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Critical world trade talks

BRUSSELS - The European Union heads into critical world trade talks this week hoping its signals of an improved agriculture offer will keep the pressure off Brussels.But critics question whether it can put enough on the table to break the World Trade Organisation deadlock without enraging member states like France that staunchly defend their farmers.

EU trade chief Peter Mandelson has said he can do more to open Europe’s farm markets if other key WTO players make concessions as well to save the WTO’s Doha round.

That has earned rare praise from Australia, which along with other big farm exporters such as Brazil have turned up the heat on the United States to do more on farm trade.

But few expect the EU or the United States can reach agreement at talks starting on Thursday in Geneva involving ministers from around the world. The talks were once supposed to settle the farm and industrial pillars of the WTO’s Doha round.

The United States has belittled the EU’s comments that it can move closer to demands of the G20 group of developing nations and says it is sticking to its much higher ambitions.

The EU contends Washington is making demands for access that Europe could not match and which would hurt some of the world’s poorest countries, whose export privileges would be eroded by a big cut in global farm import tariffs.

A U.S. trade official said the EU might keep others guessing until the last minute on precisely how it can improve its offer.

“What a lot of people are assuming is that the Europeans have one move left and they will wait until the end before they make it,” the official said, talking on condition of anonymity.

Without a deal by the end of July, the Doha round may be delayed for years due to President George W. Bush losing “fast-track” power to sign trade pacts.

A combination of cuts to EU farm import tariffs and U.S. subsidies is needed to coax developing countries such as Brazil to cut tariffs on industrial goods, thus unlocking the round.

Just as Washington wants more EU action on tariffs, Europe says the United States must do more to cut its farm subsidies.

The EU’s existing agriculture offer, announced last October as its “bottom line,” foresees an average cut of 39 percent to its farm import tariffs. But 8 percent of farm products would be classed as sensitive and shielded from much of the reduction.

That is likely to include lucrative sectors such as dairy, beef and sugar which are of strong interest to exporters such as Australia, Canada, Brazil, Argentina and the United States.

The G20 is seeking an average EU tariff cut of 54 percent while the United States wants a 66 percent reduction.

They are only prepared to accept that 1 percent of the EU’s tariff lines be classed as sensitive, saying that otherwise almost all their key export interests will be shut off.

They complain EU reduced-duty quotas being offered to offset the impact of goods being classed as sensitive are equivalent to 1 or 2 percent of consumption in the bloc although trade sources say Brussels could raise that to 5 percent.

The U.S. official said the EU had “substantial” room to move in protected areas such as dairy, sheep meat, sugar and grains.

“How much of a cut can they do that allows increased trade and at what point would that really make a big political problem? I don’t think anyone has got a really precise feel for that. Not even the (European) Commission,” he said.

Brussels insists it is already offering real access and, for example, would lead to an increase in EU beef imports equivalent to the entire annual beef exports of Argentina. An expected fall in EU chicken output would open up markets elsewhere, it says.

Mandelson will be pressed by EU farm ministers in Geneva to stick to his negotiating mandate. French Agriculture Minister Dominique Bussereau insisted on Monday there was “no question” of meeting the G20’s proposals.

EU farm group COPA-COGECA says the October offer would cut annual turnover in the EU’s meat, cereal and dairy sectors by 25 percent, or 17 billion euros ($21.4 billion), and those losses would double under the G20’s plan.

But if countries like Brazil make an attractive offer on industrial goods, other EU countries such as the free-trading Nordics might press for a more generous EU farm offer to match.