WASHINGTON, June 22: New US farm legislation that doles out billions of dollar in subsidies to American farmers will make it more difficult to reach a world trade pact in agriculture, a top European Union official said on Friday.

“This farm bill is a step in the wrong direction, and it’s a bad signal for the Doha Round,” EU Trade Commissioner Pascal Lamy told reporters at the end of two days of meetings with US lawmakers and Bush administration officials.

The United States and other members of the World Trade Organization launched a new round of trade talks last November in Doha, Qatar, with the aim of finishing by January 2005.

A principal objective of the talks is to further liberalize agricultural trade by reducing tariffs and other market access barriers, reducing export subsidies with an eye toward phasing them out and reducing “trade-distorting” domestic subsidies.

Lamy said the new US farm bill appeared to provide roughly the same level of assistance that American farmers have received in recent years under emergency spending programmes.

But the way the payments are structured will probably lead to “new overproduction and it will probably have a negative impact on prices,” he said.

The bill is also at odds with the US goal of eliminating export subsidies, Lamy said.

Commodity prices “as a whole will probably be lower and create a protection against imports and make the necessity of export support more necessary,” he said.

The EU leads the world in subsidizing farm exports.

It has resisted efforts by the United States and the Cairns Group of 18 agricultural exporting nations to set a deadline for phasing out farm export subsidies.

Lamy said both the EU and the United States generously support their farmers, compared with the rest of the world.

Given that fact, both Brussels and Washington should move toward providing the support in a way has the least impact as possible on other trading partners, he said.

The new farm legislation will make that task more difficult in the EU by weakening the hands of those who prefer a more market-oriented farm policy, he said.—Reuters