U.S.-EU Summit Addresses Doha Differences Ahead of Month-End Meeting

New OECD report challenges the view that high levels of support are necessary to ensure the quality of the environment and prosperity in rural areas.

During discussions Wednesday between United States and the European Union, leaders reiterated their commitment to a successful World Trade Organization round by the end of 2006. Leaders met in Vienna, Austria to discuss several matters, including world trade talks.

President George Bush said the discussions were frank. "The Europeans have problems with the U.S. position; we have problems with the European position; we both have problems with the G20 position. But the point is, we're committed to a successful round. And it's going to take hard work," he says.

"My pledge to our European counterparts is, we'll do the very best we can to reach an agreement that is - that satisfies all parties' desires," Bush adds.

Ministers plan to meet in Europe at the end of this month. A joint statement from the leaders states the negotiations are at a critical phase and called on WTO members to demonstrate the political will and courage necessary to achieve an ambitious and balanced agreement. "We recognize the need for trade ministers to make substantial progress on core negotiating areas over the next few weeks in order to ensure that this historic opportunity to liberalize trade is not missed," according to the statement.

US may need to give more on domestic support

Recently EU has pressured for deeper cuts to U.S. domestic subsidies. House Agriculture Committee ranking member Collin Peterson did not welcome statements by President Bush Wednesday that he'd be willing to offer more than the 60% cuts. "Not only is the President willing to abandon American agriculture by sacrificing U.S. farm support, but he is now suggesting that they have to give up the one thing they promised American agriculture - increased market access," Peterson says. "I hope that the White House is not so desperate to make a deal that they are willing to give away the farm in the Doha Round."

The Organization for Economic Cooperation and Development released a study on government support to farmers that argues against the view that high levels of support are necessary to ensure the quality of the environment and prosperity in rural areas.

Government support, measured as the overall Producer Support Estimate varies widely across OECD countries. The PSE in the European Union was 32% of farm receipts in 2005 (compared with 33% in 2004) and in the US 16% (unchanged). The largest proportions of government support are found in Japan (56% in 2005), Korea (63%), Norway (64%) and Switzerland (68%).

The report, Agricultural Policies in OECD Countries - at a Glance, adds that 59% of government support last year was in the form of measures to boost the prices of farm products. These include import tariffs, export subsidies and domestic output subsidies which, says the OECD, badly distort production, markets and trade.

However, OECD says most support goes to those who have the largest farms while government aid often "leaks" out those who are not the intended beneficiaries such as suppliers or people who own, but do not farm, land, it says. Policies to improve the environment are often ineffectual because they mainly offset pressures on natural resources from subsidies that stimulate production. Rural development is more effectively fostered by measures such as investment in infrastructure, education and social services.

Presenting the report in Brussels, Ken Ash, the OECD's deputy director of food, agriculture and fisheries says, "If governments break the link between support and production and establish better links between support and what they are trying to accomplish - for instance, environmental sustainability or rural community well-being, they will improve the performance of domestic policies and avoid negative impacts on world markets."

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