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European Union

EU Offers Sweeter Trade Deal, But US and France Resist

Strategic Insights

— 2 min read

The European Union yesterday attempted to revive the stalled Doha round of trade talks by offering further cuts in farm tariffs, but the US and France expressed disappointment, citing loopholes and inadequate concessions. The EU's proposal, which represents a 46% average cut in tariffs, is seen as insufficient by many of its trading partners, who argue it maintains steep tariffs on sensitive imports and fails to address concerns around agricultural subsidies.

Key Takeaways:

  • The EU's trade offer includes an average tariff cut of 46% and reduction of highest tariffs by 60%, but the US estimates the actual cut would be 39%.
  • The EU's proposal still maintains tariffs on 8% of sensitive imports, which is deemed too high by the US and others.
  • The US and other WTO members have called for the EU to reduce the list of sensitive products to 1% and achieve an average tariff cut of at least 54%.
  • France has reiterated its opposition to further concessions in agriculture, with President Jacques Chirac warning that France cannot make "another step" beyond the reform of the EU's common agricultural policy.
  • Peter Mandelson, the EU's trade commissioner, has been forced to balance the demands of Wolfgang Schäuble, the German finance minister, and Pascal Lamy, the head of the WTO, who have warned that the Doha talks risk collapse without a more comprehensive European agricultural offer.
  • The EU will need to secure concessions from its main trading partners on services and industrial tariffs to present to Paris as a balanced trade-off for agricultural concessions.

Statistics:

  • The EU's proposed tariff cut would reduce farm tariffs by an average of 46% and reduce highest tariffs by 60%.
  • The US estimates the actual tariff cut would be 39%.
  • 8% of EU sensitive imports would remain subject to high tariffs.
  • 1% cap on sensitive products is considered a more acceptable threshold for the US and WTO members.
  • 54% is the minimum average tariff cut advocated by the US and other WTO members.
  • The EU's common agricultural policy reform in 2003 has limited the flexibility of future negotiations on agriculture.
  • 50 least developed countries account for a significant portion of the world's agricultural exports and are a key target for EU's trade concessions.

Sources:

  • The Financial Times: "EU makes offer to revive Doha round talks"
  • The Wall Street Journal: "EU's Trade Offer Falls Short, EU Leaders Say"
  • European Union Commission: "Commission presents revised offer in Doha round talks"
  • World Trade Organization: "Press Conference - Overview of the Doha Round"

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