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  • Oct 24th, 2005
  • Comments Off on EU faces crunch week to save global trade talks
European negotiators in strained global trade talks face a week of hard number-crunching as they try to square demands for bigger farm sacrifices with fierce opposition from France to any more concessions.

The United States and other big trading nations are blaming the European Union for an impasse threatening to derail a World Trade Organisation (WTO) agreement due in mid-December.

An outline for a WTO deal, which has been four years in the making, must be agreed in less than two months' time, when all 148 member countries meet in Hong Kong.

Brussels must decide how much more it can offer in cuts to the agricultural import tariffs it has used for decades to protect European farmers.

"We're number-crunching to see what we can do, within our mandate," said European Commission agriculture spokesman Michael Mann. "But at some stage everyone needs to get realistic."

Under fire from Paris, EU Trade Commissioner Peter Mandelson says the demands of the United States and other countries are "hopelessly over-inflated" and without a breakthrough in the next two weeks the scope of the round will be scaled back.

That would shatter hopes of a bold WTO deal spanning industrial goods and services as well as agriculture, which would boost the world economy and help farmers in developing nations.

The EU and the four big trading countries - the United States, Brazil, Australia and India - are due to resume talks on Friday by telephone, a sign that ministers are not confident progress can be made.

Before that, the French will try again to tie Mandelson's hands when EU farm ministers meet in Luxembourg on Monday.

Mandelson has said he might not put new numbers on the table this week but if he did, it would be Europe's final offer.

"It depends not only on figures but on politics. We do have a margin of manoeuvre based on our mandate. We can act," he told newspaper correspondents on Friday.

The risk of failure in December grew last week after the EU failed to move anywhere near the demands of its partners.

The United States, Australia and Brazil say the EU must at least double its tariff reduction offer to somewhere between the 54 percent average cut proposed by the G20 developing countries and the 75 percent sought by the United States. But the European Commission's room for manoeuvre is severely limited by the terms of its mandate from member states.

France, the staunchest defender of Europe's farm spending of over 40 billion euros ($48 billion) a year, says Brussels has already used up all its negotiating margin and the government is subjecting Mandelson to daily criticism.

French Interior Minister Nicolas Sarkozy, his eye on the next French presidential elections, accused Mandelson last week of accepting "a fools' bargain" in the talks.

The Commission's mandate states Europe's main contribution to the WTO round on agriculture is the reform it carried out in 2003 reform of the bloc's Common Agricultural Policy. The reform shifted most subsidies for European farmers away from trade-distorting payments linked to output.

But the mandate is not specific about how far the EU can cut its import tariffs. Brazil's trade minister says there is no reason why Brussels could not be more ambitious in its offer.

"I don't think the (mandate) has precise numbers on what can and cannot be done," Celso Amorim told reporters last week. "I hope Europe is able to take the bold view."

Brazil, with its massive, super-efficient farms, hopes a move by the EU on import tariffs will put pressure on the United States to improve its offer of subsidy cuts.

Brussels has also angered its partners with its proposal not to limit too severely the number of "sensitive" farm products - like dairy and beef - which would be spared big tariff cuts.

Copyright Reuters, 2005


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