Despite a weaker dollar and increased exports, the U.S. trade deficit in July shot higher. That's because imports of goods and services were at the second highest level on record.
The Bush administration says the best way to deal with that is to get other nations to remove trade barriers. That would allow U.S. companies, the White House says, to do business more freely in overseas markets. Critics say the growing trade deficit is proof that free trade policies do not work.
But freer trade is exactly what the administration is after this week in Cancun, Mexico. There, the 146 members of the World Trade Organization are gathered for a long shot attempt at further liberalizing global trade. And much of the negotiations will focus cutting farm subsidies. John Nichols reports.
The subsidies, which by some accounts amount to nearly $1 billion dollars per day being paid to farmers in the wealthy nations, are a key issue confronting negotiators in Cancun. More than 20 developing nations have banded together to pressure the United States, the European Union and Japan to make deeper cuts. But, on the eve of the talks in Cancun, representatives of key U.S. farm groups called for unilateral reductions in farm subsidies
Bob Stallman, President, American Farm Bureau Federation: "The degree to which U.S. agriculture producers will support reductions in trade distorting domestic support and greater openness in our markets will depend on the degree to which tariffs are harmonized and trade distorting disciplines are harmonized in their markets."
Speaking in Washington prior to the start of WTO meetings in Cancun, representatives of nearly a dozen farm groups outlined their concerns regarding future trade agreements.
Nearly all of the leaders discussed the difficulties in competing in a world market distorted by government support mechanisms. And, as one representative expressed, nowhere was that more apparent, than in the sugar industry.
Luther Markwart, Exec. V.P, American Sugar Beet Growers Association: "The U.S. sugar industry is efficient by world standards. Over half the sugar produced in the world is produced at a higher cost than what we produce it here in the United States. We are very efficient and we're not afraid to compete in the global market. The problem is that the world sugar market is the most distorted, most subsidized, most depressed of any commodity market in the world. And the only way we can fix that problem is through the negotiations at the WTO."
Soybean producers, who now face tough competition from South America claim access to foreign markets is key to their survival.
Ron Heck, American Soybean Association: "Soybeans are 50% dependent on exports every year and we face increasing competition from South American production every year. So it is absolutely essential that we need substantial reductions in tariffs from the current applied rate, rather than from their bound rates so we can tap the substantial growth potential in the Asian markets. We have to be able to sell our product."
Despite representing different commodity groups with disparate concerns over the negotiations taking place in Cancun, all of the trade groups agreed on one thing -- the stakes are extremely high.
Christopher Shaffer, Wheat Export Trade Education Committee: "We have to make this round work and we have to make it work right for American agriculture. Because quite frankly, the margins are so thin across the board in American agriculture right now that if we don't do it right we will be looking at very significant change in rural America, which is fed by agriculture in the country."
Jon Dogett, National Corn Growers Association: "Agricultural markets will change whether or not an agreement is reached in Cancun. The difference will be whether the U.S. helps to change that future or if a WTO panel in Geneva dictates changes to our domestic programs for us."
For Market to Market, I'm John Nichols.