EU outlines farm moves to U.S. to unblock WTO talks

PARIS (Reuters) - The European Union outlined to the United States on Tuesday how it might improve its agricultural offer in a long-delayed global trade round and said the next move must be Washington's, an EU official said.

EU Trade Commissioner Peter Mandelson and Susan Schwab, who is expected to be confirmed as U.S. Trade Representative this week, discussed in Paris the World Trade Organization's Doha round of negotiations, which risk running out of time soon.

"It was a business-like conversation," Mandelson told reporters after the meeting on the sidelines of a conference of the Organization for Economic Co-operation and Development. "We get on and we can do business together."

The EU official, who asked not to be named, said the discussion included how the EU could improve on its offer by reducing the number of sensitive goods to be shielded from the biggest cuts and adjusting tariff-cutting formulas.

The EU has long been criticized for offering too little access to its farm markets to make the United States move further on cutting subsidies for its farmers and big developing countries like Brazil cut industrial goods tariffs.

That so-called triangle of issues is considered the key to unlocking the Doha round, which was launched in 2001 but has already missed several deadlines.

Negotiators worry that an end-July deadline for agreement on the round's most important points could be missed.

That could mean a delay of several more years because U.S. President George W. Bush loses special powers to approve trade deals in mid-2007 and it will take about a year to hammer out all the details of any deal, officials have said.

"The next move to be signaled ... is from the U.S.," the official said.

'SAME THING'

A senior U.S. official told Reuters he had not seen a new offer from the European Union. "This is the same thing we've been hearing since last October when the U.S. made our agriculture offer -- that they may do something more but we don't know what it is," he said.

Mandelson is under pressure not to offer much more on agriculture from EU countries with strong farm lobbies, chief among them France, just as the U.S. government has to contend with a strong U.S. farming lobby.

A Mandelson spokesman said last week the EU could move closer to developing countries' demand that it cut farm tariffs by an average of
54 percent if others also made concessions.

The EU's current offer works out at an average cut of about 39 percent. But the United States has said any new offer must go beyond the 54 percent developing countries want.

"I am discouraged when they say they won't even meet the G20 much less the kind of levels we are looking for," the U.S. official said.

Deputy U.S. Trade Representative Peter Allgeier said in a statement a minimal change would not be close to sufficient.

A Schwab spokeswoman said Tuesday's meeting was productive and touched on other issues including a transatlantic dispute over subsidies for aircraft makers.

Australian Trade Minister Mark Vaile, who has long urged Europe to sweeten its farm offer, welcomed the move by Brussels and said other players needed to follow suit.

His comments were backed by his Egyptian counterpart Rachid Mohamed Rachid, who said Europe had taken a welcome step.

"The Europeans are showing flexibility and asking others to be flexible which had the support of the group," he said.

The American Farm Bureau Federation and Australian National Farmers' Federation urged agricultural negotiators to be ambitious.

"A final deal that provides only modest liberalization and reforms will not be supported by U.S. and Australian agriculture," the groups said in a joint statement.

(Additional reporting by Sophie Walker in Washington)