- The Washington Times - Friday, November 7, 2003

Brazil yesterday softened its position against U.S. agricultural subsidies, potentially making room for compromise in talks to create a 34-nation trade zone in the hemisphere.

Brazil’s foreign minister, Celso Amorim, met yesterday with U.S. Trade Representative Robert B. Zoellick in a hastily called meeting meant to help break a stalemate in Free Trade Area of the Americas negotiations.

If completed, the trade zone would cover about 800 million people and about $13 trillion in production of goods and services, according to a General Accounting Office report.

But Brazil and the United States have fought over the scope of the agreement, jeopardizing progress and setting up the 34-nation meeting later this month for failure.

“I had a positive impression. Maybe tomorrow I will have to say the opposite, but I left optimistic,” Mr. Amorim said following a meeting with Mr. Zoellick in Washington.

Both sides stressed that they had a conversation, not a negotiation. But both also signaled a “constructive” meeting.

“There were some good, constructive meetings this afternoon and discussions of the FTAA and the [World Trade Organization] negotiations,” USTR spokesman Richard Mills said.

Agriculture has been especially sensitive for all parties.

Argentina, Brazil and the United States are among the world’s biggest producers of commodities such as sugar, soybeans and beef. And farm sales are major source of income.

The United States imported almost $1.2 billion in agricultural goods from Brazil last year — largely coffee, orange juice, cocoa, tobacco and beef products — according to the U.S. Agriculture Department.

U.S. agricultural exports were $329 million to Brazil, largely cotton, wheat and rice.

But Latin American countries say they face unfair competition because of rich national subsidies. Depending on farm prices, the U.S. government pays American producers $20 billion to $40 billion per year.

Brazil and Argentina suffer some of the largest losses in the world due to agricultural policies in industrialized countries, according to the International Food Policy Research Institute, a non-partisan group.

But the United States is hesitant to negotiate away its subsidies as part of a regional agreement, preferring to treat the issue at global talks. The 15-nation European Union offers the most lavish payments for its farmers — $104 billion in subsidies account for one-third of the value of the bloc’s farm output, compared with one-fifth in the United States, the research institute said. Japan is another big subsidizer.

Mr. Amorim yesterday said he understood the U.S. position, even if he didn’t entirely agree with it.

“We hear it a hundred times. Finally we understand,” he joked.

“We are trying to see within the limits each other has … in terms of a Free Trade Area of the Americas,” he said.

Brazil has shied away from rules that would force major changes in domestic laws, such as government procurement and investment rules.

Mr. Amorim suggested that countries focus on lowering barriers for industrial goods and leave other issues out.

The United States has been adamant that FTAA rules strengthen laws against movie, music and software piracy, and protect investors.

Both sides want to punt their stickiest issues to the WTO, but those talks collapsed in September and it is not clear when the current round of talks will be concluded.

Trade negotiators from 16 nations were scheduled to meet today outside Washington to try and move the talks ahead.

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