US calls for end to EU export aid

Not everyone sees free trade as a good thing

The US has once again called for the European Union to abandon farm export subsidies, adding that it would do the same in the interest of free trade.

At a press conference in Geneva, the US trade representative Robert Zoellick called on the EU to "stop fooling around" and "eliminate them all".

In return, the US would even trim the massive subsidies the US pays to domestic industries such as cotton.

Global trade talks collapsed last year over the issue of farm subsidies.

Troubles

Developing countries say that they can not open their markets fully as long as industrialised countries subsidise their farmers, thus effectively undercutting world market prices.

The EU, which uses export subsidies more than any country or organization in the world, has said it would be willing to trim those that are shown to hurt poorer nations.

It did, however, stop short of offering to get rid of them entirely.

The US government, meanwhile is paying massive direct subsidies to its farmers, which ultimately have the same impact as Europe's export aid.

Agriculture is a thorny issue and proved the stumbling block at last year's world trade talks in Cancun.

Developing countries, including Brazil, China and India, complained that their richer counterparts were unwilling to make concessions that would level the playing field.

Leading industrialised countries in turn accused less developed members of the World Trade Organisation (WTO)of intransigence and making ludicrous demands.

Next step.

Mr Zoellick said it was now time to work through the problems and accelerate preparations for the next set of meetings - scheduled to be held in Hong Kong.

Claiming that there had to be a willingness on the part of all nations to make compromises and show more flexibility, he said that allowing things to slide would be a missed chance.

"I have a sense that there is an opening to achieve progress in 2004," he said. "But it will not be easy."

Following the collapse of the WTO talks in Cancun, leaders said they planned to finalise the framework for new talks by the end of this year.

However, that plan is already well behind schedule.

At an informal meeting of trade ministers on the sidelines of the World Economic Forum in Davos, little common ground was found to agree even on a framework for trade talks.

With the election battle in the United States further sapping political will, observers say it is unlikely that anything will happen this year.

Further complicating matters is Hong Kong's admission that for logistical reasons it won't be able to play host to the talks until 2005 at the earliest.