U.S. Under Gun From Farmers to Consider Scaling Back Ag Proposal in WTO Trade Talks
6 June, 2006
Gary G. Yerkey
But the official--James M. Murphy Jr., assistant U.S. trade representative for agricultural affairs - said that it was too early to revisit the proposal even though it has never been seen by the United States as a 'take-it-or-leave-it' offer.
'We are still in a negotiation,' he said.
Earlier this month, a number of leading U.S. agriculture organizations, including the American Farm Bureau Federation, wrote President Bush saying that they were disappointed with the lack of movement on the part of the EU and raised the possibility of lowering U.S. ambitions on domestic support.
'Reductions in, and limitations on, domestic support for U.S. agriculture are only acceptable if the negotiations yield an important net gain for American farmers and ranchers through commitments on market access and other trade-distorting policies by our trading partners,' the letter said. 'At this point in the negotiations, however, it seems clear that other countries have 'pocketed' the U.S. offer on domestic support without being prepared to even come close to the U.S. proposal on increasing market access in both developed and developing countries.'
The letter, dated June 1, said that while an agreement short of the U.S. market access proposal was not their objective, 'any such outcome must result in commitments on domestic support commensurate with this diminished market access result.'
Last October - as part of its formal agriculture proposal in the ongoing Doha Round of WTO negotiations - the United States offered to reduce its allowable 'amber box' support by 60 percent.
But the G-20 alliance of developing countries, led by India and Brazil, called on WTO members with permitted amber box subsidies exceeding $25 billion a year - i.e., the European Union and Japan - to agree to cut their support by 80 percent and those with allowable subsidies of $15 billion-$25 billion -such as the United States - to agree to reduce their support by 70 percent.
EU Needs to Be Between U.S., G-20
U.S. officials have said that the United States would be willing to revisit its proposal but only on condition that the EU and advanced developing countries such as India and Brazil offer enhanced concessions on agricultural market access and industrial tariffs, respectively.
Murphy told reporters June 6 that, with respect to market access, the United States was looking to the EU to improve its current offer to 'somewhere' between what the United States has proposed and the offer that has been made by the G-20 group of developing countries.
'We have avoided giving hard, concrete numbers,' Murphy said. 'But [if the EU were to offer something between the U.S. and G-20 proposals], perhaps we could find a way through it.'
Murphy said that European Trade Commissioner Peter Mandelson has recently raised the prospect of some movement by the EU on market access. 'But [Mandelson] has also said that it may not be a whole lot,' the U.S. official said.
The United States has proposed cuts in farm tariffs of 55 percent-90 percent, with U.S. officials like Murphy saying that the final reduction would have to fall somewhere between 66 percent and the 54 percent proposed by the G-20.
But the EU, for its part, has said that its market access proposal would only result in a 46-percent reduction in average EU tariffs--while the United States and some other countries have said that the offer, in fact, would lead to nothing more than a 39-percent cut in European farm tariffs.
Murphy said that there can be no movement by the United States on domestic support without greater flexibility from the EU in the area of market access. 'That's clearly the message of our farm community,' he said.
Modalities by Summer Break
At a conference earlier on June 6, Murphy said that, in order for any WTO agreement to be considered by Congress before Trade Promotion Authority (TPA) expires at the end of June 2007, there will have to be some consensus among WTO members on the negotiating 'modalities' for agriculture 'during the summer'--i.e., before the WTO and the EU essentially shut down in August.
'It's the common view that if we don't achieve these modalities before the summer break, we're in trouble,' Murphy said. 'We're now down to the crunch, where we have to decide how ambitious the outcome [of the talks] is going to be.'
WTO Director-General Pascal Lamy has called a meeting of key trade ministers for the last week in June with the objective of substantially advancing the modalities negotiations--and possibly reaching agreement.
Murphy, speaking at a conference organized by the Organization for Economic Cooperation and Development on June 6, said that most important questions that need to be resolved in the negotiations are how deep the Europeans will cut their tariffs ('I can't stress that enough'); the extent of the compensation that will be provided for less-than-formula cuts in tariffs on so-called sensitive products; how much developing countries will be willing to contribute to the talks; and how the negotiators will define the 'parallel' elimination of export subsidies when it comes to food aid, export credits, and state-trading enterprises.
Farm Groups' Letter 'Sobering.'
Another U.S. official - Gregg Young, director of multilateral trade negotiations at the Agriculture Department's Foreign Agricultural Service - said that the letter from U.S. farm groups to President Bush on June 1 was 'sobering.'
Young said that it essentially echoed the long-standing U.S. position in the talks, which is that keeping the U.S. agriculture proposal on the table is contingent on other WTO members providing significantly improved market access.
'We've been very patient,' Young said. 'We've been looking for that balance [between reductions in tariffs and domestic support] to come forth...and the assessment was made by these [agriculture] groups that that balance has not come through yet.'