U.S. Rep to EU Sees Doha Round Slipping

Raising corn prices due to biofuels may help ease tension over subsidies, but current Doha prospects not good.

Published on: Nov 17, 2006

Although a biofuels "revolution" is underway in both the U.S. and EU, the World Trade Organization's Doha trade talks appear likely to fail, according to Boyden Gray, U.S. representative to the EU.

Disagreements over agricultural issues, primarily subsidies and tariffs, have stalled Doha talks and threaten to cut them off. The issue of whether or not the U.S. would cut its farm subsidies has contributed to Doha failure, but as Gray said at a conference on economic relations between the U.S. and Europe, if the U.S. cut subsidies, what "would your response be in the European Union? We don't know the answer."

Jonathan Evans, president of the EU Parliament delegation for relations with the U.S. Congress, and European Commission delegation head John Bruton joined Gray at the conference.

"The prospect of a deal being made is fairly negative," Evans says, "though a pitch is being made as to whether there is some way to move to other areas and return to agriculture later."

Gray says that with the growth of the biofuels industry, a "revolution" is underway on both sides of the Atlantic.

"My sense is the biofuels revolution that has hit this country is the most profound change in agriculture in 200 years," he says, adding that "the revolution is creeping over to the European Union."

Gray thinks that rising corn prices due to ethanol and biodiesel production demand may help ease tension on subsidies, but the current situation will been further complicated when a Democratic majority takes over in Congress in January. Many Democrats favor renewing the 2002 farm bill rather than writing a new one, which WTO parties have asked for.