OTTAWA (Reuters) - Canada said on Thursday that a deal to reform the European Union's subsidy-laden agricultural policy could lead to progress in getting world trade talks unstuck.
Canada is hosting a meeting of two dozen trade ministers in July to try to kick start the World Trade Organization's so-called Doha round of negotiations on trade liberalization.
On Thursday European Farm Commissioner Franz Fischler said he had brokered a reform deal that breaks the link between European farmers' output and the government payouts they get -- a key demand of Canada and others that say the EU subsidies distort trade.
"Canada believes that this encouraging, and could lead to progress in Doha round negotiations," said a spokesman for Canadian Trade Minister Pierre Pettigrew.
Pettigrew is to host the first meeting of U.S., European, Latin American and Asian trade ministers and WTO chief Supachai Panitchpakdi in Montreal next month after the EU deal.
The meeting is the last before September's full-blown meeting of trade envoys from all the WTO's 145 member nations in Cancun, Mexico.
EU farm reform is crucial as the EU hands out about $100 billion in subsidies each year. Even under the deal, EU farm spending will be at 40 billion euros ($45.6 billion) a year until 2006. It will rise to 45 billion euros in 2007 and hit 48.5 billion euros by 2013.
Canadian officials have consistently insisted on the need for the EU to eliminate its agricultural export subsidies and substantially reduce what they call "trade distorting domestic support" or production subsidies.
Another cabinet minister said more details about the reforms are needed before export-reliant countries like Canada can judge whether the reforms will liberalize trade.
"At this point, we don't have much more to go on than a news release and some background papers," said Ralph Goodale, who is responsible for the Canadian Wheat Board.
"It will be interesting to see how real that (reform) is, compared to all those false starts in the past," Goodale said, adding Canadian officials need to "watch the fine print" to gauge the impact of the changes.
(Additional reporting by Roberta Rampton in Winnipeg)
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