EU seeks agreement for food aid

The European Union said on Tuesday it would seek agreement in the World Trade Organisation (WTO) for all food aid to poor countries to be in the form of cash payments for purchases in local markets.

The proposal, which diplomats said got a cool reception from the United States and Japan but won support from many WTO members which receive food aid, was tabled at talks aimed at creating freer global agricultural trade.

A paper setting out the EU plan said the idea was that WTO countries "undertake that all food aid shall....only be made in the form of grants, in order not to increase the debt burden of the recipient country."​

But U.S. and Japanese negotiators warned that if flexibility in the form of aid were reduced, it could prevent food getting to needy people quickly.

David Roberts, chief EU negotiator at the WTO talks, told reporters the grants "should ideally be in the form of cash that can be used in local markets to ensure that the right food is purchased and that local producers are not undermined."​

The plan, likely to be under negotiation for at least three years, also provides for a commitment that actual food should only be sent in specific situations -like a humanitarian crisis - and after an appeal by international aid bodies.

WTO members, who will total 144 by the start of next year, should also pledge not to tie their food aid in any way to commercial exports of farm produce or any other goods and services to the recipient country, under the proposal.

EU officials say the U.S. officials make no secret of its conviction that food sent as aid helps create markets for future sales of the same or similar goods and often use this argument in convincing Congress to support aid shipments.

If eventually approved by all members, the plan would be incorporated into WTO agreements and rules, making it enforceable through the body's dispute settlement system which provides for sanctions against violators as a final resort.

It would also commit WTO members to notify the WTO's Committee on Agriculture of all food aid provided under any organisation to ensure full transparency and enable all countries to see what was being done.

Roberts told a news briefing that it would be best for poorer countries if all donor states dropped the system of providing aid tied to credits which had to be repaid, or simply shipping it when they had surpluses of farm produce.

To back this point, the EU delegation in Geneva presented charts based on U.N. figures which it said showed how U.S. food aid climbed when world wheat prices were low and dropped when prices were high.

"Logically, you would think it would be the other way round,"​Roberts said.