Italy leads late bid to boost EU tobacco subsidies

Mon Sep 23, 2013 12:09pm EDT

* Nine countries want output-linked subsidies for growers

* Change would unpick June EU farm policy reform deal

* EU farm commissioner warns against

By Francesco Guarascio and Charlie Dunmore

BRUSSELS, Sept 23 (Reuters) - Italy led a group of EU governments on Monday calling for tobacco farmers to receive more subsidies as part of reforms to the bloc's common agricultural policy (CAP), threatening to reopen a deal reached in June.

Most elements of the CAP reform have already been agreed by EU negotiators. A few remaining budget-related issues are due to be finalised in the coming days, paving the way for formal adoption by EU governments and the European Parliament before the reforms begin to take effect from 2014.

But the changes requested by some tobacco-producing countries would mean unpicking parts of the June deal and could undermine efforts to pass the reform in time for it to take effect on Jan. 1 next year.

"In a document signed by nine ministers, we ask to reopen a debate in Europe on the future of the tobacco sector," Italy's agriculture minister, Nunzia De Girolamo, told reporters on the sidelines of a meeting of EU farm ministers in Brussels.

Italian officials said a joint declaration had been signed by De Girolamo and farm ministers from France, Spain, Greece, Poland, Hungary, Romania, Bulgaria and Croatia.

In the document, the group said the CAP reform deal had unfairly discriminated against tobacco farmers by denying governments the option of linking their subsidies to output levels.

Under the June agreement, countries can link up to 15 percent of direct subsidies worth about 40 billion euros ($54 billion) annually to output levels, but only for certain products including cereals, livestock and dairy.

Such coupled payments tend to be higher than the basic area-based subsidies for which all EU farmers are eligible. They are designed to ensure that farming is maintained in marginal areas such as uplands.

Despite support from some EU governments and members of the European Parliament, tobacco was excluded from the list of products eligible for production-linked payments.

RISKS OF REOPENING TALKS

The group of countries would need the support of other EU member states to reopen negotiations with the European Parliament on the issue.

That would raise the prospect that parliament could try to renegotiate other elements of the deal. The EU's top farm official warned against such a move.

"In my opinion, for the health of the discussions that we will have now, it is important to be clear that we stick to the issues that have yet to be concluded," EU farm commissioner Dacian Ciolos said.

"The issue of tobacco, together with other issues, were concluded in the political agreement that we reached in June," Ciolos told a news conference.

A final round of talks between negotiators for EU governments and the parliament is scheduled for Tuesday. One EU official who spoke on condition of anonymity said the bid to reopen talks on tobacco was unlikely to win enough support from other EU countries.

The EU produces around 280,000 tonnes of raw tobacco each year, equivalent to about 4 percent of global output. Italy is the bloc's biggest producer, followed by Bulgaria, Poland and Spain.

The bloc is also currently debating new legal proposals for tougher controls on the sale of tobacco products. ($1 = 0.7412 euros) (editing by Jane Baird)

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