US embassy cable - 05PARIS7226

UNCLAS SECTION 01 OF 03 PARIS 007226 
 
SIPDIS 
 
BRUSSELS PASS USEU FOR AGMINCOUNSELOR 
STATE FOR OES; EUR/ERA; 
STATE PASS USTR FOR MURPHY; 
USDA/OS/JOHANNS AND PENN; 
USDA/FAS FOR OA/TERPSTRA/ROBERTS; 
ITP/SHEIKH/HENKE/MACKE/TOM POMEROY/MIKE 
WOOLSEY/GREG YOUNG; 
FAA/SEBRANEK/BLEGGI; 
EU POSTS PASS TO AGRICULTURE AND ECON 
GENEVA FOR USTR, ALSO AGRICULTURE 
 
E.O. 12958: N/A 
TAGS: EAGR, ETRD, PGOV, FR, WTRO, EUN, INR-B 
SUBJECT: Perspectives on WTO, Biotechnology, the 
2007 Farm Bill and Biofuels 
 
1.  SUMMARY: Fred L. Dailey, Director, Ohio 
Department of Agriculture recently met with 
representatives of the French Ministry of 
Agriculture (MinAg) to share perspectives on the 
WTO, biotechnology, the Farm Bill and biofuels. 
After making it clear that he did not speak for 
the USG, Director Dailey discussed the likely 
impact of the WTO case on cotton subsidies and 
hurricane Katrina on the next U.S. Farm Bill. 
With regard to the WTO negotiations, the French 
officials stressed that they thought that 
significant benefits would primarily accrue to 
emerging markets like Brazil at the expense of the 
poorest countries.  Alternatively, France favors 
the development of domestic farm policies in 
developing countries to help increase farm 
earnings.  On biofuel, French MinAg reps expressed 
concern about the differential in production costs 
in Brazil compared to those in the United States 
and Europe.  Finally, Director Dailey underlined 
that the European position on biotechnology is 
considered to be a non-tariff trade barrier in the 
U.S. END SUMMARY. 
 
2.  On October 13, 2005, Fred L. Dailey, Director, 
Ohio Department of Agriculture, and Embassy 
AgEconomist met with three representatives of the 
French Ministry of Agriculture (MinAg): Jean- 
Jacques Benezit, Deputy Director for International 
Trade, Daniel Boissiere, head of the Office of 
Cooperation and Bilateral Relations, and Philippe 
Duclaud, head of the Office of External Relations 
of the EU,in the Directorate for Economic and 
International Policy (DPEI). 
 
WTO Trade Talks 
--------------- 
 
3.  French Ministry of Agriculture officials 
explained they believed that the Doha round was 
more of a development round than a trade 
negotiation like the Uruguay Round.  They said 
that former rounds were like a club between the 
United States and the European Union.  However, 
they asserted that this is no longer the case in 
the current round:  developing countries are now 
playing a major role in the negotiations and this 
round will have to give them practical answers. 
The French fear that, in the end, Brazil and 
emerging countries will be the winners at the 
expense of the poorest African countries. 
 
4.  French MinAg reps explained their objective is 
to favor country development based on domestic 
agricultural policies, and not exclusively on free 
trade.  They believe it is a sovereign right for 
developing countries to have domestic farm 
policies (including non trade-distortive green box 
payments), within the framework of WTO. 
 
5.  MinAg reps explained that the EU has already 
taken substantive measures reforming the CAP and 
is now waiting for other WTO members to make 
similar reforms. 
 
 
2007 Farm Bill 
-------------- 
 
6.  Director Dailey explained that discussions on 
the next Farm Bill are beginning in the United 
States.  Two factors that will affect the 
discussions are the outcome of the WTO case on 
cotton subsidies and the "Katrina effect" which 
means stronger budget constraints than formerly 
expected.  He added that Secretary Johanns has 
conducted a number of listening sessions across 
the country to hear farmers and ranchers concerns. 
 
7.  More specifically, Ohio farmers' focus is on 
the development of bioethanol production (with 5 
plants being currently built), the expansion of 
cattle operations, the capitalization of indirect 
subsidies in land value, the reduction in farm 
subsidies announced by USTR and the limitation of 
payments to rice producers.  Director Dailey 
emphasized the preference for compensation from 
the market place rather than from public budgets, 
their call for a safety net, and refusal to become 
a "public utility." 
 
8.  When asked by French MinAg reps whether 
landscape management, carbon fixation and rural 
development were discussed as farmers' roles and 
activities that could be paid, Director Dailey 
answered these were taken for granted and did not 
have the same recognition in the United States as 
in the EU.  However, he added that there are 
important programs for soil and water conservation 
in the United States. 
 
Biofuels 
-------- 
 
9.  Director Dailey explained the success of the 
bioethanol production in the United States with 
its profitability, its generation of more demand 
for corn, the positive contribution of biofuels to 
the environment, and the reduction in use of 
fossil energy. 
 
10.  French MinAg reps expressed their concerns 
about the cost differential between European 
biofuel plants and Brazilian plants and said 
French plants are not expected to be competitive 
with Brazil for the next 10 years.  Finally, 
French MinAg reps wondered how to deal with the 
issue of biofuel in the WTO given the high cost 
differential between operations in Brazil, Europe 
and the United States. 
 
Biotechnology 
------------- 
 
11.  Director Dailey said 75 percent of soybeans 
grown in Ohio this year are genetically modified. 
He indicated that tofu processed in Ohio for 
Japanese consumers meets Japanese standards 
regarding biotech. Director Dailey indicated the 
U.S. government considers the EU policy on biotech 
to be a non-tariff trade barrier because 
scientists worldwide have recognized this 
technology to be safe. 
 
12.  Representatives of the French MinAg indicated 
the biotech issue was very sensitive in France 
given that side-effects on health and the 
environment are not clear.  They favored clear 
labeling for the sake of consumer choice and did 
not consider the EU biotech policy to be a non- 
tariff trade barrier. 
 
Geographical Indications 
------------------------ 
 
13.  French MinAg reps explained they have a 
country of origin law, which affects product 
value.  They indicated that China, Vietnam and 
Thailand worked with France on Geographical 
Indications and were keen on adopting the concept 
as a means of traceability.  Director Dailey 
responded that, in the end, consumers would 
recognize high quality products. 
 
Stapleton