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World Trade Reps Still Stuck on Issues

posted on January 27, 2006


In addition to the new mad cow discovery in Japan, Canada this week also reported a case of BSE in a six-year-old animal in Alberta. Canadian officials report their scheduled February talks with South Korea about resuming trade of Canadian beef have been put on hold.

As for the U.S., Japan has dispatched its own inspectors to 11 facilities in five states that handle beef products for Japanese markets.

While North America struggles with beef trade, beef isn't the only export concern. The U.S. has major sticking points on other trade issues -- from subsidies to import tariffs. Ministers from about 30 of the world's major trading powers --including the U.S. --are in Switzerland this week to break a deadlock in global trade talks.

With just more than three months left before a self-imposed deadline for setting formulas to cut trade barriers ... So far, there seems to be little progress.

 

World Trade Reps Still Stuck on Issues

The main sticking point for negotiators is farm trade. Developing nations in the WTO -- and there are a lot of them -- want farm subsidies eliminated in wealthy nations like the United States. They claim the subsidies are trade-distorting because they 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 the developing nations remove import tariffs and other trade barriers.

But the proposals proved too extreme. Powerful political voices on both sides of the economic divide objected... and subsequent offers from the U.S. and the European Union to reduce, but not eliminate, farm subsidies, have been rejected.

Bob Stallman, President, American Farm Bureau Federation: "The main crux of the issue at this point is the tradeoffs between reducing trade-distorting domestic supports and having real economically meaningful market access for agricultural products."

Agriculture, historically, has been the lone bright spot in the overall U.S. trade picture. But the string of more than 40 consecutive agricultural trade surpluses is in jeopardy. While the U.S. still is the world's largest exporter of agricultural goods and currently enjoys an agricultural trade surplus, imports are rising nearly twice as fast as exports. And some economists predict if current trends continue the U.S. agricultural trade surplus will turn into a deficit before the end of the decade.

The government's latest trade numbers from the past two years support the prediction.

While the U.S still exports more agricultural goods than it imports, the surplus shrank from $6.6 billion for the first 11 months of 2004, to $3.5 billion for the same period in 2005. The numbers also reflect seasonal patterns in the overall U.S. export picture. Shipments of cotton and soybeans, for example, increased sharply in the fall, as more of the crops were harvested.

Year-to-date exports did, in fact, grow by more than 1.7 billion dollars in 2005. Most of the increase in export value is directly attributable to livestock. Red meat values alone were up 33 percent over 2004.

While final numbers for 2005 are not yet available, USDA reports the U.S. exported 49 percent of U.S. food grain production, 16 percent of its feed grains and more than 35 percent of its oilseeds in 2004.

 


Tags: agriculture Mad Cow news trade