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 You are in: Special Report: 1999: 11: 99: Battle for Free Trade
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Wednesday, 24 November, 1999, 12:13 GMT
Agriculture trade battle looms
French opposition to agricultural trade deals led to riots

Agricultural subsidies could become the key battleground in the next round of trade talks.

The battle for free trade
Farm ministers from key exporting countries would like the press for the complete abolition of agricultural subsidies, against fierce opposition from the EU and Japan.

Australia, Canada and the United States will urge a "coalition of support" for the abolition of export subsidies and the promotion of free trade in agriculture.

But the EU and Japan look set to resist further demands for trade liberalisation.

Disputes over agricultural subsidies delayed the completion of the last major trade liberalisation round, which ended in 1989. At that meeting the EU pledged further farm reform, which it says it has implemented in its Agenda 2000 programme of Common Agricultural Policy (CAP) reform.

EU on the warpath

Now EU farm ministers plan to go on the offensive, refusing to go beyond agreed reforms and attacking the farm policies of other nations.

They plan to criticise the US practice of export subsidies and the existence of state-run agricultural trade bodies, such as the Australian Wheat Board.

The EU is determined to continue agricultural subsidies
"Appropriate solutions must be found to other less transparent forms of export support such as state trading and the provision of food aid," the EU said.

"The Council is prepared to continue the process of reduction of export subsidies provided that all such support is given on an equal basis," it added.

But the EU does not want to reduce its direct aid to farmers, a key part of its recent reforms which are gradually replacing the price supports under the CAP.

Needs of developing countries

The Cairns group of agricultural exporting nations, and other developing countries, argue that agricultural subsidies of $200bn a year by the rich countries are still one of the biggest barriers to free trade.

They believe that their farmers, are disadvantaged by the lack of subsidy, cannot compete on equal terms with European farmers who receive higher prices than those available on the world market.

They would like the next trade round to pledge the total abolition of agricultural trade subsidies, which they believe would provide the single largest benefit to poor countries of the trade talks.

Japan joins in

Japan, which has the most heavily subsidised agriculture in the world, is also gearing up for resistance to any further liberalisation.

Japan has asserted that due importance should be given to the "multi-functionality" of agriculture, a code word for the subsidies which preserve the rural way of life.

Japan also says it supports the principle of food security, given the instability of world food supply and the issues of starvation and malnutrition in developing countries.

That could be construed as supporting domestic food production, as opposed to exports.

Exports of GM crops are likely to prove controversial
But Japan, which is not a food exporter, once it has secured its own domestic production, says it is willing to give more sympathetic consideration to some developing country concerns.

Food safety row

The EU is also gearing up for further battles in the World Trade Organisation regarding food safety.

It has already been involved in disputes with the United States over imports of hormone treated beef, and there is growing resistance to imports of GM (genetically modified) food.

Now the EU hopes to use the world trade talks to change the rules regarding health and safety in food, in order to make sure its concerns cannot be over-ruled.

That threatens a bitter battle with the United States, which believes the EU health fears to be groundless.

All in all, the issue of agriculture, which many thought would be only a minor issue at the next round of trade talks, now looks like proving just as controversial as it was a decade ago
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See also:
02 Sep 99 |  The Economy
WTO, champion of the 'vulnerable'
30 Aug 99 |  The Economy
US clashes with France on agriculture
07 Sep 99 |  The Economy
Asia-Pacific trade clash
29 Sep 99 |  The Economy
Brazil and Argentina agree shoe deal

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