Brussels, like Washington, is planning to launch measures to regulate commodity exchanges and curb speculation, as well as step up transparency in food trade after the recent surge in agricultural commodity prices.
"We are examining with care rules adopted in the United States (in raw materials markets), and notably those concerning position limits or powers given to regulators, including a mandate against speculation," said EU Internal Market Commissioner Michel Barnier.
"We are ready to be pioneers too, if possible," Barnier added during a two-day conference in Brussels on financial services, which ended yesterday (21 September).
The commissioner underlined that the planned reform of the law, known as the Markets in Financial Instruments Directive (MiFID), and the envisaged review of the EU directive on market abuse will provide an opportunity for "an ambitious overhaul of the markets of raw materials".
The first legislative proposal is expected for spring 2011.
Food prices in the spotlight
Barnier's statements were echoed by his colleague in charge of agriculture, Dacian Ciolo?, who for the first time openly backed a tough line against speculation on commodity markets.
Speaking at the same conference, Ciolo? joined the chorus of criticism against speculation, which is portrayed as responsible for current price volatility.
"It's clear that the evolution of agricultural commodity prices, both upward and downward, has never been so abrupt. This has an impact on farmers, food-makers and consumers. Speculation should not endanger economic activities which are normally viable," the EU agriculture commissioner stated.
Echoing Barnier, Ciolo? also highlighted as a crucial step forward the reconsideration of "position limits to counter excessive movements".
The US authorities have imposed limits on the number of commodity contracts held by financial actors, such as banks or hedge funds. It is not clear how far Europe will go with its reform.
However, some experts have already criticised the US move on the grounds that there is no way to measure excessive positions.
Critics underline that high volatility in food prices is the consequence of other factors rather than speculation, which is instead seen by financial actors as a way to protect investment against potential risks, thus favouring further investment.
They point the finger at weather conditions, which dropped production in top wheat exporters, such as Russia or Ukraine (EURACTIV 26/07/10), inflation driven by cash injections by central banks and policies favouring biofuel production over crops.