EU concerned with US farm subsidies

EU policy makers and farmers organisations have
expressed concerns that the new US Farm Bill will endanger WTO
trade liberalisation talks on agriculture.

The proposed new legislation would raise price guarantees
for corn, wheat, oats, and sorghum. It would also revive a
target price system, abolished in 1996, to provide
additional payments to farmers when commodity prices are
below minimum levels.

The additional subsidies to US farmers,
amounting to 73.5 billion dollars, threaten to distort
production and markets across the world. The reinforced
price-linked payments which shield farmers from low prices
will result in over-production.

The US Farm Bill adds to the ongoing
EU-US trade disputes over steel, beef and company tax


EU Agriculture Commissioner, Franz

, warned that the new US Farm Bill "risks calling into
question the reform promises of Doha". He underlined that
the US is likely to breech WTO ceilings for
production-distorting expenditure. The Commissioner called
on the US to respect WTO rules, and expressed concern that
the proposed Farm Bill send a negative message to
developing countries.

The Commissioner stated that the
proposed legislation "marks a blow for the credibility of
US policy in the WTO, where the US has presented a
trade-oriented agenda wholly inconsistent with the new

Committee of Agricultural Organisations in the
European Union (COPA)

sees the proposed Farm Bill as "a clear admittance that
even in the most market based society, the US, agriculture
cannot be left to market forces but needs also agricultural
policy". However, COPA underlines that it cannot accept
"the strongly trade-distorting way the US is now proposing
to support agriculture".

COPA warned that the US Bill is
detrimental both to poorer countries and European farmers
who are trying to stabilise production and markets. "The
new US Farm Bill means total failure of the late 1990's
American agricultural policy model which still inspires
certain quarters in Europe in efforts to dismantle the
European CAP," stated COPA. It called on the EU to develop
a balanced CAP "through avoiding a split between the two
pillars of CAP".

Australian Agriculture Minister, Warren

, expressed his disappointment over the proposed US
legislation, stating that "the US has clearly abrogated its
leadership on the issue of world trade in agriculture".
Australia, one of the big farm exporters, fears the new US
subsidies will further depress commodity prices around the
world. The Australian government intends to challenge the
new US legislation through the WTO.

US Nobel price winner for economy Joseph
Stiglitz on Monday 6 May attacked the subsidies to US
farmers as hypocritical in an interview with the French
financial daily La Tribune. Stiglitz stated the total of
agricultural subsidies in the northern hemispere was now
greater than the gross domestic product of sub-Saharan


The US House of Representatives and the Senate have reached
a compromise on the new Farm Bill that will boost
agriculture spending by 70 percent over the next 10 years
and increase subsidies to US farmers.

Over 14O member countries of the World
Trade Organisation (WTO) are negotiating on the
liberalisation of agricultural trade in Doha Round that is
supposed to be completed by 2005. The aim of these
negotiations is to improve market access, abolish all forms
of export subsidies and reduce trade-distorting domestic


US President George Bush is expected to sign the new Farm


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