Iowa Public Television


G20 Pushing for Deaper Farm Subsidy Cuts from U.S.

posted on October 14, 2005

Cynics claim the U.S. proposal is a prelude to the business of shifting trade-distorting subsidies into safer havens, like the WTO's blue and green boxes. In fact, the European Union launched reforms two years ago to convert the bulk of its farm subsidies into hands-off green box programs.

Still, the reaction of European trade officials to the U.S. proposal was mostly positive. That's important because without some give-and-take on farm subsidies between the two trading powers, the chances of a breakthrough are remote at December's WTO summit in Hong Kong.

But the U.S. and Europe aren't the only players. The WTO requires unanimous approval on global trade deals from all 148 of its members. And there was at least one bloc within the WTO that was less than thrilled with the proposal.


G20 Pushing for Deaper Farm Subsidy Cuts from U.S.

The G20 is a group of 20 developing countries whose formation two years ago at the failed WTO talks in Cancun, Mexico, signaled the arrival of a powerful new trading force. Spearheaded by Brazil and India, the group said this week's U.S. offer to cut trade-distorting subsidies by 60 percent didn't go far enough.

Brazil's foreign minister said after meeting with G20 colleagues, "We welcome the fact that (the U.S. offer) was made. We think that it's a positive step, but there's also an agreement that it's an insufficient step."

The G20 is pushing for increased access to industrialized markets for its farmers, while arguing that poor countries should be allowed to cut their own import tariffs much less dramatically.

Other foreign critics charge the U.S. offer would NOT result in significant cuts to American farmers. They claim the proposal relates to the overall amount the U.S. is allowed to spend on subsidies, rather than the current level it actually spends. The WTO limits U.S. amber box programs to $19.1 billion a year.

SLUG: Harvest

On the home front, the reaction was slightly more guarded. American Farm Bureau Federation President Bob Stallman called the U.S. proposal a step toward opening foreign markets to American farm goods.

But the American Corn Growers Association said the plan would hurt U.S. corn farmers. The proposed cuts would succeed, the group said, only if Washington provides price supports through mom-recourse loans, government purchases of surplus grain, and an expanded federal grain reserve.

None of those things will fly with U.S. trading partners.

At least one lawmaker, Iowa Republican Senator Charles Grassley, cautioned farmers the proposal does NOT mean the elimination of all subsidies, but rather a shift in the safety net that protects farm income.

Senate Agriculture Committee Chairman Saxby Chambliss of Georgia was less enthusiastic, saying the proposal had the potential to cause "economic hardship in rural America."


Tags: agriculture government news trade