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U.S. Shows Wilingness to Make Concessions on Farm Subsidies in Trade Talks

posted on September 21, 2007

GENEVA(AP) Breathing life into struggling world trade talks, the United States has signaled its willingness to limit trade-distorting farm subsidies to a level between US$13 billion and $16.4 billion, the WTO's lead farm trade negotiator said Wednesday. Crawford Falconer of New Zealand said Washington made the move contingent on other countries accepting proposed cuts in agricultural tariffs. The U.S. has never said publicly it could accept a cap on payments to American farmers below around $23 billion. The question of rich countries' farm subsidies has been a major stumbling block in the WTO's six year effort to liberalize world trade. "I thought it was very constructive," Falconer said at the WTO's Geneva headquarters, where he has been chairing intensive agriculture talks since the beginning of September aimed at bridging differences between rich and poor nations over proposed subsidy and tariff cuts. "That probably justifies three weeks of work in itself." Sean Spicer, spokesman for the U.S. trade representative in Washington, said "the U.S. will lead but others must step up to ensure" that significant new trade flows are created in agriculture, manufactured goods and services. Several WTO diplomats present at the meeting confirmed that chief U.S. farm trade negotiator Joe Glauber said Washington accepted the proposed subsidy range if other countries agreed to Falconer's plan for cutting tariffs on farm products. For the 27-nation European Union, for example, that would mean a reduction of its highest farm tariffs by 66 percent to 73 percent. Peter Power, spokesman for EU Trade Commissioner Peter Mandelson, said he hoped Washington's move would spark other countries to offer concessions. "This shows that like the EU, the U.S. has the will to negotiate and conclude the round successfully," he said from Brussels, Belgium. The global trade talks known as the Doha round aim to add billions of dollars to the world economy and lift millions of people out of poverty. But they have repeatedly stalled since their inception in Qatar's capital in 2001, largely because of wrangling over eliminating barriers to farm trade and, more recently, manufacturing trade. Two new proposals, one by Falconer and another by chief industrial trade negotiator Don Stephenson of Canada, were released in July in an attempt to force countries into bargaining. The drafts also aimed to erase a major failure in June by the United States, the EU, Brazil and India to hammer out the blueprint of a deal, which is already three years behind schedule. At that meeting, officials said the U.S. indicated it was willing to limit annual farm subsidies to $17 billion, an offer that was rejected by Brazil and India. "We would have liked to have had more clarity on where in the range the U.S. was willing to go, but I think it's an important initial step," said Ambassador Clodoaldo Hugueney of Brazil, a major agricultural exporter that has been one of the most adamant that Washington deliver real cuts in subsidies. Washington spent only $11 billion on trade-distorting subsidies last year, but the Bush administration wants flexibility in the event that greater assistance to farmers is needed because of a decline in world agricultural prices. Critics of the subsidies say they drive down prices, making it impossible for small farms to compete in international markets, and more difficult for poorer countries to develop their economies by selling their agricultural produce abroad. Many trade officials have expressed doubts in recent weeks over Washington's ability to sell subsidy cuts to farm groups, which could play a key role in next year's presidential and congressional elections. The Democratic-controlled House of Representatives recently passed a new five-year farm bill offering few changes in programs for major crops such as corn, cotton, rice, soybean and wheat. And the expiration in June of the U.S. "fast track" authority to send Congress a trade deal for a yes-or-no vote has already made it much harder for Washington to offer greater concessions. But even some of the fiercest opponents of U.S. President George W. Bush's trade policy on Wednesday acknowledged, with reservations, that a positive move had been made. "I still want to hear what Congress says about that," Venezuelan Ambassador Oscar Carvallo said. "Will Congress accept US$16.4 billion? We have to know how credible this offer is." Sen. Tom Harkin, an Iowa Democrat who chairs the Senate Committee on Agriculture, Nutrition and Forestry, said he would support a Doha round agreement if it balanced U.S. subsidy cuts with tariff concessions by other countries, "as reflected in Mr. Falconer's text." "If it is not a good deal for U.S. farmers, it would likely face a difficult road to approval by the U.S. Congress," Harkin said. He added that it was important that WTO rules allow the United States to continue paying farmers through programs that are not trade-distorting but promote conservation, renewable energy and rural development.

Tags: agriculture foreign relations news trade