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WTO Members Still at Odds Over Farm Subsidy Programs

posted on December 16, 2005

You can't tell the players without a scorecard and that's certainly the case this week at the World Trade Organization summit in Hong Kong. Here's the scoring summary, as of Friday:

The powerful G20 bloc of nations says it's ready to accept a U.S. call to eliminate farm subsidies by 2010, though the question of defining subsidies is unresolved. Score one for progress.

A group of 77 developing nations has threatened to reject any trade deal that threatens safeguards for their farmers ... or their access to lucrative European markets. Score one for stalemate.

The U.S. offers duty-free imports to cotton producers in Africa ... progress.

Europe and the U.S. are sparring over food aid programs ... stalemate.

And so it goes. The bottom line is the predictions for limited success in Hong Kong have been fulfilled ... and the prospects for a new global trade deal by the end of 2006 seem more remote than ever. John Nichols provides the update.


WTO Members Still at Odds Over Farm Subsidy Programs

The start of this week's World Trade Organization summit in Hong Kong was reminiscent of previous ministerial gatherings.

Outside the summit, scores of protesters -- mostly South Korean farmers -- clashed with police. The protesters are claiming that a WTO treaty that limits import barriers will destroy the South Korean rice market and, with it, their livelihoods.

A few blocks away at the summit, tensions of a different sort were evident. Despite outward attempts to be optimistic, observers say the chances are remote that trade delegates will succeed in establishing a framework to liberalize world trade.

Pascal Lamy, WTO Director General: "We have the chance to make our trading rules more relevant to the realities of the 21st century. Should we not succeed, all of this too will be lost. So the stakes are very high, and they're very high for all of us."

The diplomatic rhetoric died quickly. On the second day of the summit, U.S. Trade Representative Rob Portman singled out the European Union for holding up the stalled talks. He said until the Europeans get more cooperative on market access, no other WTO member will feel compelled to make concessions.

But European Union trade boss Peter Mandelson defended the policies of the 25-nation bloc, saying the cuts in tariffs and subsidies the EU proposed ahead of the summit are generous enough.

Peter Mandelson, E.U. Trade Commissioner: "... if we have a really ambitious outcome of this round, it would give a massive shot to the global economy."

Offers to slash farm subsidies and import tariffs from developed trading powers like the EU and the United States are a bone of contention with developing nations, which would like to see those trade-distorting programs eliminated entirely. They claim the subsidies allow cheap farm goods to flood the world market at the expense of their own non-subsidized commodities.

In exchange for eliminating farm subsidies, initial WTO proposals suggested developing nations remove import tariffs and other trade barriers. But the proposals proved too extreme ... and subsequent offers from the U.S. and the European Union to reduce, but not eliminate, farm subsidies, have been rejected.

Kamal Nath, Minister of Commerce, India: "... it is the signal and the directions and the momentum which Hong Kong creates that will really lead either to the success or the failure of the developmental aspects of this round."

Much of the run-up to the Hong Kong summit was cast as a battle of rich versus poor, with farm trade at the center of the debate.

Some nations have suggested setting the farm subsidy squabble aside to focus on more winnable trade issues, like in services and manufacturing. In fact, some question how the concerns of a relatively small number of farmers can hold hostage the broader trade interests of the international community.

But U.S. interests say there can be NO disconnect between farm trade and other trade issues.

Rob Portman, U.S. Trade Representative: "... the U.S. position is very clear: we believe that there should be reduction of trade barriers, tariffs, trade-distorting subsidies, non-tariff barriers, because we think it is in the interest of all citizens to be able to have a more efficient, better working economy; to have something that, again, gives hope for the future. "

Portman also was quick to defend U.S. food aid programs, which came under attack primarily from Europe. The U.S. has pledged to make changes in its food aid programs if the Europeans end their export subsidy programs. Portman described the EU perspective on U.S. food aid as "an obsession."

In the end, the forecasts for the six-day summit were pegged to progress, not breakthroughs.

Pascal Lamy, WTO Director General: "We need to capture as much as possible of what we have achieved since last year. The fact that we have recalibrated ambitions for Hong Kong does not mean that we should stop working now."

For Market To Market, I'm John Nichols.

Tags: agriculture government news trade