GENEVA, Feb 26: The European Union must break down remaining barriers to trade in services and in agriculture to ensure its economic recovery is durable, the World Trade Organisation said on Monday.

The WTO's regular Trade Policy Review of the EU warned that structural reforms to free up the 27-nation bloc's economy must dig deeper to sustain a recovery driven mainly by private investment and exports since 2004.

The report, which is due to be discussed by the WTO's 150 members until Wednesday, praised the EU's overall attempts to progressively open up international trade but pointed to "substantial" barriers in "a few but important areas."

In farming, controversial changes to the EU's Common Agricultural Policy's regime of subsidy payments to farmers in 2003 have "somewhat augmented the exposure of farmers to world market signals," the report said.

However, "reduction/elimination of export subsidies and tariffs on agricultural imports would benefit EU consumers, improve resource allocation and significantly contribute to promotion of the world economy," it added.

The WTO rates the EU as the world's biggest agricultural trader. In services, "significant barriers" remain both within the union and with other countries, even though free internal movement of services is one of the fundamental economic freedoms outlined in the EU's founding treaty, the report said.

Monopolies in the European services industry and differences in regulation between member states are hampering trade, it added.

"Addressing these distortions would boost the overall competitiveness of the economy," the report said.

Attempts to cut trade-distorting farm subsidies in deadlocked global trade talks have met with vocal opposition from some European countries, especially France, amid heavy political pressure from farmers' groups who fear that many farms face ruin without adequate support.

The WTO's trade policy review placed greater emphasis on the value of services, calling it the "backbone" of the EU's economy.

The services sector accounts for more than 77 per cent in Gross Domestic Product (GDP) and employment in the European Union, while agriculture contributes just 2.0 per cent, according to the report.—AFP