New WTO proposals not pragmatic, says EU''s

Mumbai: The European Union considers the draft tariff and subsidy cuts under the new WTO proposals as too deep at the higher end and too low at the base, even as the US said pruning farm subsidies to $13 billion a year is "unacceptable."

The new proposals drafted by Crawford Falconer, who chairs WTO agriculture negotiations, would reduce the ceiling for overall US trade-distorting subsidies by 66 per cent to 73 per cent, to between $13 billion and $16.4 billion a year.

As per the new draft, most developing nations would keep import tariffs on industrial goods at an average 12 per cent, much lower than the ceiling countries such as Brazil and India have sought, while developed countries would cut tariffs to below 3 per cent on average.

The new draft texts on agriculture and industry are a step forward in world trade talks but the range of tariff and subsidy cuts they propose are too tough, Spain''s el Economista newspaper quoted European Union trade commissioner Peter Mandelson as saying.

Neither would the lower end of the proposed range of cuts help the WTO reach a free trade agreement, Mandelson said.

"The top ends of the ranges are too ambitious and the lowest are not enough to make sure the negotiations result in satisfactory liberalisation," Mandelson was quoted as saying.

The draft says the EU should cut its highest agricultural import tariffs by 73 per cent against its offer of 60 per cent. It also proposed a cap of $13-16.4 billion on US farm subsidies, against the Us offer of $17 billion.

"I will have to negotiate hard to defend Europe''s interests," Mandelson said. "They (the texts) have helped put pressure on all of us but we have to keep calm."

Mandelson, who met Brazil''s foreign minister Celso Amorim this week, said he saw signs that Latin America''s largest economy wanted to reach a deal.

Mandelson, however, warned against any corporate protectionism after German Chancellor Angela Merkel proposed that Europe should look at ways of protecting companies from buyout funds.

"It worries me that the EU might give the image of closing itself to foreign investment," he said. "We should protect our strategic sectors, but intelligently. Thinking aloud, I wonder if we could create a ''European golden share'' that would be managed by national governments and the European Commission," he added.

"If we leave it in the hands of each national government, it will be used simply to protect national interests."

The new draft did not make a specific suggestion, for example, on what percentage of tariff lines developing countries should be able to protect from tariff cuts, one of the round''s most contentious issues.

The Doha round of trade talks was launched in Qatar in 2001 in a bid to restore confidence in the world economy and prioritise the development of poor countries but the talks have been mired in one set of problems after another.