Iowa Public Television


U.S. Report Reveals New Information about Global Trade

posted on August 26, 2005

Hello, I'm Mark Pearson. Government reports on the U.S. economy this week were mixed. *According to the Commerce Department, orders for durable goods - those products expected to last three or more years - fell 4.9 percent in July -- Their largest decline in 18 months. *But first-time claims for unemployment dropped by 4,000 to 315,000 last week. That puts the four-week average of claims at its lowest level in four years. *And the government is forecasting the agricultural trade surplus to fall to $2.5 billion dollars in fiscal year 2006. America is expected to export $63.5 billion worth of agricultural goods this year -- an increase of $1.5 billion. But imports are predicted to rise more than twice that amount to $61 billion. Expanding U.S. agricultural exports continues to be a key priority for the Bush administration. But agricultural subsidies continue to be a sticking point for trade negotiators. And a government report released this week had much to say about subsidies -- especially in Europe.

U.S. Report Reveals New Information about Global Trade

A United States report this week reveals new information about global trade. According to the Congressional Budget Office, or CBO, the European Union is the world's most aggressive protector of its farmers and agricultural industries.

The CBO claims EU members shielded 39 percent of their agricultural production from international competition with tariffs of more than 100 percent. In contrast, the U.S. protects 26 percent of its agriculture with similar tariffs.

An EU spokesperson says the CBO findings are misleading because they focus on a period before major global trade reforms in 2003. The statistics are from 2002 and earlier. The CBO maintains the conclusions would be true today.

The report also states that the EU dominates the use of export subsidies, something the U.S. long has been criticized for by developing countries. The CBO claims the EU accounts for nearly 90 percent of the world's total export subsidies, while the U.S. provides only two percent.

These findings come at a time when officials are working to resolve differences in agricultural trade. Much of the disagreements have focused on developing nations accusing more affluent countries of using subsidies to cause artificially low international prices --a move they feel hurts struggling farmers.

Resolving these matters is crucial to the success of a World Trade Organization summit this December in Hong Kong. Contentious issues include:

The dispute over surging Chinese textile exports. Textile exports from China have risen sharply after permanent quotas were abolished last January.

Brazil is considering filing a complaint against U.S. rice subsidies. It won a similar case regarding U.S. cotton earlier this year.

And, in an escalating trade war with the U.S., Canada this week threatened to impose tariffs on American products in response to Washington's policies against Canadian softwood lumber.

These global trade disputes, along with others, will make this year's WTO meeting difficult. The last WTO meeting in 2003 collapsed after member nations failed to agree on agricultural trade.


Tags: news trade