10th November 2001

Make or break time for the WTO

By Matt Dempsey

This week is make or break time for the WTO. The failed Seattle meeting resumes in Doha in Qatar on the Persian Gulf amidst worries over security and the future of the organisation.

While agriculture has been the main area under public scrutiny, developing countries are worried at least as much, if not more so, about access to rich markets for their textile and steel exports.

On agriculture the WTO - World Trade Organisation - has come up with a basic starting off paper which pleased nobody, but which everybody agreed was at least a useful starting off point.

Broadly the EU says it is willing to talk about a substantial reduction in export subsidies - provided similar type of export credits, food aid when commodity prices are low and state trading bodies are trimmed back at the same time. The WTO says it wants a reduction leading to a total phasing out of all forms of export subsidies and substantial reductions in trade distorting domestic support.

Nor surprisingly the Cairns Group said the WTO text did not refer to the eventual elimination of all trade distorting domestic supports, subsidies and direct payments. While the EU want non trade concerns such as animal welfare, environment etc taken into account.

The issues are broadly the same, but the US after the attacks of September 11 shows all the signs of moving much closer to the EU side than the Cairns Group with national food security much further up its agenda. The WTO round will probably be launched during he course of this meeting - it is scheduled to go on until next Tuesday, November 13. The Minister for Agriculture, Department Secretary John Malone and IFA president Tom Paarlon are all going

Huge EU budget savings

The costs of Foot and Mouth and BSE have fallen on farmers rather than the EU budget. Despite all the pressures, spending is under budget for 2001 by E1 billion.

The budget that has been prepared for 2002 farm spending will be E2.3 billion below the maximum allowed under the Agenda 2000 agreement.

As usual when there is spare cash around there are all kinds of people warning that it must not be frittered away. Already the special emergency provision of E1 billion for the BSE / Foot and Mouth effects has been abolished, on the basis that it is not needed as the effects on consumption and the overall beef business have been much less severe than had been forecast.

The strong budgetary performance has also been helped enormously by the strong dollar. As the dollar strengthens, lower export refunds are needed and this has reduced spending in the arable and dairy sectors.

The strong sheep trade has also reduced sheep spending on the variable premium by 30 per cent. It is ironic that these savings will not be available once the fixed ewe premium is in operation.