Trade friction between the European Commission and the United States threatened to worsen yesterday as officials rejected Washington's demand for an outright end to farm export subsidies within a strict deadline.
Already embroiled with the United States in a dispute over steel tariffs, the Commission, which negotiates international trade issues on behalf of the 15 European Union countries, said it was too early to talk of deadlines.
It also said efforts by Washington to paint the bloc as the sole user of subsidies would not work.
The United States, with the EU clearly in its sights, urged the World Trade Organisation (WTO) to set a five-year deadline for ending agricultural export subsidies in upcoming talks on farm reform.
Gregor Kreuzhuber, spokesman for EU Farm Commissioner Franz Fischler, said the Commission's stance had not changed since the deal reached at Doha, Qatar last year to launch a new WTO round on further global trade liberalisation.
"We have been extremely clear about our position. We are prepared to substantially reduce our export subsidies with a view to phasing them out - the famous Doha phrase - only if other trade distorting measures are treated equally," he said.
"The US said very little about this," he told Reuters.
Speaking in Geneva, US chief negotiator Allen Johnson said Washington fully supported further farm reform talks, despite the recent US farm bill, which boosted agricultural subsidies and sparked worldwide condemnation.
"Our proposal is to eliminate export subsidies in five years," he told reporters after a two-day WTO meeting.
The six-year farm bill increases domestic subsidies to US farmers by billions of dollars, but its critics, including the EU, have said it will distort world markets.
The legislation effectively institutionalises payments used since 1998 to shield farmers from low prices, and the EU's Fischler said it contained elements that were "nothing but concealed export subsidies".
Kreuzhuber said the WTO's focus could not solely be on the EU and its use of export subsidies to bridge the gap between normally higher internal prices and the world market.
"It's pretty clear they (Washington) are trying to shift all the blame on to others and not accept any discipline of their export promotion. This is something we will not accept and neither will our partners in the WTO," he said.
The EU argues that Washington's system of export credits, short-term loans which provide a financial guarantee to exporters should they not be paid for their goods, give it an unfair competitive advantage on world agricultural markets and therefore should be treated as exports subsidies.
"Our system is completely transparent, we publish details of our export subsidies. We want to see non-transparent forms such as export credits also disciplined," Kreuzhuber said.
The Commission will also come under fire during the negotiations from the Cairns Group of agricultural exporters, which includes Australia and New Zealand as well as South American countries such as Brazil and Argentina.
Along with the United States, the group has long been calling for a shakeup of the Common Agricultural Policy (CAP), and an end to export subsidies.
The EU believes that state-owned trading enterprises - such as the Australian Wheat Board - that exist in many Cairns Group countries, should be banned for acting as commodity monopolies.