Bush willing to work with EU to end farm subsidies by 2010

The offer by President Bush outlining his willingness to work with the EU to put a stop to farm subsidies as early as 2010 has…

The offer by President Bush outlining his willingness to work with the EU to put a stop to farm subsidies as early as 2010 has again put the focus on how both blocs support their farmers.

The issue has been raised internally in the EU by the British premier, Mr Blair, who is linking the return of the British government's rebate to reform of the Common Agricultural Policy.

The European Union's policy on farming, which has been in place since the early 1960s, has been dramatically transformed in the last decade.

Under the stewardship of the first Irish European Union Agriculture Commissioner, Ray MacSharry, there was a shift from paying Europe's farmers subsidies on what they produced, to a system of direct payments to the farmers .

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This was done to facilitate the inclusion of agriculture into the World Trade Agreements, a sector which had not been covered by the international trade supervision body until the early 1990s.

The pressure to reduce supports has been increasing since then, and there is now agreement that export subsidies on agricultural produce - payments made to exporters to make up the difference between the artificially high EU price and lower world prices - must end.

The link between direct payments and farm production in Europe was finally broken last year with the introduction of the latest policy review, which costs the European taxpayer just under €40 billion annually.

Support continues to be paid, but on the livestock, production and land-area farmed in the first three years of this decade.

In the United States, where direct subsidising of farming has been going on since the Roosevelt administration of the 1930s, the system of supports, in contrast to Europe, are not as transparent.

The Food For Peace programme of 1954 removed surplus food by sending it abroad, thus ensuring that domestic prices remained high. This food-aid programme was subsequently extended to the US urban poor in the 1960s.

While the US is meeting its World Trade Organisation commitments, and registers a $19 billion (€15.9 billion) support for its farmers, compared with $58 billion the EU pays to its farmers, the Europeans argue that while the EU has reformed its system, the US has not.

Maireád McGuinness MEP who serves on the EU's Agriculture Committee, said the US intervenes directly with "counter cyclical payments" to exercise price control.

"These are far more trade distorting than anything we do here because it keeps prices low, especially grain, which gives a competitive advantage in livestock rearing as well," she said.

Europeans also point to the legal use of hormones in beef and milk production as another tool used by US farmers which are illegal in Europe.