Farm subsidies key to global trade talks breakthrough
New offers from the US 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.
US trade representative Rob Portman gave negotiations a boost early yesterday when he laid out a new proposal on agricultural tariffs and subsidies, saying the EU and Japan must now promise to do more to cut aid to their own farmers.
The EU 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.
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.”
At a Hong Kong summit scheduled for the end of the year the WTO’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 has stalled, largely because of the thorny issue of US and EU 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.
According to the US offer, Washington would make cuts of 60% in trade-distorting farm subsidies.
Portman said the EU and Japan would have to make cuts of 80%, since their subsidy levels are higher.
In response, EU 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 for products including wheat, dairy goods and rice by 70% – five percentage points higher than its previous pledge. Other subsidisers – including the US – would make lower but proportional cuts, the EU 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 EU 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.”
Brussels had previously offered to cut its subsidies in products including wheat, dairy goods and rice by 65%.
Japan’s Agriculture Minister, Mineichi Iwanaga, said his country could not accept the US offer as a basis for discussion.
“There is a very big gap between the US proposal and our position because the (US) domestic support reductions are insufficient,” Iwanaga said, adding that Tokyo cannot accept any restrictions on its tariffs.
WTO Director-General Pascal Lamy has said that the EU and the US will have to make adjustments in agriculture policy if progress is to be made in the Doha round, which is already well behind an original December 2004 deadline.
EU farm reforms adopted in 2003 will convert the bulk of the bloc’s production subsidies into programmes 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 programme, which provides payouts to farmers when prices fall, allowing US producers to charge artificially low prices.
