US farm bill proposals come under fire in Europe

BRUSSELS, Feb 1 (Reuters) US government proposals for a new farm bill came under attack in Europe on Thursday for not offering enough cuts to domestic support payments to ensure success at a crucial stage in stalled world trade talks.

U.S. domestic farm supports have been a sticking point in the World Trade Organisation (WTO) negotiations -- known as the Doha Round -- for developing nations, which say they preclude true global competition.

The talks broke down in July in an impasse over agriculture.

Critics believe the subsidies drove down prices and lock out poor farmers in the developing world. But Washington says it can only cut so much until other nations roll back their own duties.

On Wednesday, U.S. officials unveiled a plan to shield farm subsidies from legal battles, shuffling some of the billion they want to spend over the next decade into programmes that they hope will not run foul of WTO rules.

The European Commission, the EU's executive arm, was quick to point out what it saw as a series of shortcomings in the U.S.

administration's proposal for the 2007 farm bill -- the umbrella law that sets subsidy, environment and nutrition spending.

''If we are to have a successful outcome to the Doha Round, the U.S. will need to propose more ambitious cuts and disciplines in trade-distorting domestic farm subsidies,'' said Michael Mann, the Commission's agriculture spokesman.

''So far as Doha is concerned, it is not possible for us to form a clear view from this proposal of what the (U.S.) Administration's negotiating approach will be,'' he said.

''Key trade distorting programmes for dairy and sugar remain virtually untouched,'' Mann told a daily news briefing.

Proposed cuts in loan deficiency payments, the basic safety-net of the 2002 U.S. farm bill, were extremely modest, he said. But the Commission noted a modest shift towards more ''green'' direct payments, he said.

The U.S. proposal assumed that commodity prices would remain at their current high levels, Mann said. If this was so, domestic farm support would fall, he added -- but if price trends changed, then trade-distorting farm support would rise.

The Doha negotiations on lowering barriers to commerce were halted by WTO chief Pascal Lamy after major powers failed to break a long-running deadlock over farm trade.

But a recent series of meetings -- mainly bilateral sessions between major trading states and blocs, such as the United States, Brazil, the EU and Japan -- sent signals of flexibility.

REUTERS PKS RS1942