Oct 28, 1987


GENEVA OCTOBER 26 (IFDA/IPS - CHAKRAVARTHI RAGHAVAN) – The European Economic Community (EEC) has in effect proposed organising International Trade through minimum export prices, and partial reduction of support to levels that would eliminate imbalances between world supply and demand.

The EEC proposals regarding agricultural trade were unveiled here Monday by Guy Legras, the EEC Director for Agriculture, at the negotiating group on agriculture in the "Uruguay Round" of Multilateral Trade Liberalisation talks.

The proposals ran counter to the separate U.S. and Cairnes Group proposals for liberalising agriculture trade through improved disciplines within the General Agreement on Tariffs and Trade (GATT) to achieve free trade over a period of time.

In fact, the United States and members of the Cairnes Group Monday reacted coolly to the EEC’s proposals.

The U.S. proposals, presented in July, called for complete elimination of all agricultural subsidies over a period of 10 years and of all import barriers directly or indirectly affecting trade.

The Cairnes Group proposals unveiled in GATT Thursday by the Australian Prime Minister and to be presented formally Tuesday to the Negotiating Group, call for a 10-year phased programme of ending agricultural support.

The group also wants some immediate relief measures by freezing existing levels of export subsidies, import restrictions and other such measures.

The EEC proposals envisage a two-stage approach that would ultimately enable better GATT disciplines, but rule out complete elimination of domestic support or subsidies.

Talking to reporters before presenting the proposals, Legras stressed that the EEC was just not ready to accept even as an ultimate goal the possibility of excluding all farm subsidies.

Calling for a cautious approach, Legras said "one cannot brutally force things down farmers" throats. Lives of millions are at stake".

Legras also said that in its proposals, the EEC envisaged in effect a double-pricing system – one for the internal market and the other for the global market.

The EEC is also seeking emergency action to deal with cereals, sugar and dairy products.

It has advocated individual undertakings by GATT members for "price discipline" in cereals and cereal substitutes, and for sugar, it is seeking reduction of quantities put on the world market and maintaining present access to traditional import markets.

For dairy products, it is seeking compliance by GATT members which are not members of the international dairy arrangement (primarily the United States which withdrew from the arrangement) but are significant exporters, with the disciplines of the international dairy arrangement.

At a press conference Monday evening, Legras argued that the emergency measures were pragmatic proposals to deal with the immediate situation, and were not long-term or intended to cartelise the world market.

EEC sources also said they did not want any formal international sugar agreement, but only informal agreements within GATT to deal with the immediate situation affecting many third world countries because of the price collapse.

Neither Legras at his press conference, nor other EEC officials who spoke privately, were able to explain why or how such an approach of dual pricing, minimum export prices and export restrictions and managed trade would be possible in agriculture without it overflowing into other sectors of world trade.

Earlier Monday morning, the Swiss presented what they termed some "ideas", calling in effect for emergency action to avoid increases in exports of subsidised agricultural products which are in surplus in the world, an effort to reduce the output of such products, and the maintenance of market access at current levels.

In a second phase, the Swiss said, there should be negotiations for rules and discipline in agricultural trade in order to minimise the international effects of national agricultural policies.

The EEC has suggested that its proposals for emergency measures are to form part of the first stage of a two-stage approach to achieve the objectives of the Uruguay Round in agriculture.

In the EEC view, the negotiations should cover all agricultural products – raw and processed – and give priority to sectors with structural surplus and where serious disruptions are foreseeable.

The EEC also wants negotiations to involve a two-stage phased reduction in the "damaging effects of support on international markets".

The first stage would include efforts to ease the situation on the worst affected markets and a concerted reduction of support aimed at halting the rising trend in existing imbalances, thus initiating the process of restoring "healthy market conditions".

Second stage measures would be designed to create conditions for "a lasting reversal of the present trend towards structural disequilibria and permanent instability".

In presenting its proposals, the EEC said negotiations should tackle the root problem of world agricultural markets – imbalance between supply and demand.

At the same time, they should allowing maintenance of agricultural activity adapted to a changing environment and taking account of the development needs of various parties.

The reduction of uncertainty, imbalance and instability on world agricultural markets would entail balanced implementation of concerted farm policies, the EEC said.

Such policies would include better control of production through, for example, phased reduction of support which directly or indirectly affects trade in agricultural products, and an increase in the sensitivity of agriculture to market signals.

They would also include appropriate change in methods of income support for farmers to make greater use of direct aids not linked to output.

Reacting to the EEC proposals Monday, a number of major exporting countries said they were unlikely to lead to liberalisation of trade in agriculture.

The United States said it welcomed the envisaged reduction in farm subsidies but was disappointed that the EEC was really proposing the expansion or continuation of its won "managed agricultural system".

Thailand, on behalf of the Association of south-east Asian Nations (Asian) said the proposals in effect called for continues market sharing arrangements, and did not rule out the reduction or elimination of subsidies.

However, the Asian countries welcomed the EEC’s recognition of the need for special and differential treatment for the countries of the third world.