U.S. WTO Proposal Well-Accepted in International Arena

Bold plan to drastically cut U.S. domestic subsidies calls the bluff of other countries. Jacqui Fatka

Published on: Oct 11, 2005

A new U.S. proposal to move World Trade Organization negotiations forward has finally put the United States on the offensive in the Doha Round of trade talks. U.S. Trade Representative Ambassador Rob Portman laid out an ambitious and bold proposal in Zurich, Switzerland Monday to WTO member ministers.

Intense focus has been placed on rich countries' need to drastically cut domestic trade-distorting subsidies. Steven Censky, American Soybean Association chief executive officer, says many countries, especially the European Union, were caught by surprise with the United States' willingness to support a 60% cut in "amber box" support - the most distorting type of subsidies - over the next five years.

"The proposal calls the bluff of other countries that were posturing in negotiations," Censky says.

Most farm organizations base their support on increased market access. The proposal includes an ambitious tariff reduction consistent with the framework and using the formula developed by Brazil, India and others in the Group of 20 developing countries. This should involve steep tariff cuts over the next five years, starting from 55% up to 90% in the highest tariffs in rich countries. In a second stage, tariffs should be brought down to zero.

The proposal represented U.S. farm interests by calling for subsidy cuts, if and only if additional market access barriers are removed. "It clearly did make the link of what kind of market access was needed for cuts in domestic supports," Censky says.

Censky adds that feedback from U.S. negotiators indicates the U.S. proposal was well received from other exporting countries including Australia, Canada and even Brazil. U.S. negotiators are now meeting bilaterally with other countries to further explain the proposal. Only nine weeks remain before a December ministerial meeting slated for Hong Kong.

Japan is unhappy with the U.S. proposal, saying it asks more of them than the U.S. Japan and other members of the so-called G10 group of foodstuff-importing nations plan to make a counterproposal to the U.S. framework.

Ron Heck, ASA board member and former president, explains that Japan has some of the highest levels of trade-distorting subsidies. "They're just being asked to come closer to a level playing field with the goal of all countries moving down to a much lower level," Heck explains.

Proposal requires farm policy changes

Senate Agriculture Chairman Saxby Chambliss, R-Ga., says the proposal will require real cuts and reforms to domestic support programs. He urged the EU and negotiators from other countries to bring equally ambitious proposals on market access to the table before Congress will be willing to make changes in policy.

"Let me reiterate that Congress will be writing the next farm bill in 2007 and U.S. agriculture will not disarm unilaterally," he says. "If other countries do not harmonize their levels of domestic support and provide meaningful and tangible market access, then the Senate and House will find it very difficult to support the final agreement."

American Farm Bureau Federation President Bob Stallman says the Administration’s proposal to address these areas of trade policy will help frame the discussion regarding the next U.S. farm bill.

"Changes in domestic support programs resulting from an agreement will result in significant short-term economic challenges for some commodities and specific farm types," he says. "We firmly believe, however, that in the long term, U.S. agriculture will overcome any challenge through the expanded opportunity for exports created by specific and measurable improvements in market access."