News Release
Franz Fischler
No.
17/03
March
6, 2003
WTO/Agriculture: EU’S FISCHLER SAYS, “WAY TO A BALANCED AGREEMENT
MUST WEIGH POLICIES ACCORDING TO TRADE-DISTORTING IMPACT”
Following
his meeting in Geneva with Stuart
Harbinson, the
Chair of the agricultural negotiations in the World Trade Organization, EU
Farm Commissioner
Franz
Fischler said:
"All
policies are not the same with respect to their trade-distorting impact, and all
parties have not moved in the same direction. We expect recognition of both facts
in the modalities debate. The issue is rather how to establish a balanced approach
that does not miss the commonly-agreed objective of these negotiations, that is
to move further down the path of less-trade distorting support, and to enhance
trade's contribution to economic growth. Agreement on modalities will only be
reached if all participants consider that a balance of interest has been reached.
The EU remains firmly committed to reaching agreement on the modalities by the
target date agreed at Doha, i.e. 31 March 2003."
The
Commissioner also said:
"The fundamental issue is not so much what overall ambition one sets for
the Doha
Round. This will be defined at the end of the negotiating process. But one first
has to establish the proper balance in dealing with agricultural policies.”
Commissioner Fischler highlighted the confusion surrounding the way domestic support,
and its complex link to trade distortions, is measured. While the Uruguay Round
Agreement on Agriculture (URAA) established clearly defined rules that distinguish
policies according to their trade-distorting impact, in the public debate, a different
measure is widely used—the Producer Support Estimate (PSE) developed by OECD.
The PSE sums policies together and counts explicit budgetary outlays and implicit
support as equal. This fails to take account of the trade-distorting impact of
different policies or their interaction. The OECD, recognizing that different
policies have different impacts on trade, has developed a new, more promising
approach that weighs policies according to the trade distorting impact.
"One would hope that in the context of negotiations aiming to enhance trade,
such conclusions would be taken into account. Unfortunately, the contrary seems
to be the case," he said.
Fischler pointed out that the EU has moved towards less trade-distorting support
both on overall domestic support and on the Aggregate Measure of Support (AMS).
He
added that, because the EU “operates under clearly determined budgetary ceilings,
one can expect that our domestic support would further decrease by 2007. The direction
of agricultural policy reform in the EU has been consistent moving away from trade-distorting
forms of domestic support. It is also undeniable that this policy direction contrasts
totally with the manner by which US
domestic support has evolved. Not only has the level of US domestic support consistently
increased in recent years, but has managed to stay within the AMS ceiling with
the use of the de minimis loophole. In 1999, support classified as de minimis,
the bulk of which is to compensate ex post specific crops for market price declines,
accounted for 51% of the current US AMS.
With one third of domestic support falling under this loophole, one wonders what
de minimis really means. This is why we proposed the abolition of this loophole
for the developed countries."
The Commissioner noted: "If one were to use the popular approach in
dealing with support for agriculture, the conclusions from all this would be clear.
A euro or a dollar spent in support of agriculture in either the EU or the US
is the same thing. But is this really so? Not according to the OECD, which has
analysed the impact of different policies based on their trade effects. Unfortunately,
their direct relevance to the present round has been missing from the Harbinson
paper.”
Press Contacts: |
Wilfried Schneider
202-862-9523
|
Maeve O'Beirne
202-862-9549
|
