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MEMO/01/28

Brussels, 5 February 2001

EU makes proposal for "win-win" solution to WTO agricultural negotiations

Today in Geneva the European Union presented a comprehensive proposal for the WTO agricultural negotiations. The proposal is a positive contribution to the talks that began in March 2000, and is comprehensive in all senses of the word. Firstly, it covers all the elements of Article 20 of the Uruguay Round Agreement on Agriculture, namely the aim of achieving further reductions in support and protection, non-trade concerns and the need to provide special and differential treatment to developing countries. Secondly, it is designed to be all-inclusive so that all parties feel that they have gained and not lost from the ongoing negotiations. Finally, it lays down what the EU is prepared to do in the process of trade reform, as well as asking others what they intend to contribute. This constructive input from the EU is well-timed, according to Franz FISCHLER, EU Commissioner for Agriculture, Rural Development and Fisheries. "The EU is completely committed to negotiate a balanced agreement. In a successful trade negotiation, everyone wins and we are confident that our proposal is designed to achieve this. The BSE-crisis has strengthened the EU's position that agriculture is more than just an industry and has to be treated accordingly in the WTO. European agriculture is also about the environment, consumers and food safety. This is why we will stand firm to defend these non-trade concerns in the WTO talks. With the Agenda 2000 reforms we have proven our firm commitment to go down the road towards less trade-distorting, de-coupled farm support ."

The approach of this proposal is based on the Agenda 2000 reform package as well as on the positions that the Community adopted in the run-up to Seattle and in several submissions that the EC have made to the WTO since the beginning of the negotiations on agriculture in March 2000.

Content of the proposal

    Market access building on experience gained to date

Regarding market access and more specifically tariffs, which is of high importance to the EU since it is one of the largest exporters in the world, the EU's proposal is to use the same formula adopted under the Uruguay round, i.e. a commitment as to the overall average reduction of bound tariffs and a minimum reduction per tariff line.

"This approach permits to take into account the particular situation of specific sectors without making any a-priori exclusion. Moreover, it has already been shown to work", Mr FISCHLER said. The proposal also advocates retaining the special safeguard clause to ease tariff reductions and to avoid more frequent use of the general safeguard clause. On tariff quotas, the proposal recognises the urgent need to establish clear application rules so that quotas are filled and legal certainty is assured.

In order to secure fair competition for those products whose quality and reputation are linked to their geographical origin and traditional know-how, the EU proposes that the right to use geographical indications or designations of origin be protected and that consumer protection be guaranteed through regulation of labelling.

    Export competition establishing a level playing field

On export competition, Mr FISCHLER said that "the Community's position has been and remains that we will agree to negotiate further reductions in export refunds provided that other instruments that are used to boost exports are also disciplined." He specifically mentioned the use of subsidised export credits as well as the abuse of food aid. In case of the least developed countries and the net-food import developing countries, food aid should be granted only in fully grant form and in ways which do not damage local food production. He also referred to State-trading enterprises (STEs) whose export operations should also be regulated and made more transparent.

    Domestic support facilitating ongoing and fundamental reform

As far as domestic support is concerned, the EU position is that rules on domestic support should facilitate a continuous process of reform. The structure of the boxes agreed in the Uruguay Round matches this central objective of promoting ongoing and fundamental reform and should be maintained. The impact on trade by the so-called Blue and Green box measures has proved, as anticipated, to be less distorting than market price support on the one hand and payments based on output or on variable input use on the other hand. This framework will allow for further reductions in amber box commitments, which the proposal supports. Specific discipline should equally be applied to those variable "amber box" subsidies which boost export performance through providing compensation for variations in market prices.

    Non-trade concerns addressing the broader interests of society

According to the EU comprehensive proposal, the specific role of agriculture as a provider of public goods should be recognised. In this context, the multifunctional role of agriculture, which includes its contribution to sustainable development, the protection of environment, the sustained vitality of rural areas and poverty alleviation, both in developing and developed countries should be taken into account. The reform process is more likely to be acceptable to all members by meeting their non-trade concerns.

The need to use specific measures, including the precautionary principle, whenever there are concerns about the food safety of products should be taken into account according to the EU's proposal. The paper also underlines the need to ensure that trade liberalisation does not undermine efforts to improve the protection of the welfare of animals. Compensation for additional costs to meet animal welfare standards should be exempted from reduction commitments.

    Special and differential treatment making trade work for developing countries

As regards developing countries, the EC's proposal underlines that the EU are by far the largest market for the exports of agricultural products from developing countries, in large part as a result of trade preferences, and that they are pledged to provide duty-free access to essentially all products from the least-developed countries, including agricultural products. Such an approach will help exploit the potential of trade to create wealth for developing countries.

In order to increase market access to products originating in developing countries, the EC propose that developed countries and the wealthiest developing countries provide significant trade preferences to developing countries, and in particular the least-developed.

As part of its general policy to promote the sustainable and economic development of countries, the EC propose that all developed countries should intensify all forms of assistance to developing countries, in particular in areas of implementation, and making use of the appropriate WTO agreements.

The EU's position paper can be found on the Internet:

http://ec.europa.eu/agriculture/external/wto/officdoc/index_en.htm


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