If exports to non-EU countries are no longer possible after the completion of the current World Trade Organisation talks, the consequences for Irish food companies will be dramatic, Mr Pat Ivory of IBEC, the employers' confederation, has warned.

This could occur if export subsidies (refunds) for food being exported outside the EU were reduced below the levels already agreed in the reform of the Common Agricultural Policy - Agenda 2000 - or if prohibitive tariffs were imposed in markets to which Ireland exports.

Mr Ivory is concerned that only one other EU state, France, is adamant that there should be no deviation from the agreed EU line on agriculture. "In many cases, the impact would be more severe on Irish companies than our competitors in other EU member-states who have large home markets and are also geographically much closer to the emerging new EU member-states of Eastern Europe," he said.

In an analysis of the food processing industry's position in the lead-up to the WTO talks in Doha, Mr Ivory warned that if export subsidies were phased out rapidly, EU finance and agriculture ministers would need to agree a more costly and deeper reform of the CAP. This was necessary if EU countries were to compete on world markets with the US, New Zealand, Argentina and other major food producers. However, he said the Irish food processing industry could not adopt a protectionism stance towards further trade liberalisation.

An EU negotiating paper points out that export refunds are not the only way to support exports, the export credit system, widely used in the US, has the same distorting impact on world trade as the EU's more transparent and accountable system. Mr Ivory said that the US was, in recent years, becoming more and more protective.