Food industry success tied to positive WTO outcome

The Confederation of the EU food and drink industries believes that current talks have the potential to secure future industry investments in Europe and allow the industry to compete more effectively on foreign food and drink markets.

"We are encouraged by the sense of leadership that major negotiating parties and groups have shown in submitting concrete proposals last week,"​ said CIAA president Jean Martin.

"The European Commission, in particular, has not only demonstrated its continued commitment for a successful round but also showed flexibility within its negotiating position, which other parties should now show as well."​

But success, according to the CIAA, depends on the ability of the EU to ensure that certain issues are properly dealt with. The organisation has called for maintained pressure from the EU on export competition, claiming that negotiating partners must satisfactorily address all elements of export support, including differential export taxes.

This, says the CIAA, must lead to progress on disciplines regarding export credits, State Trading Enterprises and food aid and it is a prerequisite for setting a time period for the phasing-out of export refunds.

In addition, EU tariff cuts must lead to coherence in import duties applied to agricultural products and to their processed goods. Tariffs for processed goods should continue to be calculated according to their ingredient content.

The achievement of a satisfactory agreement however still hangs in the balance. Internal and external disagreements could still rip any fragile consensus apart, putting a breakthrough on global agriculture policy out of reach.

Earlier this month for example, France and 13 other countries, including Spain, Italy, Greece and Portugal, claimed that EU trade commissioner Peter Mandelson had overstepped his mandate at A recent warm up meeting for December's World Trade Organisation talks in Hong Kong.

While Mandelson said that the Commission had acted fully within its remit and had not taken unilateral action when it offered to cut EU agricultural aid subsidies, Carmen Suarez, chief economist at Britain's National Farmers' Union, said the EU and US had still not been clear enough on the big issues for the dairy industry: tariff lines for 'sensitive products' and the timescale for scrapping export subsidies.

France's potential to derail talks remains serious; the country is the largest recipient of EU agricultural aid, getting €9bn more than anyone else, and the government, already unpopular over market reforms and high unemployment, is wary of a political backlash.

In addition, internal strife within the US, without whom an effective agreement cannot be reached, continues to undermine attempts by the US envoy to reach a compromise on farm subsidies.

The US's recent commitment to cut domestic farm subsidies by 60 percent within a five-year timeframe could be vital in "breaking the deadlock in multilateral talks on agriculture, and unleashing the full potential of the Doha Round,"​ in the words of US trade envoy Robert Portman.

Vital, that is, unless heavy opposition at home prevails. In open letter this week to USDA secretary Mike Johanns, Senate agricultural committee chairman Saxby Chambliss expressed his "concern regarding proposals… that would dramatically reduce US farm support."​

In any case, trade ministers will aim to conclude negotiations on the WTO global trade agreement on agriculture and services in Hong Kong this December. The negotiators have already missed their initial deadline of 1 January 2005 for a final agreement on the Doha Round, which began in 2001.

For the EU food and drink industries, a good deal in Hong Kong in December would be a comprehensive set of rules in agricultural trade, leading to balanced and coherent reforms in agricultural policies. But significant obstacles must still be overcome for this to happen.