RIO DE JANEIRO, Brazil (Reuters) - Brazil, Latin America's agricultural superpower, cautiously welcomed on Thursday the European Union's new farm reform package, saying it should provide impetus to international free trade talks.
The main aim of the reform, agreed by the EU's 15 farm ministers after marathon talks in Luxembourg, is to trim trade distorting farm subsidies. Farm spending eats up half the EU's annual budget of almost billion euros ($115.6 billion).
The reform breaks the link between farm production and subsidies which encouraged farmers to overproduce and resulted in food surpluses.
"Although far from ideal, the EU farm ministers' decision is a sign of flexibility," Brazilian Farm Minister Roberto Rodrigues said in a statement.
Rodrigues said that progress may be seen at a mini-ministerial meeting of the World Trade Organization (WTO) in Montreal, Canada, on July 26-27 and at the WTO's next full ministerial meeting in Cancun, Mexico, from September 10-14.
The WTO's so-called Doha Round of world trade negotiations has been stalled while the EU revised its widely criticized Common Agricultural Policy (CAP).
Rodrigues said that the reform package would help to reduce market distortions and provide "fresh air" talks with the EU in the WTO and Mercosur -- the south American trade bloc of Brazil, Argentina, Paraguay and Uruguay.
In the statement, Rodrigues noted that EU farmers will from 2005 receive direct rural development aid linked to protection of the environment, food quality and animal welfare.
"The protection (subsidy) model is going to change," he said, noting that EU farm subsidies will not rise until 2013.
However, independent analysts were skeptical that the EU reform package added up to very much.
"It's a small step in the right direction but not enough to make a breakthrough in the WTO," said Pedro de Camargo Neto, adviser to the influential Brazilian Rural Society, adding that it wasn't enough to get agreement in Cancun.
"Free trade will take 100 years at this rate," Camargo said, adding that Brazil will survive because it's one of the world's largest and lowest cost agricultural producers. "But poor African countries won't." Camargo is a former head of the agriculture ministry's production and trade department.
Brazil is the world's No.1 producer and exporter of sugar, coffee and orange juice, as well as No.2 producer of soy and has the world's largest commercial cattle herd.
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