)
just days before ministers from several WTO states hold a potentially
crucial meeting in Paris.

"We feel that a breakthrough is possible and the EU is ready to do its
part," Agriculture Commissioner Franz Fischler said. "All our export
subsidies are effectively on the table."

The EU spends about 43 billion euros a year on its farm policy, nearly half
of its entire annual budget. By far the largest proportion of this goes to
France. The EU has faced mounting pressure to abolish its export subsidies.
Lamy said the offer depended on the EU’s WTO partners matching the move,
which the United States has indicated it is willing to do. It also required
progress in the two other key areas of the negotiations, domestic farm aids
and market access.

"If an acceptable offer emerges on market access and domestic support, we
would be ready to move on export subsidies," Lamy said in the letter, a copy
of which was obtained by Reuters.

Up to now, European unwillingness to eliminate these subsidies by a set date
has been a major obstacle to reaching a deal on agriculture, widely viewed
as the key to unlocking the WTO’s troubled Doha Round of trade
liberalization talks.

Fischler said the EU was offering concessions on new trade issues, known as
the Singapore issues, special treatment for the weaker developing countries
and on agriculture.

"This means that our international partners have to make clear that they are
ready to fully match the EU on their forms of export support such as export
credits, abuse of food aid or state trading enterprise," he told reporters
at a meeting of the EU’s 25 farm ministers in the Irish city of Killarney.

Stalled trade talks

The round, whose successful conclusion economists say would give a huge
long-term boost to world growth, was supposed to have been wrapped up by the
end of this year.

That deadline is certain to be missed and in its place negotiators want to
reach outline deals, or frameworks in WTO parlance, in the main areas by the
end of July.

Diplomats from EU trade partners welcomed the EU’s offer but said it would
have only a limited impact because it was simply a public announcement of
something the bloc had long ago been signaling in private.

"Of course it is good news but I do not see it making an awful lot of
difference," said one Geneva diplomat from a leading developing country.

The bloc insists it has already made massive strides in reducing the worst
of its trade-distorting farm support — market price guarantees and export
subsidies — in two reforms in 1992 and 1999 and also in major changes
agreed last June.

On market access, Lamy said the EU was sticking to its guns for a "blended"
formula, which would allow the 25-nation bloc and countries like Japan with
expensive domestic farm industries to keep high tariffs on some politically
sensitive goods.

But the G20 group of developing countries, led by Brazil, India and China,
has rejected this as it says it would asks too much of developing nations
and too little of richer states.

The market access formula for how much states will open markets to others’
goods will be at the center of talks in Paris at the Organization for
Economic Cooperation and Development (OECD), which start Wednesday when
technical experts meet.

About 28 trade ministers, including Lamy and U.S. trade chief Robert
Zoellick, will meet on Thursday over dinner and on Friday afternoon for what
will be the last chance to bring so many ministers together before the July
deadline for the frameworks.(Reuters)

http://www.cnn.com/2004/WORLD/europe/05/10/eu.farm.reut/index.html