WTO, lukewarm reaction from food industry?

- Last updated on GMT

Related tags: Eu food, World trade organization, International trade, European union

Breakthrough talks at the weekend on world trade will have received
a reticent welcome from a European food industry likely to see the
phasing out of payouts to export food products.

The EU food industry exports some €45 billion in food goods each year, but a new framework agreement pencilled in by 147 countries at the World Trade Organisation talks in Geneva last weekend could herald an end to the subsidies which help it do so.

"Since export refunds are a compensation for higher EU agricultural prices, their elimination would result in certain exports being no longer viable. Hence, if the EC Commission made such a commitment, it will have to face the consequences,"​ warned the Confederation of the EU food and drink industry in a statement just prior to the meeting.

The €600 billion industry, the largest manufacturing sector in Europe, is concerned that the deal will compromise the competitiveness of the EU food and drink industries through the phasing out of export refunds and without the "availability of competitive agricultural raw materials".

But from the standpoint of the environmental group Friends of the Earth, the industry may have nothing to fear as the deal fails to go far enough.

"The so-called concessions by the EU and US in the agricultural negotiations turn out to be empty promises,"​ said the non-government organisation in a statement just after the Geneva meetings.

According to Friends of the Earth, the commitment to eliminate export subsidies credits "is missing any substance"​ as no end date is mentioned in the text.

"On domestic support for agriculture, language in the framework agreement clearly opens the door for the EU and US to maintain nearly their entire level of current subsidies and to use these to continue the dumping of agricultural goods in developing country markets."

Rich trading nations have been heavily criticised for their trade-distorting subsidies that prop-up the trading capacities of their local industries, allowing these industries to export products at supported, and consequently advantageous, prices.

After the collapse of the WTO's meetings in Seattle and last September in Cancun, participants in the talks this weekend were under pressure to come up with a framework agreement. The G20 group, led by Brazil and which includes India, China and South Africa, was formed before the Cancun meeting to press for deep cuts in rich nations' farm subsidies. Trade diplomats are reported as saying at the weekend that the G20 had won much of what it wanted.

"Today's decision shows that the multilateral trading system is alive and kicking,"​ Pascal Lamy, European Union trade commissioner said in Geneva. "The results are good for the EU, for developing countries and for others."

WTO members agreed to extend the negotiations until at least December 2005, when trade ministers will meet in Hong Kong.

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