World trade talks fail

Global trade talks collapsed at the weekend with rich and poor countries in a clash over farm aid as developing nations held out for a better deal.

After several days of hard negotiations the World Trade Organisation ministerial conference in Cancun, Mexico, has ended in 'failure', said Pascal Lamy, European trade commissioner, this week. Deemed as a 'lost opportunity for all of us', Lamy remained firm that the EU had offered to 'significantly reduce trade distorting support to farmers' - a position disputed by developing nations present at the conference.

During the talks, a coalition of more than 20 developing countries, led by Brazil, India, China and South Africa, threatened the traditional dominance of rich countries.

The principal complaint of the so-called G21 centred over the approximately €300 billion in annual subsidies that rich governments pay to their farmers, which, they say, locks the developing world out of international markets.

Arguably, the emergence of the G21 was a sign that the developing nations now have real power in the WTO and that it was their ability to maintain a common bargaining position that proved decisive.

"On agriculture, the EU stood ready to eliminate export subsidies on products of interest for developing countries and we offered to significantly reduce trade distorting support to farmers, after a painful process of internal reform of our agricultural policy,"​ said Lamy on Sunday. But for the developing countries, the EU position was clearly not enough.

In any case, the 'internal reform' of the EU Common Agricultural Policy (CAP) offered at the Cancun table was a far diluted version of the original proposition laid many months ago before European ministers by EU farming commissioner Franz Fischler.

Fischler set out to reshape the CAP to ensure that only needy farmers are subsidised, and only necessary food is produced, avoiding the food mountains of the past. Instead, he proposed a system of 'decoupling', of single farm payments, independent from production.

France, currently benefiting from almost half of the €45 billion CAP subsidies, from the beginning was out to water down the reforms. In the end, the reform guards the principle of the single farm payment but compromises are in evidence in that limited coupled elements may be maintained to avoid 'abandonment of production'.

EU ministers will undoubtedly be asking themselves whether, as Fischler had wished, a lot more could have been done to reform CAP. In turn, Europe's position would have been more acceptable to developing countries.