EU's Agricultural Tariff Cuts Hinge on Domestic Reforms

Strategic Insights -

The European Union's Ambassador to Washington, John Bruton, has clarified that the EU has reached its limits in offering tariff reductions on agricultural imports, echoing a message to the US and other trading partners in the ongoing Doha Round of trade talks. While the EU has hinted at further concessions if large developing countries like Brazil and India open their markets to manufacturing and services, Bruton emphasized that the EU's scope for progress is constrained by the Common Agricultural Policy (CAP) reform program. The EU has proposed average tariff cuts of 40-45%, with exemptions for sensitive products, but the US is pushing for deeper reductions of 55-90% with few exceptions.

Key Takeaways:

  • The EU's Ambassador to Washington, John Bruton, has stated that the EU has reached its limits in offering tariff reductions on agricultural imports, citing the Common Agricultural Policy (CAP) reform program as a limiting factor.
  • The EU has proposed average tariff cuts of 40-45%, with exemptions for sensitive products, but the US is demanding deeper reductions of 55-90% with few exceptions.
  • The EU wants to build alliances with poor countries that fear their preferential access to the EU market would be eroded by deep cuts in farm tariffs.
  • EU Trade Commissioner Christin Baker and French Trade Minister Christine Lagarde have expressed concerns about the EU's negotiating mandate on agriculture, with Baker stating that it is "deliberately ambiguous".
  • The EU's agricultural tariff cuts are contingent on domestic reforms, including the implementation of the CAP reform program.
  • The big developing countries like Brazil and India have been urged to open their manufacturing and services markets to facilitate further EU concessions.

Statistics:

  • 40-45%: Average tariff cuts proposed by the EU on agricultural imports
  • 55-90%: Average tariff cuts demanded by the US on agricultural imports (with few exceptions)
  • 2003: CAP reform implementation date limiting EU's scope for progress on agricultural tariff cuts
  • 13: Number of EU states that supported France in signing a letter warning the European Commission not to exceed the 2003 CAP reform limits
  • 2: Main trading partners involved in the Doha Round of trade talks (US and EU)

Sources:

  • "Europe sets limits on farm tariff cuts", The Financial Times
  • "EU has limits on farm tariff cuts: Envoy", Reuters
  • "Ag-dispute talks in Hong Kong", Wall Street Journal
  • "Europe's conundrum over farm subsidies", The Economist