"The beginning of a new era," officials of the European Community said of their latest round of agricultural policy reforms aimed at cutting farm production and reducing dumping of their commodities in foreign countries.

But to those outside the EU, it was seen as mostly smoke and mirrors that will have little meaningful impact on the overproduction that has characterized the community's agriculture in recent decades.

"We are saying goodbye to the old subsidy system that significantly distorts international trade and harms developing countries," said an EU agriculture commissioners in the wake of extended, acrimonious negotiations on revisions to their 1950s-era Common Agricultural Policy, which pays farmers more to produce more.

"This reform sends a strong message to the world that our new policy is trade friendly," said Franz Fischler, who noted that it will put the union in a better negotiating position for the September World Trade Organization talks in Cancun, Mexico.

EU subsidies to growers, at some $60 billion per year and nearly half of the community's entire budget, make those in the U.S. seem chump change by comparison. The generous payments have resulted in widespread overproduction, particularly of grains and milk, which have been dumped on markets in poor nations, undercutting the price of locally-produced commodities. At the same time, developing nations have found it virtually impossible for their agricultural exports to compete with the heavily subsidized EU products in world markets.

While the CAP was originally created to encourage food self-sufficiency in the aftermath of World War II, its escalating costs over the years have pushed food bills for EU citizens nearly 50 percent higher than they would otherwise be.

The recent changes, EU commissioners contend, will in most cases decouple subsidies from production. But critics note there likely won't be much reduction in what farmers grow and that promised environmental "green" improvements will be even scarcer. Further, they say, only the method of subsidizing farmers has been changed — but the program will be as costly as ever, and the changes don't even begin to be phased until 2005.

Oxfam, a British charitable organization, labels the CAP changes a "disaster for the poor" that "comprehensively fails" to halt dumping on poorer countries. "Europe had the opportunity to take global leadership," says Phil Bloomer; "instead it has chosen to stick its head in the sand" while member states "protect their own interests." The reforms, said Oxfam's Kevin Watkins, "are simply repackaged subsidies under another name."

EU officials, in praising their work, alluded to the $170 billion increase by the U.S. government to its farmers in last year's farm bill. "We've done our homework; it is now up to others to do their homework," the EU's Fischler said. "I have not seen much so far from our American friends, (who) raised their subsidies."

U.S. Trade Representative Robert Zoellick and Secretary of Agriculture Ann Veneman, in a joint statement, were reserved in their assessment, terming it "a necessary step forward that we hope will provide a useful impetus to WTO negotiations." They said it is hoped the compromises will not "limit the EU's ability to contribute to global reform in agriculture."

e-mail: hbrandon@primediabusiness.com