France fails to halt EU subsidy cuts for WTO

By Chris Mercer

- Last updated on GMT

Related tags European union

EU moves to cut agricultural subsidies survived a French-led revolt
in an emergency Council of Ministers meeting Tuesday, but calls for
closer scrutiny of Commission negotiations could still dash a deal
at the WTO.

France and 13 other countries, including Spain, Italy, Greece and Portugal, said EU trade commissioner Peter Mandelson had overstepped his mandate at last week's warm up meeting for December's World Trade Organisation talks.

Yet, other ministers watered down the revolt, leaving the Commission's proposals intact for now.

Mandelson, predictably, said the Commission had acted fully within its remit and had not taken unilateral action when it offered to cut EU agricultural aid subsidies by 70 per cent and halve its highest import tariffs.

Carmen Suarez, chief economist at Britain's National Farmers' Union, said the EU and US had still not been clear enough on the big issues for the dairy industry: tariff lines for 'sensitive products' and the timescale for scrapping export subsidies.

Mandelson, speaking to the Council, criticised member states for not focusing on numbers during discussions over tariff and subsidy reductions.

"For most of this year we have been treading water, not negotiating,"​ he said, adding that at Geneva last week "it was not an option for the EU to sit on the sidelines, not to put numbers, albeit preliminary ones, on the table when all others were doing so"​.

The Council revolt may have been quelled for now, but France's potential to derail talks remains serious. France is the largest recipient of EU agricultural aid, getting €9bn more than anyone else, and the government, already unpopular over market reforms and high unemployment, is wary of a political backlash.

The country's opposition may make a trade deal harder to achieve at the WTO Ministerial in Hong Kong.

At Tuesday's Council meeting, France led several delegations in proposing that a special committee scrutinises every stage of discussions to check on what the Commission has offered up.

Council spokesperson, Laurent Benhamou, said there was no final decision on this, but the Commission may now have to provide an explanation to the Council to show it stayed within its mandate.

Mandelson said Tuesday that he accepted the need for better communication, but that it would be a "terrible mistake"​ for the EU to "pull in our horns"​.

"If it [WTO deal] succeeds it will give the strongest shot in the arm to the world economy, with real benefits for needy developing countries. The benefits may be worth $100bn per year, and the EU will share those considerable gains."

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