Hello, I'm Mark Pearson. To no one's surprise, the Federal Reserve this week raised a key interest rate. It was the 17th straight meeting at which the central bank boosted the federal funds rate, the interest that banks charge each other. That rate now stands at its highest level in five years. Now, here's what it means for you and me: *The cost of mortgages, home equity loans, and credit card debt goes up with each bump in interest rates. *In farm country, the cost of doing business also rises. *And unfortunately, savers, for the most part, have not seen a corresponding increase in their returns. The Fed started its credit tightening campaign two years ago when concerns about inflation began to surface. Since then, the economy has begun to slow, although analysts say it's unclear if the Fed is finished nudging interest rates higher. One sector that did approve of the latest rate hike was Wall Street, where the Dow jumped more than 200 points Thursday on the news. The Bush administration also put on a happy face this week, but for a different reason. World Trade Organization talks are starting up again and administration officials, at least publicly, are upbeat. That's a view not shared in Congress, where lawmakers called on U.S. negotiators to hang tough.
This week, trade ambassadors from 60 of the 149 member nations of the World Trade Organization are meeting in Geneva, Switzerland to hammer out details on a global trade agreement. Before newly appointed US Trade Representative Susan Schwab and Agriculture Secretary Mike Johanns left for Geneva they talked tough on trade.
Ambassador Susan Schwab, United States Trade Representative: "We made it clear last fall that our proposal was not a take it or leave it offer. However it was contingent on receiving meaningful offers from our trading partners that match our level of ambition on agricultural market access. We have yet to receive such offers"
Secretary Mike Johanns, United States Department of Agriculture: "I can't come to these folks on the hill and say we have given away our domestic support if I can't get a solid market access agreement."
They were joined by a veritable "who's who" of farm state lawmakers. The pair received strong words of encouragement and definite instructions on what to do at the negotiating table.
Sen. Saxby Chambliss, R-Georgia, Senate Agriculture Committee Chairman: "We want to make sure that we do everything possible to try to achieve an agreement because it is important to America's farmers and ranchers in the future as well as in the short term that we have a good strong agreement in the Doha round."
Rep. Bob Goodlatte, R-Virginia, House Agriculture Committee Chairman: "No other country has put forward offers that measure up to our proposal. Now it is time for the rest of the world to step up to that challenge. If they will not then that old but accurate phrase applies, 'No deal is better than a bad deal.'"
The current round of trade talks, started in Doha, Qatar in 2001, have constantly been stymied by the two issues of agricultural support payments and trade tariffs. Scheduled to conclude in Geneva in 2004, the talks broke down when negotiators could not reach an agreement. The members decided to keep working and scheduled another meeting in Hong Kong in 2005. Those talks also came to a halt when no agreement could be reached.
During the Hong Kong meeting, the United States offered to cut trade distorting farm subsidies by 60 percent if other countries dropped farm tariffs by up to 95 percent. Counter-offers by other countries, the European Union among, them have been unacceptable to US negotiators.
Ambassador Susan Schwab, United States Trade Representative: "We want a big outcome and there have been, periodically, rumors that some how we would settle for something less and the message here is we have no intention of settling for something less."
Trade ministers from the European Union have stated they are willing to work with the United States trade team and, if there are real cuts to farm subsidies, increase access to the European marketplace.
The entire agreement will require work on an interwoven series of negotiations requiring all the member nations to give-in on one point or another before real progress can be made. WTO Director General Pascal Lamy, the former European Union Trade Commissioner, has informed all the participants that "the clock is ticking."