Congress, Commodity Groups Give Lukewarm Response to WTO Progress

Hong Kong brought no big surprises and little for U.S. farmers to be excited about moving forward. Jacqui Fatka

Published on: Dec 20, 2005

For the past 18 months the world talked about last week's Hong Kong ministerial meeting as a crucial point in accomplishing "free world trade." Despite U.S. efforts to jumpstart stalled negotiations over the past two months, Hong Kong brought no big surprises and little for U.S. farmers to be excited about.

After spending endless hours negotiating last week, Secretary of Agriculture Mike Johanns is confident the world supports the current trade round and views the U.S. as a leader, especially after this fall's proposal. "The world looked at the EU response and saw it as very timid. Then the world looked to the EU and said it was their time to step up. Will the EU do that? That issue is in their control," he says.

A last minute compromise brought an agreement to end export subsidies in agriculture by 2013, past the 2010 guideline desired by the United States. The declaration makes clear that the agreed date on export subsidies is conditional. A statement from WTO Director-General Pascal Lamy says loopholes have to be plugged to avoid hidden export subsidies in credit, food aid and the sales of exporting state enterprises.

Johanns explains that the agreement to end export subsidies includes state trading enterprises, i.e. the Australian and Canadian Wheat Boards. The date was set to end all export subsidies, but the actual specifics of how to do that has not been negotiated yet, Johanns says.

For cotton the elimination is accelerated to the end of 2006. In addition, cotton exports from least-developed countries will be allowed into developed countries without duty or quotas from the start of the period for implementing the new agriculture agreement. Ministers have also agreed to aim to cut trade-distorting domestic subsidies on cotton by more than would normally apply under the new agreement, and to do so more quickly.

Lukewarm response from commodity groups, Congress

Most reaction from the WTO ministerial meeting was lukewarm. Sen. Chuck Grassley said it plainly in a release headline, "Congress Would Reject Current WTO Draft." Ministers were unable to make progress on market access because of distraction about food aid and cotton issues.

The National Cotton Council loudly criticized trade negotiators for signaling out cotton. "The text, though bracketed indicating lack of complete consensus, suggests the EU and the U.S. will be asked to take larger cuts quicker, to give preferred access to products produced by the Least Developed Countries with nothing in return, and to end export subsidies for cotton before the implementation period of the agreement is likely to begin," says NCC Chairman Woods Eastland. "The text is not a single undertaking approach to the negotiations; it clearly singles out cotton."

Eastland also expressed disappointment that "the text abandons West African cotton producers by failing to require the largest cotton importers to provide greater, more predictable access to their markets. This is concrete evidence that the controversy has not been about helping African farmers, but has been a concerted attack on U.S. cotton. The text provides the Least Developed Countries access to U.S. spinners, a market of six million bales annually while ignoring access to China, India and Pakistan spinning mills that consume a combined total of 70 million bales annually. Finally, the text contains no specific provisions to improve market access for U.S. cotton as the text implies that China, the largest cotton producer and importer in the world, will receive special dispensation as a recently acceded member of the WTO."

Johanns expected the lukewarm response, explaining that without the whole package it is difficult to see the big picture for U.S. farmers. The new goal for the "whole package" is to complete "full modalities" in agriculture and non-agricultural market access by--April 30, 2006--a deadline set by the ministers.

In the areas of market access and reform, there's still much work to be done. But each minor agreement is one step closer to a broad agreement. "[The European Union] really holds the key to the future success of this round," Johanns says. "We're going to be patient, but still aggressive."

U.S. negotiators have their work cut out for them. Hong Kong left a lot of hard work for 2006, Johanns says. Over the next several months, trade leaders will continue talking in smaller-scale negotiations. A new end goal is to complete negotiations by 2006 with enough time to rewrite the farm bill in 2007.