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Friday, 3 December, 1999, 14:19 GMT
Farm fight follies

farm Agriculture is one of the world's largest exports

As negotiations near the deadline at the World Trade Organisation meeting in Seattle, our North American business correspondent Richard Quest asks whether trade ministers can finally settle the long-standing row over agriculture.

It is a subject that has brought countless trade talks to failure before. It has cost billions of dollars in subsidies and bedevilled the World Trade Organisation since its inception.

The battle for free trade
The question of farm and agriculture subsidies goes to the heart of the WTO and has been among the most difficult subjects under discussion in Seattle.

The Europeans are leading the charge to continue helping farmers. Export subsidies and crop payments are an important part of the EU's Common Agricultural Policy, benefiting thousands of farmers.

US cattle Exports of hormone-treated beef caused friction between the US and EU
The Americans - with their giant, highly profitable factory farms - are against the programmes and have fought for years to have them eliminated.

The Cairns group, which includes Australia, Brazil, Chile and New Zealand among others, sides firmly with the US.

Old problems, no solutions

Trade negotiators failed to solve payments to farmers back in the old days of the GATT, the predecessor organisation to the WTO, and agreed to postpone key decisions during the Uruguay Round in 1994 - leaving them to the current round of talks.

So the delegates to the Third Ministerial Meeting, here in Seattle, are spending much time going over old business. Basically, how far can nations subsidise farmers for non-farming purposes?

Reaching agreement is not easy. According to Richard Fisher, the US Deputy Trade Representative and the number two negotiator for the United States, "The easy stuff on trade has already been done through previous trade rounds. The toughest decisions and the most difficult ones are about agriculture."

The two sides came here very far apart and they have spent most of the time until now name-calling.

Everyone says that everyone else is subsidising their farming industries. The Americans claim that European farmers are the most subsidised in the world (agricultural subsidies make up 47% of the EU budget but just 0.5% of EU GDP).

The Europeans say the Americans are doing exactly the same, just through the back door.

Franz Fishler, the EU Agriculture Commissioner believes that Americans don't want to eliminate subsidies completely because so many American farmers in the Midwest themselves benefit.

A compromise?

After years of going backwards and forwards on this issue, now there are reports that at last agreement might be close.

It now appears that the European Union has moved on the question of cutting subsidies, provided the Americans don't insist on wording that would 'eliminate them' - that is an absolute no-no.

Pascal Lamy, the EU Agriculture Commissioner told the BBC: "We are not at the end of the day yet, but I believe the idea that agriculture is not only about food and has other functions is something which the EU has been pushing and is now more acknowledged by a larger circle than before."

This known as multi-functionality and is a cornerstone of the EU demands.

"What it is about is: does agriculture have an environmental function? The answer is yes.

"Does it have to do with rural development? The answer is yes.

"Is it important for family communities? The answer is yes. So this is what we mean by multi functionality."

Tightening up

But everyone else wants to tighten up when farmers can be subsidised and that is the problem.

Australia's trade minister Mark Vail recognised that there were times when the government would want to help farmers during crises - and that there were non-food benefits to farming, such as in the Australian outback rural communities.

Even so, he wants an agreement to reduce and ultimately eliminate subsidies: "This particular group of ministers is focused on making progress."

In a warning about the future of the WTO he says, "This is a watershed where we must see tangible benefits."

As the hour grows late for agreement, everyone in Seattle knows that agricultural issues will be the touchstone for these talks.

Other newer items may be put on the agenda, but the ability of the American and the Europeans to settle an issue that has destroyed so many previous talks will be an achievement everyone will find worthwhile.

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See also:
24 Nov 99 |  Battle for Free Trade
Agriculture trade battle looms
02 Dec 99 |  Business
EU makes biotech concessions
20 Jul 99 |  The Economy
US hits EU, spares UK in beef war

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