The empty promise of the European Commission to make huge cuts in agricultural supports

1. The European Commissioner for trade relations and the Head of the US Trade Department have just made reduction proposals of their trade-distorting agricultural domestic supports apparently impressive in order to unlock the Doha Round negotiations and to prompt developing countries to make parallel offers on the opening of their markets to the EU and US exports of services and non agricultural products.

2. Peter Mandelson has proposed to reduce the EU total AMS ("Aggregate Measurement of Support") by 70%, the "de minimis" supports by at least 65%, and has told that the EU could even contemplate to reduce its blue box subsidies below what is prescribed by the Framework Agreement of 31 July 2004, that is below 5% of the value of EU agricultural production. We will show that these proposals would not challenge the common agricultural policy (CAP) at least as it is viewed from Brussels and they would even leave space to increase subsidies. On the other hand, since the EU has cheated massively in the notification of its agricultural supports in the various WTO boxes, the condemnation of these cheatings would make the CAP collapse. Another analysis will deal with the US offers on the reduction of its domestic trade distorting agricultural supports.

Viewed from Brussels, Peter Mandelson's proposals are compatible with the CAP

Preliminary definitions of the components of domestic trade distorting supports

3. The total AMS corresponds to the trade distorting (or 'coupled', implied to the price or production level of the current year), in other words to the 'amber box'. The total AMS is the sum of all product-specific AMSs and of the non product-specific AMS. Besides we have to distinguish between the authorized or bound total AMS and the applied or notified total AMS: the first has remained fixed at