The EU's top trade negotiators face a rough ride at global trade talks opening in Hong Kong next week.
The stakes for Hong Kong are especially high because failure to agree on further cuts in farm subsidies and tariffs would block efforts to reach a global WTO trade pact by the end of next year.
The focus on agriculture is not popular in Brussels. EU Trade Commissioner Peter Mandelson and European Farm Commissioner Mariann Fischer-Boel admit to being angry and frustrated that demands for better access to European agriculture markets are center stage at the WTO.
They insist that attacks on EU farm trade concessions being made by the US, Australia and leading developing nations, including Brazil, are unjustified.
And Mandelson and Fischer-Boel are struggling -- so far unsuccessfully -- to turn world attention away from European farm policies to EU insistence that countries such as Brazil, Mexico, India and Pakistan must start opening up their own markets for industrial goods and services.
"People have exaggerated expectations of what we can do," Mandelson told trade reporters in Brussels recently.
True, the bloc's CAP (Common Agricultural Policy) used to be marked by high import tariffs, vast aid schemes for farmers and export subsidies. But while CAP was a "fat, juicy target" -- criticized for being protectionist and creating huge EU surpluses which were then dumped on world markets -- EU farm policies are now transformed following major internal reforms, Mandelson said.
As a result of the overhaul, the EU has put in an offer at the WTO for further farm trade concessions which is "ambitious and bold," Fischer-Boel said. "But instead of giving the EU credit for revamping its agriculture, the value of our [farm] offer has been underestimated by our partners."
The EU's pre-Hong Kong farm package covers concessions in all three agriculture "pillars" -- market access, domestic aid and export subsidies. The EU has said it is ready to reduce subsidies to its farmers by 70 percent and cut its average farm tariffs from 23 percent to 12 percent. Export subsidies are to be phased out.
"This is the most substantial offer made by the EU in any trade round," Mandelson said.
Others are less impressed, however. Australian Trade Minister Mark Vaile has warned that the EU's failure to make a "meaningful" offer on access to European markets had brought the Doha round to the brink of collapse.
Brazil's Foreign Minister Celso Amorim has been especially critical of the EU concessions, saying the bloc must slash farm import tariffs by 54 percent to satisfy poorer nations' demands for better access to European markets.
Mandelson has responded by warning that the EU will not make any further farm offers next week. He has also accused Brazil of using its clout in the WTO to promote national self-interest.
If Hong Kong is to succeed, negotiations must move beyond agriculture to reciprocal cuts in tariffs in industrial goods and freer trade in services, Mandelson said.
Meanwhile, France, which receives the lion's share of EU farm subsidies, has warned that it will veto any deal struck in Hong Kong if it means additional sacrifices for European farmers.
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