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WTO Talks: Deadlocked or Just Dead?

posted on October 28, 2005

Hello, I'm Mark Pearson. The talk of the week is about money ... who's got it ... and what they're doing with it.

In the corporate world, the money belongs to the oil companies. Exxon Mobil rewrote the record books this week by announcing a third-quarter profit of nearly $10 billion. That's greater than the annual gross domestic product of some oil-producing nations, like Kuwait.

In Congress, the money is in the hands of the Republican leadership, which has mandated significant reductions in spending. To that end, the House Agriculture Committee this week proposed cutting farm program spending by $3.7 billion, with nearly a third of the cuts coming from commodity programs.

And in the arena of international trade, the money belongs to the wealthiest nations. That's a problem for poor countries, which claim the money spent in industrialized nations on farm subsidies puts Third World agriculture at a disadvantage on the trade front.

Despite recent efforts by the U.S. to address those concerns, reticence to cut farm subsidies continues to cloud the future of world trade talks.


WTO Talks: Deadlocked or Just Dead?

The opposition to proposed cuts in farm subsidies under the World Trade Organization has been so staunch that analysts are wondering if next month's critical talks in Hong Kong will be dead on arrival.

To break a deadlock on the talks to liberalize global trade, the U.S. this month offered to drastically cut its domestic farm subsidies IF the European Union and Japan would do the same. Cutting those subsidies is something on which increasingly powerful blocs of developing nations within the WTO have insisted.

But reaction to the proposal has become more restive. And some factions within the European Union, notably France, have grown increasingly hostile. French President Jacques Chirac this week demanded other agriculture exporters cut their subsidies before the European Union takes any further action.

The powerful French farm lobby has a long history of noisy protest against proposed cuts in European subsidies, which account for some 40 percent of the European Union budget. The last reform of the EU's Common Agriculture Policy came two years ago, and farmers oppose any further changes.

EU trade officials are treading more lightly, hoping the momentum gained from the U.S. offer doesn't slip away. EU Agriculture Commissioner Mariann Fisher Boel says any future concessions by Europe will include restrictions on food aid and a reduction in tariffs.

American trade officials and farm groups have been quietly disappointed in the response to the U.S. offer. Even the Canadians have dismissed the proposal, saying the cuts offered only reduced the allowable limits for U.S. farm program spending.

Either way, the assessment from at least one trade official is the crucial Hong Kong talks set for December now are on "life support."


Tags: agriculture European Union government news trade