(June 24) The result of a continuing struggle to reform European agriculture either could doom or give new life to July’s World Trade Organization mini-ministerial meeting in Montreal, and a more important September ministerial meeting in Cancun, trade analysts said June 24.

European farm leaders were set to meet again in late June to attempt reform of the EU agricultural policy, but France threatened to veto a move to eliminate subsidies tied to production by 2005.

Ultimately, Europe’s action could foreshadow the fate of the entire WTO negotiations, which are supposed to be finished by 2005.

In the face of opposition from France, European farm ministers are attempting to decouple payments to farmers from production. The EU also wants to protect its budget when 10 countries will join the union next year; presently, farm subsidies account for half of EU spending and members in waiting include the heavily agricultural country of Poland.

Removing trade-distorting subsidies (so called amber box subsidies) is one of the U.S. goals for World Trade Organization negotiations, and the actions of Europe could influence Japan and South Korea.

Mary Kay Thatcher, director of public policy for the American Farm Bureau Federation, Washington, D.C., said it was likely the farm leaders will embrace a partial decoupling.

She said the success of the WTO talks depends on the extent of European agricultural reform, but as of late June, she said much of U.S. agriculture is not happy with the flow of the negotiations, notably the Harbinson draft for agricultural trade reforms.

“No WTO deal is better than a bad deal,” she said. Thatcher said the fact that the Harbinson draft calls for uniform reductions on bound tariff rates mean Europe and Japan would continue to have much higher tariffs than the U.S. Likewise, with uniform reduction in domestic support, Europe would still be outsubsidizing the U.S. at a ration of 3.5-to-1, she said.

Anita Brown, trade analyst for Schramm, Williams & Associates, Washington, D.C., said she expected European agricultural leaders would agree to a partial decoupling of subsidies from production.

If Europe does move subsidies out of the amber box and into the green box — allowable expenditures such as rural development projects — Brown said Europe must be fully transparent in showing how it is supporting agriculture.

“We gave a lot in the Uruguay Round, and we didn’t get equality and harmonization,” she said.

Brown said the Bush administration’s tough sledding with the WTO talks is accompanied by a lot of activity in regional free trade agreements — much as was the case when the U.S. negotiated the North American Free Trade Agreement when the Uruguay Round of world trade talks was stalled in the late 1980s.

Today, she said the U.S. is pursuing regional trade deals in the Americas and the Middle East.