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U.S. offers 60% cut in its ag subsidies at WTO talks
ZURICH, SWITZERLAND — New offers from the United States and European Union to cut aid to their farmers could herald a breakthrough in deadlocked global trade talks, just two months before a deadline for a framework treaty, ministers said Monday.

U.S. Trade Representative Rob Portman gave negotiations a boost early Monday when he laid out a new proposal on agricultural tariffs and subsidies, saying the E.U. and Japan must now promise to do more to cut aid to their own farmers. The E.U. responded with a proposal to make deeper cuts in subsidies to its own farmers.

But the necessary reforms are expected to be a tough sell to farmers on both sides of the Atlantic who have profited from generous government handouts.

At a Hong Kong summit scheduled for the end of the year, the World Trade Organization’s 148 members are supposed to agree on an outline for a global trade deal as part of the Doha round of negotiations. But progress had stalled, largely because of the thorny issue of U.S. and E.U. farm subsidies.

The Doha round — named for the Qatari capital where it was launched in 2001 — is set to conclude next year. It sets out to boost the global economy by lowering trade barriers across all sectors, with particular emphasis on developing countries, for whom farm subsidies are a particularly sensitive topic.

"The U.S. is willing to take some pain," Portman said. "We are ready to make meaningful changes to American farm programs provided our trading partners deliver tangible market access for U.S. agricultural exports."

According to the U.S. offer, Washington would make cuts of 60% in trade-distorting farm subsidies. But Portman said the E.U. and Japan would have to make cuts of 80%, since the E.U. "uses about three times more support than we do."

The U.S. proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.

In response, E.U. Trade Commissioner Peter Mandelson put forward an offer to make deeper cuts in Brussels' farm subsidies, but it stopped short of Washington's demands.

Brussels offered to cut its subsidies in products including wheat, dairy goods and rice by 70% — five percentage points higher than its previous pledge. Other subsidizers — including the United States — would make lower but proportional cuts, the E.U. proposal said.

"The time has come for all of us to put cards on the table," Mandelson told other ministers as he laid out the E.U. proposals. "If we do not advance this negotiation in concrete terms this week — and among ourselves today — we will have to acknowledge that we may simply run out of time for Hong Kong."

Washington's proposal could be the breakthrough negotiators have been seeking, said Australia's Trade Minister Mark Vaile.

"It's a step in the right direction," said Vaile. "We now need to push forward to achieve real progress in lowering barriers to agricultural trade."

But Japan's Agriculture Minister, Mineichi Iwanaga, said his country could not accept the U.S. offer as a basis for discussion.

"There is a very big gap between the U.S. proposal and our position because the (U.S.) domestic support reductions are insufficient," Iwanaga said, adding that Tokyo cannot accept any restrictions on its tariffs.

Brazil's foreign minister, Celso Amorim, welcomed the U.S. proposal but said more work is needed before an agreement can be reached. He also criticized the lack of movement from the E.U. on the issue of access for foreign producers to its farm market.

But some critics said the U.S. offer would not result in significant cuts in aid to farmers because the proposal only relates to the overall amount Washington is allowed to spend on subsidies, rather than the current level it actually spends.

"What looks on the surface like a genuine attempt to move the talks forward is in fact a very clever piece of maneuvering by the U.S.," said Celine Charveriat of international aid agency Oxfam. "The devil is in the details, and these details are very devilish indeed."

E.U. farm reforms adopted in 2003 will convert the bulk of the bloc's production subsidies into programs such as animal-welfare and environmental-management grants to farmers — deemed far less trade-distorting under WTO rules. Washington envisages no such change to its "countercyclical" subsidy program, which provides pay-outs to farmers when prices fall, allowing U.S. producers to charge artificially low prices.
MGR Archive 12.10.2005
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