Trade talks win lease of life on EU subsidy plan
LEIGH PHILLIPS
28.07.2008 @ 10:18 CET
A late intervention by World Trade Organsation chief Pascal Lamy on Friday (25 July) has saved global trade talks from collapse for now, suggesting fresh cuts in farm tariffs in return for access to industrial goods markets in the developing world.
The Lamy proposals would see the European Union reduce support for agriculture that is the most trade-distorting by 80 percent, matched by a cut of 70 percent by the United States.
The EU and Latin America banana war seems to have come to an end (Photo: EUobserver.com)
Additionally, the EU would lower tariffs on farm products by 60 percent, with the US limiting its annual subsidies for farmers to $14.5 billion.
The quid pro quo for developing countries would be wider cuts to protection for industrial goods than they had previously proposed, with no figures specified for now.
Delegations in Geneva for the latest series of negotiations, which originally began seven years ago in Doha, Qatar, had been deeply pessimistic about a deal on Friday, with southern countries rejecting offers of EU and US cuts to agricultural subsidies as insufficient.
On Friday Mr Lamy warned that the talks were on the verge of collapse and EU delegations had already booked their flights home due to the stalled negotiations. But the debate is now set to continue into a second week.
Banana optimism
Meanwhile, fresh optimism was delivered by a tentative deal on bananas on Sunday, which may bring to a close a 16-year-old dispute between the EU and Latin America.
Under the agreement, the EU would cut its tariff on bananas to €114 per tonne by 2016, down from €176 a tonne, with a first cut in 2009 to €148.
Latin America has traditionally argued that any tariffs are unfair so long as the EU gives duty-free access to bananas from its former colonies, with ex-colony Cameroon - which benefits from the status quo - criticising the tentative new deal.
The EU and US also reached out to the developing world by offering to loosen restrictions on the entry of highly-skilled immigrants, with EU trade chief Peter Mandelson proposing 80,000 new temporary work visas for workers in the services sector.
The proposal focuses on the hi-tech sector, a main demand of India.
Any conclusive deal is far from being achieved, however. Over the weekend new fears emerged about a split amongst developing nations, with China requesting the exclusion of some industries, in particular machinery and chemicals, from the general trade liberalisation proposals.