US trade chief offers to cut farm subsidies
>By Alan Beattie in London and Raphael Minder in Brussels
Financial Times
The US will on Monday offer to end farm export subsidies in five years and slash its domestic subsidies by more than half, in an attempt to revive the flagging Doha round of trade talks.
The US proposals will be discussed at a meeting of trade ministers in Zurich, just nine weeks before a crunch ministerial meeting of the World Trade Organisation in Hong Kong.
Agriculture, one of the most protected areas of world trade, is a sticking point in the negotiations, with the European Union and US at odds about cuts in tariffs and subsidies. The constraints on the US's main negotiating partner became clear from a memorandum circulated by France urging the European Commission to consult with EU member states before offering similar concessions.
Writing in the Financial Times, Rob Portman, US trade representative, offers to eliminate farm export subsidies by 2010, the date demanded by the Group of 20 developing countries and some European leaders, including Tony Blair, the British prime minister.
Mr Portman also agrees to cut those domestic farm subsidies believed to distort world trade by 60 per cent, higher than the 55 per cent reduction the EU was demanding from the US. Bob Stallman, president of the American Farm Bureau, recently said the US should not go beyond 50 per cent.
The US also suggests halving a ceiling agreed last year on those farm subsidies regarded as less distorting of trade. This cut, though it meets a demand from development campaigners such as Oxfam, would still allow the US to retain its controversial “counter-cyclical payments”, which compensate farmers for low prices. “The US offer is conditional on other countries reciprocating with meaningful market access commitments and subsidy cuts of their own,” Mr Portman says. The US proposals are designed to put the ball back into the EU's court by offering cuts in domestic farm support and ending export subsidies a key demand of Peter Mandelson, Mr Portman's European counterpart.
But Dominique Bussereau, the French agriculture minister, has gained the signatures of 13 of the EU's 25 member states, including Italy, Ireland and Spain, on a memorandum insisting that Brussels trade negotiators consult with them before offering any farming concessions in the Doha talks. His memorandum, seen by the FT, says: “The task is not to negotiate a date for the elimination of our export subsidies, but a period of implementation for what is a conditional concession.”
It is likely to dismay Brussels trade negotiators, who assumed they had a clear mandate last year when the EU offered to phase out farm export credits.
“It is simply not feasible to go back and discuss with member states at every twist and turn of these negotiations,” said a Brussels trade official.
In return for subsidy cuts, Mr Portman also repeated a proposal for substantial cuts in agricultural tariffs, which will require big cuts from the EU and Japan.
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