The European Union said that any move by the US Congress to extend legislation providing hefty subsidies to farmers would have “serious fallout”.
Talks on reform of agricultural tariffs and subsidies are in trouble since countries mist the deadline in April and pressure on the US government is growing to prolong the current farm bill until new global rules on trade have been made.
European Commission spokesman Peter Power said such a move would send the wrong signals to other trade powers, because the whole point of the trade negotiations is to reduce and discipline farm subsidies and not renew and roll them over.
Power said that “Any such move would have serious fallout in developing countries, but also in Europe where our reforms are being implemented and have started to bite.”
The 2002 farm bill boosted US crop and dairy subsidies by 67% to about $20-billion a year. Parts of it have been challenged at the World Trade Organisation by other countries on the grounds the payments unfairly distort trade.
Outgoing US trade chief Rob Portman has pledged to cut the US WTO allowance for trade-distorting domestic farm subsidies by 60% if other countries throw open their agricultural markets and cut tariffs by 55% to 90%.
The EU says US proposals are unrealistic, adding the bloc already drastically reformed the way its farmers receive payments. Developing countries say the obligation is on rich nations like the United States and EU bloc to make the first move to open their farm markets.
The perceived lack of response from other WTO member countries to the US offer has irritated many in Congress and some US politicians are growing uneasy about refurbishing farm policy in 2007, when the current law will expire, without assurances other nations will cut their subsidies.