DALIAN, China, (Reuters) — Ministers from around the world made a breakthrough yesterday toward agreeing on a formula for cutting farm import tariffs, one of the main obstacles to a broad trade deal that could lift tens of millions out of poverty.
The United States, the European Union and Japan all agreed that a proposal submitted by the Group of 20 developing countries led by Brazil made a good starting point for serious negotiations on farm trade after months of stalemate.
“It does provide a formula that we believe is the basis upon which we can now find a middle ground to move forward, so I am encouraged by the attitude but also the substance,” U.S. Trade Representative Rob Portman told reporters.
The G-20 initiative is a compromise between the European Union, which favored a uniform cut in all farm tariffs, and agricultural exporters such as Australia that wanted high tariffs to be cut the most in order to maximize their market access.
The G-20 plan groups tariffs into five bands and then subjects them to a uniform cut.
To the outsider, the breakthrough might appear modest and arcane. For a start, the size of the reductions and the exceptions for developing countries promise painful bargaining ahead.
What’s more, the European Union said it would keep pressing for the across-the-board cuts to be administered flexibly.
Japan, another fierce protector of its farmers that levies a 500 percent tariff on rice imports, said it could not accept a proposal to cap farm tariffs at a maximum 100 percent.
Still, after months of dithering, ministers hailed the progress. Indonesian Trade Minister Mari Pangestu said the advance was partly because of the Group of Eight summit last week in Scotland, which issued a strong call in support of the World Trade Organization’s Doha round of market-opening talks.
“The fact that the Europeans and the Americans are ready to consider the alternatives is a positive sign,” she said. “We’re not there yet, but it’s fair to say there’s a lot more optimism than prior to the G-8.”
Miss Pangestu was among trade and farm ministers from more than 30 countries meeting in this northern Chinese coastal city aiming to produce an outline agreement for the Doha round by the end of the month. The draft deal would be fleshed out in time for a December meeting of all 148 member states of the WTO in Hong Kong.
The round originally was scheduled for completion by 2004. Ministers now aim to wrap it up by the end of 2006, more than five years after it was launched in the Qatari capital.
Agriculture is key to the success of the complex undertaking because poor countries say high tariff barriers and the $279 billion that the 30 richest states provided in farm aid last year rob them of the chance of selling agricultural produce — often their main export — at a profit in world markets.