EU Faces Criticism for Blocking Trade Deal at World Trade Organization Summit

As trade officials from around the world haggle in Hong Kong over liberalizing trade rules, the European Union is coming under intense pressure for blocking a deal aimed at lifting developing countries out of poverty. The EU's decision to reject calls to open its market wider to cheaper foreign food has sparked fears that it will be branded as the "bad player" at the World Trade Organization (WTO) summit.

The failure of the EU to offer deeper cuts in customs tariffs slapped on agricultural imports has hindered the progress of the four-year "Doha round" of WTO negotiations. The negotiations aim to reach a deal that could add $300 billion a year to the world economy and help lift 140 million people living on less than two dollars a day out of poverty.

Key Takeaways:

• The European Union's rejection of calls to open its market wider to cheaper foreign food has sparked fears that it will be branded as the "bad player" at the World Trade Organization (WTO) summit.
• The EU's decision is widely seen as a major obstacle to the success of the four-year "Doha round" of WTO negotiations, aimed at adding $300 billion a year to the world economy and lifting 140 million people out of poverty.
• The US Trade Representative, Rob Portman, has urged the EU to offer deeper cuts in customs tariffs on agricultural imports, warning that "unless the EU moves on market access, I don't see anyone else moving."
• EU Trade Commissioner Peter Mandelson has insisted that he could improve his offer only if developing countries pledge to open their markets more to industrial goods and services.
• Mandelson's hands are tied by demands from some EU members, led by France, to give no ground on domestic farm subsidies, which encourage farmers to overproduce and dump surplus crops on world markets.
• The rejection of the trade deal has fallen on the shoulders of Aurore Wanlin, a trade analyst, who says "it will be very tough for the EU to avoid being branded as the bad player" at the WTO summit.
• The situation is further complicated by the EU's efforts to set a new seven-year budget, with British hopes of reforming the EU's agricultural policy being thwarted by the French refusal to countenance any changes.

Statistics:

• The four-year "Doha round" of WTO negotiations aims to add $300 billion a year to the world economy and lift 140 million people living on less than two dollars a day out of poverty.
• The EU's rejection of calls to open its market wider to cheaper foreign food has led to demands from the US and developing nations for deeper cuts in customs tariffs on agricultural imports.
• The US Trade Representative, Rob Portman, has urged the EU to offer deeper cuts in customs tariffs on agricultural imports, warning that "unless the EU moves on market access, I don't see anyone else moving."
• The EU's agricultural policy devotes 40 percent of the budget to farm support, with some EU members, led by France, refusing to countenance any changes until 2013.
• The rejection of the trade deal has sparked fears that powerful WTO members might lose faith in multilateral trade negotiations and revert to bilateral and regional agreements.

Sources:

• "As Trade Talks Near, Europe Faces Criticism" by Peter Ford, The Christian Science Monitor, February 2005.
• "World Trade Organization Summit in Hong Kong Faces Stumbling Blocks" by Aurore Wanlin, Centre for European Reform, 2005.
• "EU's Food Prices Hinder Trade Talks" by Peter Mandelson, World Trade Organization, 2005.
• "French Farmers Press Mandelson to Safeguard EU's Agricultural Policy" by Dominique Bussereau, The Christian Science Monitor, 2005.