EU aims to curb export taxes in Doha talks

The European Union plans to press for curbs on controversial export taxes as part of the Doha global trade round, despite widespread opposition from the many developing countries that use them.

The draft EU proposal, seen by the FT, seeks to eliminate all taxes on exports by World Trade Organisation members. Poor countries would be allowed to keep some taxes, subject to a ceiling, but would have to phase them out eventually.

Brussels claims that export taxes act as indirect subsidies to domestic producers and restrict the access of foreign manufacturers, including those in the developing world, to essential raw materials.

Its proposal 'aims to address distortions to international trade' caused by export taxes, while maintaining some flexibility for developing countries.

But it is bound to sour the Doha talks at a critical time when WTO members are struggling to reach an ambitious interim trade deal by the end of next month on cutting farm and industrial tariffs and agricultural subsidies. Peter Mandelson, EU trade commissioner, will meet his US and Brazilian counterparts in Rio de Janeiro, Brazil, today and tomorrow to try and move the Doha talks forward.

Argentina and other users of export taxes say there is no mandate to discuss the issue in the Doha talks.

John Hilary of War on Want, a UK-based development group, said yesterday: 'It is incredible that the EU is planning to introduce such a divisive new agreement at this late stage in the WTO negotiations.'

Brussels has been pushing for a WTO accord on export taxes since 2003 but has garnered little support, with the exception of Japan. Developing countries say they have the right to control what happens to their own resources and to use export taxes to encourage development of their domestic processing industries.

According to figures for 103 countries compiled by the EU last year, half apply export taxes and 12 countries apply taxes of 15 per cent or more.

The EU proposal is due to be formally submitted to the WTO