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Food aid on the table at WTO meeting

The EU and the US, already sharply at odds over who should make more concessions in global trade talks here, clashed yesterday on a new issue -- food aid reform.

"Food aid policies are being exploited for commercial interest," an EU official told journalists, hammering home an EU demand that Washington halt what critics claim is food aid that is really a disguised subsidy for US farmers.

"This is a sensitive area, but we don't want an emotional debate," the official said on the second day of a WTO ministerial conference.

Washington's critics argue that behind many of its food donation programs lies a system that helps US farmers to dump produce on poor countries.

Such food donations work their way onto developing country markets, undercutting the local agricultural sector, say opponents. In WTO jargon, that is known as "commercial displacement."

The UN's World Food Program gets 51 percent of its donations in cash and 49 percent in kind -- and 90 percent of the latter comes from the US.

Food donations have been spotlighted in the current Doha Round of WTO negotiations, which were launched in 2001 with the aim of breaking down barriers to global commerce and using freer trade to reduce poverty.

Other rich countries, including the 25 EU members, mostly give cash to aid agencies, allowing food to be purchased from poor farmers in a procedure that -- according to Washington's critics -- boosts their national economies.

"It's not in any way about taking resources away from developing countries. It's about converting policy A to policy B," the EU official said.

Cash donations mean value for money, the official noted: "It is clear that commodities procured on the donor market are more expensive than those on the developing country market."

But US representatives in Hong Kong hit back yestereday.

"The fact of the matter is that the European Union does some very good work in development." said one US official, speaking on background.

"But in terms of food assistance, they're missing in action," he said.

He dismissed as "nonsense" EU claims that food aid accounts for 20 percent of US wheat exports. The real figure is 5 percent to 6 percent, he said.

Most US food aid is sent to crisis zones in response to international appeals, a US trade official added.

"There's not much commercial displacement in an emergency because no one's going to the market to buy things," he said.

He suggested that the EU is "trying to impose the European system of food aid on American programs," which he said Washington would resist.

Meanwhile, China was under fire yesterday from the US and EU for not doing enough to honor its WTO commitments as Beijing insisted it is the developed world that needs to do more for a fairer global trading system.

The latest US broadside charged Beijing with not fully embracing WTO principles by falling well short on transparency in key economic sectors and in failing to tackle copyright violations.

The EU called on China to further open up to European auto makers or likewise face similar legal action.

In a statement in Brussels, the European Commission said it would continue its "close monitoring of Chinese business and regulatory developments with a view to assessing the possibility of success at an eventual WTO dispute settlement panel if the existing situation does not improve."

European firms, anxious to get access to the world's fastest growing auto market, faced many obstacles in China, including copyright protection and advantages given to domestic producers, it said.

Chinese officials in Hong Kong made no comment. However, it was announced in Beijing late on Tuesday that tariffs on more than 100 categories of imports would be cut from Jan. 1, explicitly to honor its WTO commitments further.

Products covered in the revision include vegetable oil, raw chemical materials and significantly, in view of the EU complaint, automobiles and parts, the official Xinhua news agency reported.
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