US at odds with EU ahead of trade talks

The US and the EU still have differences on many issues related to farm trade, according to senior US officials, despite their agreement on a framework for negotiations at next week's World Trade Organisation (WTO) talks in Cancun, Mexico.

In a breakthrough ahead of Cancun, the US and the EU recently agreed a paper to go before the talks, suggesting a common approach to reducing agricultural subsidies. However, in a briefing for Irish journalists yesterday, senior officials from the State Department and the US Trade Representative's Office said this paper was a framework for negotiations and that in some areas the US favoured larger subsidy cuts than the EU.

"Agriculture is a wedge issue, a key issue in moving things forward," said Mr Shaun Donnelly, from the State Department's economic and business division, speaking via video link from Washington. The US approach in this and other areas would be to seek ambitious agreements to open up markets, he said, and it would favour greater liberalisation than the EU in areas such as market access.

The EU will obviously come under pressure in Cancun to go beyond what was contained in the recent CAP reform plan, as other farm exporting countries and some developing countries have criticised the CAP plan and the EU/US framework.

The Irish Farmers' Association met Mr Michael Ahern, the Minister for Trade and Commerce yesterday, to state that the talks must not agree subsidy cuts beyond those contained in the plan. Mr Ahern, who will attend the talks, said he "noted" the concerns.

Mr Donnelly would not comment directly on the CAP reform plan. However, he did say that the EU's approach - whereby agreement is reached beforehand among EU member-states before WTO talks - may cause problems. " It can be perceived as difficult by other parties when one party says 'we have met, this is what we can do to 2010 , nothing more is possible'."

The Cancun talks were "an historic opportunity", said Mr Matt Rohde of the US Trade Representative's office, with the core issues being improved market access in agriculture, manufacturing and services. The Cancun meeting should take decisions to move the process forward to "very ambitious results", he said.

The economic importance of progress in the mid-term meeting - the Doha WTO round is due to conclude by January 2005 - was also emphasised yesterday by US and EU business lobby groups.

The US will push for significant reductions in import tariffs (taxes), the officials said, favouring a formula which led to larger cuts in bigger tariffs. Lowering tariffs and "bringing all members into a global trading system" could boost trade and growth for all countries, they added. While special phase-in periods may be appropriate for lowering tariffs in developing countries, the US would oppose any proposals for "a two-tier system".