EU offers to end export subsidies

Agreeing on trade issues will help boost global growth

The European Union has offered to stop subsidising farm exports in a move aimed at reigniting world trade talks.

European trade commissioner Pascal Lamy has written to members of the World Trade Organisation outlining the plan.

An agreement will depend on other WTO countries such as the US, Canada and Australia being willing to follow suit.

France, one of the main beneficiaries of farming aid, has criticised the step as "dangerous", adding that the EU was not authorised to make such an offer.

According to the EU's latest figures, subsidies on farm exports were 2.8bn euros (£1.9bn; $3.3bn) in 2001, a fraction of the trade bloc's total aid spending.

Brussels set aside 48bn euros in its 2003 budget to help farmers, almost 49% of its annual expenditure.

Too far

Even though the planned cuts have been flagged for some time and their effects will be somewhat limited, they are proving controversial.

France's Agriculture Minister Herve Gaymard said: "We are very much opposed to this".

Speaking at a meeting of ministers in Killarney, Ireland, he added that: "This seems to exceed the negotiating mandate and also seems to be tactically very dangerous."

Germany, however, welcomed Monday's announcement with the country's minister calling it "an important signal".

Poorer nations have long complained that subsidies give farmers from more developed countries an unfair advantage by keeping prices artificially low.

Sticking point

The issue has come increasingly into focus during recent years as economic growth slowed worldwide, prompting job losses and calls for greater protection of domestic industries.

WTO talks in Cancun, Mexico, last year were dogged by violent demonstrations and eventually collapsed amid allegations from all sides of intransigence over state handouts to agriculture.

Since then politicians have been trying to breathe new life into the process and want to hammer out by July a framework that will allow them to deal with the more sensitive issues.

Trade ministers from about 30 countries are scheduled to meet in Paris on Thursday and Friday.

Ready?

The EU's agriculture commissioner, Franz Fischler, said the time was right for them to sort out their differences.

"We feel that a breakthrough is possible and the EU is ready to do its part," he told reporters at the meeting in Killarney. "All our export subsidies are effectively on the table."

According to Mr Fischler, "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".

For its part, the US indicated that it would be willing to negotiate on export subsidies.