U.S., EU Offer Plans to Reduce Farm Aid

The U.S. and Europe offered competing proposals Monday to slash farm subsidies and tariffs, challenging other nations to help revive stalled global trade talks.

Trade negotiators are eager to reach an agreement on an outline for global trade talks before the December ministerial meeting of the World Trade Organization in Hong Kong.

The so-called Doha trade round -- named after the Qatari capital -- was launched in 2001 to reduce barriers in heavily protected farm trade and open up new areas to developed nations. It was dubbed the “development round” because trade officials promised to get poor countries a bigger slice of the trade pie.

U.S. Trade Representative Rob Portman on Monday called on developed countries to reduce tariffs by 55% to 90%, with the goal of eliminating agricultural subsidies and tariffs for all WTO countries within 10 years.

Portman also said the U.S. was ready to make cuts of 53% in overall farm supports as long as Europe and Japan agreed to even “deeper cuts” in their programs. He said the European Union spent three times more than the U.S. on farm subsidies.

“The United States is committed to breaking the deadlock in multilateral negotiations,” he said.

The EU responded Monday with a proposal to cut its subsidies in key areas such as wheat, dairy goods and rice by 70%, which was higher than its previous offer but lower than the U.S. demand.

“The time has come to push the envelope,” said EU Trade Commissioner Peter Mandelson.

But Japan’s agriculture officials said the U.S. proposal was unacceptable. Japan, one of the world’s leading providers of farm subsidies, has resisted opening its heavily protected rice, wheat and dairy markets, among others. By offering up ambitious proposals, the U.S. and the EU apparently hope other developed nations will slash their farm supports and poor countries will agree to lower their trade barriers, including agricultural and industrial tariffs. The developed nations are also seeking greater access to areas such as banking, telecommunications and government contracts.

Daniel Sumner, a professor of agriculture at UC Davis, said the U.S. and European proposals were significant because they provided numerical targets for reducing domestic farm support, which should be enough to get other countries back to the negotiating table.

“This is a very important contribution the U.S. has come up with here,” he said. “If we can enter a negotiation about the numbers, there will be a solution in Hong Kong.”

But Sen. Max Baucus (D-Mont.), warned that Congress wouldn’t support a deal unless other countries, such as India, South Korea and Japan, were willing to make significant cuts to farm aid. The farm bill expires in 2007 and any changes to U.S. farm policy agreed upon in the WTO talks would need to be incorporated in new legislation.

“Domestic priorities, not the Doha round, will determine how we move forward in the United States on agriculture,” said Baucus, ranking Democrat on the Senate Finance Committee.

The majority of California’s export-dependent farmers don’t receive large subsidies. For the producers of almonds, citrus and other specialty farm goods, the key issue in the Doha round is reducing the high tariffs that price them out of foreign markets, said Bill Bryant, an agriculture trade expert in Seattle.

Others argue the U.S. and Europe have proposed cutbacks in farm supports but are revising the system so they can offer aid to farmers in other ways. For example, they said, the U.S. has agreed to cut direct production payments but could still help farmers through programs that support conservation or reduce pollution.

Pedro de Camargo Neto, a Brazilian agriculture expert, said the U.S. and European proposals don’t confront the biggest issue facing poor nations: the flooding of their markets with subsidized farm products.

“Just one simple rule -- that the EU and the U.S. would not export below production cost, no dumping -- would be a step forward,” he said.