US to Float Figures on Domestic Supports

Geneva * The United States is considering floating figures on what it proposes to do in the difficult area of trade-distorting domestic supports during an informal trade ministerial meeting in Zurich on Monday, WTD has learned (see related report this issue).

In the face of continued skepticism over the latest US offer to cut agricultural tariffs and its vague proposal on lowering trade-distorting domestic supports in the Doha Development Agenda negotiations, Washington is busy preparing ground to table more specific figures on various cuts in domestic subsidies, one negotiator told WTD yesterday.

US Trade Representative Rob Portman and Agriculture Secretary Mike Johanns, apparently, have been busy working the phones from Washington with key Cairns Group trade ministers including Australia in an effort to finalize figures in trade-distorting domestic support, the negotiator said.

Brussels last week unveiled its figures for cuts in the trade-distorting domestic support pillar 65 percent reductions in the overall aggregate measurement of support, a 65-percent cut in the WTO de minimis exception, 65-percent reductions in overall trade-distorting domestic supports and a likely ceiling of 5 percent in "blue box" income payments.

Cairns group members especially Australia and New Zealand reacted critically to the EU proposal, saying Brussels was creating a "smokescreen" and offering nothing on market access, one Cairns group official told WTD.

US, EU Defensive Stances

Both the EU and the United States are hypocritical in their stance in the Doha farm negotiations, the official stated. He noted that the EU suggested only a 36-percent cut in tariffs on average in market access while claiming high ground in domestic support with 65 percent reductions.

On the other hand, the United States said it wants high ambition in market access under a "Swiss" formula and a 75-percent maximum tariff for industrialized countries. But, he noted, Washington has refused to show its hand on domestic subsidies.

The "Fluella-plus" ministerial meeting in Zurich is going to test the waters on trade-distorting domestic support once the United States presents its figures, another negotiator commented.

The biggest challenge for the United States relates to disciplines on its counter-cyclical payments program. Yesterday, the Agriculture Department announced final counter-cyclical payments for 2004 for corn and sorghum wheat producers whose market prices have fallen below target levels outlined in the 2002 farm bill. The preset target price for corn in 2004 was 29 cents per bushel; farmers are getting 28 cents on average, according to Agriculture.

EU Moves First on Ag Sen. Chambliss

Until the European Union makes sincere commitments in the Doha Development Agenda farm trade negotiations on market access, the United States should hold back on offering reductions in domestic farm supports, said Senate Agriculture Committee Chairman Saxby Chambliss (R-Ga) yesterday (see related report this issue).

The Georgia senator said he has heard nothing from ranking European Union officials who he met with over the past several weeks to indicate that Brussels was ready to significantly open its market to agricultural imports.

Mr. Chambliss told a seminar on the DDA sponsored by the Troutman Sanders law firm in Washington that the whole point of the DDA negotiations for US farmers and ranchers is market access especially in the EU.

Mr. Chambliss said he is in daily contact with US Trade Representative Rob Portman and met recently with European Union farm commissioner Mariann Fischler Boel and EU trade commissioner Peter Mandelson.

The average US agricultural tariff is 12 percent; those in the EU can go as high as 200 percent, Mr. Chambliss commented.

Nevertheless, Mr. Chambliss said he was "cautiously optimistic" that a farm negotiating package could emerge by the mid-December Hong Kong ministerial meeting.

To show his seriousness in following through on a package of US domestic support reductions, the committee chairman has attached legislation to end the controversial "Step 2" cotton program judged illegal by a WTO dispute panel to a budget reconciliation bill. The full committee is expected to approve the measure today and send it to the Budget Committee for packaging for full Senate consideration.

Mr. Chambliss cautioned agriculture representatives at the meeting that he could make no promises on the form of a new farm bill which is up for renewal in 2007. He suggested, however, that it will conform to whatever is finally agreed in the Doha negotiations. Making early changes to the current farm bill is highly unlikely, he commented.

Congress also will see a entirely new class of members in the House and Senate after the 2006 elections, the senator said, adding that no one could predict at this point what the 110th Congress will look like.