U.S. offers lower cap on trade-distorting farm subsidies
GENEVA — The United States took the first bold step in a week of crunch-time trade talks Tuesday, slicing $1.4 billion from a previous offer to limit contentious, trade-distorting subsidies to American farmers.
U.S. Trade Representative Susan Schwab told a news conference that Washington was prepared to rewrite elements of its recently passed farm bill to ensure that U.S. subsidies believed to give advantages to American farmers are limited to $15 billion annually.
While Congress may view the move skeptically, the Bush administration’s top negotiator shifted pressure on Brazil, India and other emerging economies to open up their markets for industrial goods — a key demand of more developed countries in the World Trade Organization’s seven-year-old trade round.
Emerging countries have demanded a cap closer to $12 billion for the United States, noting that actual U.S. subsidies have fallen to around $9 billion annually as prices have risen for agricultural commodities.
Less developed countries say the payments are providing rich-world farmers an unfair competitive advantage that hinders Third World development. But the Bush administration — and Congress — have sought flexibility in case crop prices fall and American farmers need greater support.
Washington is currently allowed to distribute over $48 billion in subsidies linked to price, production and other trade-distorting criteria. The U.S. agreed last year to come down at least to below $16.4 billion in a move that generated criticism among American farm groups. The European Union and Japan are also offering steep cuts in subsidy limits.
“Anyone who understands farm programs will understand how significant the reduction is implied by this number,” said Schwab, noting that U.S. subsidies have exceeded her proposed limit in seven of the last 10 years.
Without a global trade deal, they may exceed $15 billion again as part of the United States’ new, five-year farm bill worth nearly $300 billion that Congress passed over President Bush’s veto.
Schwab described the concession as a “major move, taken in good faith, with the expectation that others will reciprocate and step forward with improved market access” for farm and industrial exports.
Rich and poor countries have clashed repeatedly in the WTO talks launched in Qatar’s capital in 2001, now known as the Doha round. Developing nations want agricultural tariffs and subsidies in rich countries to come down so they can sell more of their produce, while the U.S., European Union and others seek better conditions in emerging economies for their manufacturers, banks, insurers and telecommunications companies.
Negotiators are hoping for agreement this week on a deal that would liberalize world agriculture and manufacturing, setting the stage for an overall trade accord by the end of the year. But there is widespread skepticism.
Schwab said her move showed leadership.
“For this round to succeed as a developing round, all of the main developed and emerging market players will be faced with hard decisions,” Schwab said.
Brazil and India will now have to face those hard decisions. As co-leaders of a broad coalition of developing countries, they have resisted cuts in manufacturing tariffs that would create new opportunities for automakers, machinery and electronics from the U.S., Europe and Japan.
Brazil’s Foreign Minister declined to say how it would respond, and instead criticized the U.S. offer for not going far enough. “I hope this is not the last offer,” Celso Amorim said. “It’s a very low level of ambition.”
Top negotiators from about 30 governments met behind closed doors Tuesday, where Schwab explained her proposal in detail.
On Monday, EU Trade Commissioner Peter Mandelson made his opening pitch by offering to raise to 60 percent the average cut for European agricultural tariffs.
While that was up from a previous offer from 54 percent, the details were unclear. Some trade officials suggested the cut was only an EU recalculation of its previous offer, while others suspected some creative mathematics. Marianne Fischer Boel, the EU farm commissioner, and Michel Barnier, her French counterpart, denied that the EU had given ground.
U.S. Trade Representative Susan Schwab told a news conference that Washington was prepared to rewrite elements of its recently passed farm bill to ensure that U.S. subsidies believed to give advantages to American farmers are limited to $15 billion annually.
While Congress may view the move skeptically, the Bush administration’s top negotiator shifted pressure on Brazil, India and other emerging economies to open up their markets for industrial goods — a key demand of more developed countries in the World Trade Organization’s seven-year-old trade round.
Emerging countries have demanded a cap closer to $12 billion for the United States, noting that actual U.S. subsidies have fallen to around $9 billion annually as prices have risen for agricultural commodities.
Less developed countries say the payments are providing rich-world farmers an unfair competitive advantage that hinders Third World development. But the Bush administration — and Congress — have sought flexibility in case crop prices fall and American farmers need greater support.
Washington is currently allowed to distribute over $48 billion in subsidies linked to price, production and other trade-distorting criteria. The U.S. agreed last year to come down at least to below $16.4 billion in a move that generated criticism among American farm groups. The European Union and Japan are also offering steep cuts in subsidy limits.
“Anyone who understands farm programs will understand how significant the reduction is implied by this number,” said Schwab, noting that U.S. subsidies have exceeded her proposed limit in seven of the last 10 years.
Without a global trade deal, they may exceed $15 billion again as part of the United States’ new, five-year farm bill worth nearly $300 billion that Congress passed over President Bush’s veto.
Schwab described the concession as a “major move, taken in good faith, with the expectation that others will reciprocate and step forward with improved market access” for farm and industrial exports.
Rich and poor countries have clashed repeatedly in the WTO talks launched in Qatar’s capital in 2001, now known as the Doha round. Developing nations want agricultural tariffs and subsidies in rich countries to come down so they can sell more of their produce, while the U.S., European Union and others seek better conditions in emerging economies for their manufacturers, banks, insurers and telecommunications companies.
Negotiators are hoping for agreement this week on a deal that would liberalize world agriculture and manufacturing, setting the stage for an overall trade accord by the end of the year. But there is widespread skepticism.
Schwab said her move showed leadership.
“For this round to succeed as a developing round, all of the main developed and emerging market players will be faced with hard decisions,” Schwab said.
Brazil and India will now have to face those hard decisions. As co-leaders of a broad coalition of developing countries, they have resisted cuts in manufacturing tariffs that would create new opportunities for automakers, machinery and electronics from the U.S., Europe and Japan.
Brazil’s Foreign Minister declined to say how it would respond, and instead criticized the U.S. offer for not going far enough. “I hope this is not the last offer,” Celso Amorim said. “It’s a very low level of ambition.”
Top negotiators from about 30 governments met behind closed doors Tuesday, where Schwab explained her proposal in detail.
On Monday, EU Trade Commissioner Peter Mandelson made his opening pitch by offering to raise to 60 percent the average cut for European agricultural tariffs.
While that was up from a previous offer from 54 percent, the details were unclear. Some trade officials suggested the cut was only an EU recalculation of its previous offer, while others suspected some creative mathematics. Marianne Fischer Boel, the EU farm commissioner, and Michel Barnier, her French counterpart, denied that the EU had given ground.
Copyright © 2002-2008 Lincoln Journal Star. All rights reserved.