France claims EU trade chief crosses ‘thin red line’

By Chris Jones - 13th October 2005

---

France believes EU Trade Commissioner Peter Mandelson has overstepped his negotiating brief by agreeing to cut import tariffs on food.

Mandelson made the concessions in Switzerland this week at preparatory talks for December’s WTO summit in Hong Kong.

Subsidies for farmers in Europe and the US were blamed for the failure of the last round of WTO talks in the Mexican city of Cancun in 2003, and Brussels and Washington are under pressure to make more concessions this time around.

The US said it would cut its subsidies on the most trade-distorting products by 60 per cent, if Japan and the EU agreed to an 83 per cent reduction.

But Mandelson said the EU was only prepared to make a 70 per cent reduction, while Japan rejected the US proposal altogether, saying it did not go far enough.

With ministers needing an agreement before Hong Kong, trade representatives are working on new proposals ahead of an emergency meeting in Geneva next week.

But moves by Mandelson to kick start new negotiations by offering a major reduction in EU import tariffs have angered France.

Philippe Douste-Blazy, France’s Foreign Minister, has complained that Mandelson has overstepped his remit by offering concessions without prior consultation with other EU members, a claim denied by Brussels.

EU foreign ministers will hold an emergency meeting in Luxembourg next week to discuss the issue.

French farmers are the biggest recipients of EU subsidies, and the agricultural lobby there is a powerful political player. As a result, any proposals that threaten French farming incomes tend to be vigorously opposed by Paris.

France sent a letter to the European Commission on October 7 setting down a “thin red line” that should not be crossed in the negotiations. Twelve other EU countries supported France’s position.

Tariff cuts vital

Nonetheless, a reduction in import tariffs is seen as vital for the opening up of world trade as envisaged by WTO leaders at their talks in Doha in 2000.

Pascal Lamy, the former EU trade commissioner who is now the new head of the WTO, has made it clear that food producers in developing countries had to have free access to markets in the developed world for any agreement to be reached.

Michael Howard, Australia’s Prime Minister, said that Europe needed to go even further in making concessions.

“The greatest stumbling block still remains the attitude of many countries in the European Union towards the common agricultural policy,” he told reporters.

He stressed that Australia had some of the lowest tariff levels in the developed world.

But convincing Brazil and the other ‘developing’ nations in the so-called G20 group that the subsidy and tariff cuts go far enough be the key to any agreement.

It was the G20’s refusal to accept EU and US concessions in Cancun that led to the failure of that round of talks.

And there is little sign that Brazil and the other southern nations in the G20 are likely to be any more convinced this time around.

The main sticking point is that the concessions made by the US and the EU will not lead to an overall reduction in subsidies – just those that are the most distorting to world trade.

Unfair trade

Lobby groups are also concerned that the talks will fail to make to any real difference.

“For a deal to be acceptable for developing countries, the EU and US need to demonstrate genuine reductions in agricultural spending and real improvements in market access for poor countries,” said Celine Charveriat of Oxfam.

“They must guarantee developing countries the flexibility to decide their own trade policies, not force them to make harmful concessions.”

“Poor countries need to be reassured that they will be able to use trade policies to promote development. Pressure to get a deal by December must not mean that they are forced to compromise or accept terms that will damage their economies and people.

“Yes, we want a deal at the WTO – but not at any cost.”

France’s insistence that a line be drawn beyond which no concessions should be made was also criticised.

Luis Morago, Oxfam’s representative in Brussels, called the move “a protectionist approach that risks hampering progress”.

“The commission needs a strong backing instead of having its arm twisted by key member states.”