GENEVA, (Reuters):

The European Union should remove or reduce export subsidies and import tariffs on farm goods because this would benefit consumers and make its economy more efficient, a World Trade Organisation (WTO) report says.

The report, which is due for official release later this month, says the economy of the 27-state bloc is generally open and that this has aided global growth. However, "substantial" barriers remain in a few areas, notably agriculture.

"Reduction/elimination of export subsidies and tariffs on agricultural imports would benefit EC (European Community) consumers, improve resource allocation and significantly contribute to the promotion of the world economy," says the report, a copy of which was obtained by Reuters.

Six-month suspension

Rich nation farm tariffs and subsidies are a central issue in the WTO's troubled Doha round of free trade negotiations, which have recently resumed in Geneva after a six-month suspension triggered largely by deep divisions over agriculture.

The EU has already offered to get rid of export subsidies as part of any final Doha treaty, which would also cover industrial goods, services and trade rules.

But Brussels is resisting calls from major farm goods exporters, led by the United States, for deeper tariff cuts than the some 50 per cent its negotiators have proposed.

The EU says the United States must reduce farm subsidies further and it is also seeking concessions from major developing states in industrial goods and services.

The report by WTO economists, who regularly review the trade performances of member states, does not go into details on the Doha negotiations. But it expresses concern that Brussels' new interest in bilateral and regional trade pacts could divert negotiating energy away from the search for a Doha deal.

Since the last review in 2004, the average most favoured nation (MFN) tariff on agricultural goods, the baseline duty open to all WTO members, has risen to 18.6 per cent from 16.5 per cent, mainly due to lower international prices.

But individual duties go as high as 428 per cent on certain processed meat products.

The EU remains the world's leading exporter and importer of commercial services, despite the fact that there are still significant barriers to such business both inside the bloc and with third parties, it notes.

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