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Business

EU-Subsidies a Sticking Point at WTO Talks

European Union farmers dug in their heels against phasing out agriculture export subsidies, a key issue as World Trade Organisation members struggle over a declaration to launch new world trade talks.

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Developing countries see EU demands that exports comply with environmental rules as back door protectionism to keep their products out.

They are wary of European attempts to link trade to environmental rules, seeing them as a new form of hidden protectionism designed to keep out cheaper goods from poorer countries with lower pollution standards.

Instead, they say any new round of talks should focus on reducing the protectionism that already exists - in the form of rich countries' farm subsidies for crops that poor countries can grow far more cheaply.

The charge strongly denied by Brussels. "We are prepared to write in blood in the Doha declaration words to the effect that we reject any outcome that would lead to protectionism," a senior EU official, speaking on condition of anonymity, told reporters.

The question of how aggressively to target agricultural export subsidies is one of about half a dozen difficult issues that countries must resolve by Tuesday to reach agreement on launching new trade negotiations next year.

What’s in it for the West

Different groups want different things. The EU favours a broad trade round that includes global investment and competition rules so it can tell its farming lobbies that it has won concessions in return for cuts in massive agricultural subsidies.

The big prize for the US and Europe is the liberalisation of trade in services. This could allow private sector companies access to public services in transport and utilities.

US insurance groups and healthcare companies have been lobbying hard to open up education and health as well. The EU may be prepared to reduce agricultural subsidies if what's known as the general agreement on trade in services treaty gets approved.