Reaction to the chair's draft

Ladies and Gentlemen:

In a nutshell, my assessment is the following:

This paper crosses several red lines the EU has clearly set out. However, it is a basis we are ready to work with, even though it adds serious headache to the stomach ache we already had.

Let me just mention some aspects:

We fully accept the importance of the development dimension in this proposal. It puts far more burden on rich countries, forsees stricter disciplines, more market access and a wide range of specific measures from which the developing countries will benefit. We support this approach. For example, we fully subscribe to the proposal that all developed countries shall provide duty and quota free access for farm products from the least developed countries.

Other elements need further reflection and discussion. We are prepared to look into them in good faith.

On export subsidies, our position is clear. Negotiate a list of products of interest to developing countries for which all from of export subsidies will be eliminated, substantially reduce the rest.

It is hard to understand that there is still a loophole which would allow that export credits could continue to be used to dump surpluses on the markets of the poorest countries. This has to go.

We feel that we are getting a rough deal on domestic farm subsidies. The text does not sufficiently take account of a simple economic fact. That shifting farm subsides from the highly trade distorting amber box to the much more trade friendly blue box support has had a clearly positive effect on trade. We have done so in the past, with the effect that overproduction in Europe decreased and exports declined.

Squeezing developed countries further on the blue box, beyond the 5% cap we have proposed, would have the perverse effect that farm policy reforms toward less trade distortion would actually not be promoted but hampered! This is against the WTO's own objectives. This doesn't make any sense, not to the developing countries, not to us.

All in all, we see some light, much shadow and many grey areas which we have to tackle. The EU will negotiate on the basis of this draft, with a constructive attitude to drive this process forward.