Is too ambitious possible when it comes to market access levels in world trade talks? The European Union thinks the United States has done exactly that by calling on countries to reduce tariff levels up to 90%.
No longer is the world focus on lowering domestic support. Instead all eyes are looking to the EU to provide market access that provides economic development needed for developing countries.
In a conference call Wednesday, U.S. Trade Representative Rob Portman addressed specifically concerns from the EU that the U.S. trade proposal is unrealistic in terms of market access.
"The EU is saying the U.S. needs to be more realistic. What they're really saying is that we should lower our expectations," Portman says. "That will not meet the promise of Doha in terms of economic development." Developing countries demanded focus on agriculture in this round. It is market access that provides the opportunities for economic development, not reduction in domestic support or export subsidies, Portman adds.
The Uruguay Round, criticized for not going far enough for agriculture, brought an average reduction of 36% in tariffs and 20% in aggregated measured support. The latest EU proposal calls for a 39% cut in tariffs and allows 8% sensitive products left out of tariff rate reductions. The U.S. proposal asks for a 90% reduction in tariffs, the G20 developing nations want between 45 to 75%.
The World Bank says without 75% reduction in tariffs, market access issues will still stifle developing countries competitiveness. Portman says the U.S. is willing to negotiate at levels between the G20 and U.S. proposal. Currently, EU's proposal is far from those levels.
Commodity groups won't support deal without market access
Instantly when headlines read "U.S. Proposes 60% Subsidy Cuts," commodity groups and farmers across the country were posturing for a hard fight. Their loudest cry then and still, was "give us market access and we'll let you lower our payments."
A House Agriculture hearing last week talked specifically about the WTO negotiations. Representatives from agriculture groups across the board said market access is conditional for future approval of a deal.
The U.S. proposal on market access did not specifically address the need for equally ambitious improvements in market access by developing countries. "Developing countries are the markets of the future," says Bob Metz, American Soybean Association President. "In making the case for trade liberalization, the Administration has pointed out that 95% of the world's population lives outside our borders. ASA calls attention to the fact that 81% of this population lives in developing countries. That's why the U.S. must ensure adequate market access to developing country markets."
National Corn Growers Association President Gerald Tumbleson testified that NCGA support is conditional. "The U.S. proposals on domestic support would require fundamental changes in U.S. farm programs. We can only agree to such changes in the context of an agreement that offer substantial improvements in market access for U.S. exports; the elimination of export subsidies; substantial reductions in trade-distorting support by our competitors; and preserving an effective safety net for U.S. producers."