EU says U.S. needs "more ambitious" farm subsidy cuts to make trade breakthrough

BRUSSELS, Belgium (AP) _ The United States needs to make ``more ambitious'' farm subsidy cuts to make progress at global trade talks, the European Union said Thursday in response to U.S. budget

Thursday, February 1st 2007, 6:04 am

By: News On 6

BRUSSELS, Belgium (AP) _ The United States needs to make ``more ambitious'' farm subsidy cuts to make progress at global trade talks, the European Union said Thursday in response to U.S. budget proposals that would cut agriculture spending by $18 billion over the next five years.

``If we are to have a successful outcome to the Doha Round, the U.S. will need to propose more ambitious cuts and disciplines in trade-distorting domestic farm subsidies,'' EU spokesman Michael Mann said, in a first reaction to the U.S. draft farm bill.

``We had hoped the administration's proposal for the new farm bill would signal this more clearly,'' he said.

But the EU was hopeful that this was ``not the end of the story,'' he said, adding that further steps could still be taken as the draft was just the administration's first steer to Congress.

He said the draft had a ``modest shift'' toward direct payments to farmers that would not distort trade, but criticized the U.S. for not acting on dairy and sugar.

``Key trade distorting programs for dairy and sugar remain virtually untouched,'' he said.

Reductions in loan deficiency payments, which the EU's executive arm claimed was the basic safety net of the 2002 farm bill, were ``extremely modest.''

``The proposals assume that commodity prices will remain at their current high levels. If so, U.S. farm support will be lower. But if price trends change, trade distorting farm support would rise again under these proposals,'' Mann said.