Financial Times, London, November 02, 2005

Australia attacks EU on farm subsidies

Australia’s foreign minister on Wednesday launched a blistering attack on France and the European Union, claiming that next month’s crucial World Trade Organisation meeting could fail because "French farmers were holding the international trading system to ransom".

Alexander Downer said France should have endorsed a US offer to cut farm subsidies and the chance of reviving the Doha round of world trade talks.

"The French government has failed to take advantage of the US offer, which represents a once-in-a-lifetime opportunity that ought to be grasped," he said. "It will be bad for the EU’s standing in the world if, in the end, it cripples the Doha trade round."

Although the EU tabled last week an improved agricultural offer, the US as well as Australia and other members of the Cairns group of agricultural nations said the EU continued to fall short of their demands for greater market access for their farm exports.

A senior US trade official told the FT that, given the level of ambition shown by the EU in the farm talks, Europeans should brace themselves for reduced concessions from other WTO members in industrial tariffs and services. He warned that the US could downgrade its agricultural offer in response: "If that is all they (the EU) can do on market access, they cannot expect us to maintain what we have offered on domestic support.’’

While the US remains committed to next month’s WTO meeting in Hong Kong, the US official said the outcome might not be the two-thirds completion of the Doha round that had been envisaged. "We have to figure out for Hong Kong what is the best we can achieve and it is very unlikely to be what we had hoped for at the start of this year,’’ he said.

In Geneva, Pascal Lamy, WTO director general, warned that a Doha round failure would cost billions of dollars in trade and development gains forgone, and "be cruel for developing countries’’ hoping for a more equitable trading system.

In agriculture, the world would miss a "historic opportunity" to eliminate export subsidies and lock in real cuts in trade-distorting supports.

Mr Downer said the EU needed greater leadership. "We were always pessimistic about the [Doha] round succeeding because of fears over EU protectionism," he said.

In the event of failure in Hong Kong next month, Mr Downer said Australia would speed ahead with "Plan B" to sign further bilateral and regional trade agreements. "We will go off in another direction and aim to create, over the long term, a free trade area covering the Asia Pacific region, which is the most dynamic area in the world," he said.