- The Washington Times - Monday, October 10, 2005

The United States and European Union yesterday offered to cut back or end some farm subsidies in an attempt to revive global trade talks.

The World Trade Organization’s 148 members since 2001 have been working to boost economic development by lowering trade barriers, but have deadlocked over issues such as how wide to open markets and how much to scale back farm subsidies.

“The United States is committed to breaking the deadlock in multilateral talks on agriculture, and unleashing the full potential of the Doha Round,” said U.S. Trade Representative Rob Portman, referring to the city in Qatar where the negotiations formally began.

The World Bank estimates that a “good” WTO agreement would boost world economies by $520 billion and lift about 144 million people out of poverty during the next decade.

Mr. Portman, ahead of a meeting in Zurich with other trade officials, said the U.S. would cut subsidies that most distort trade by 60 percent over five years. The 25-nation European Union and Japan would have to match that with a cut of 83 percent.

Europe and Japan have higher allowable levels of support than the U.S., and the Bush administration insists they make cuts to bring themselves more in line with U.S. programs.

Peter Mandelson, EU trade commissioner, yesterday offered a 70-percent cut in the most trade-distorting farm payments as long as others make “proportionate, but not equal, reductions.”

The subsidies stimulate production, leading to greater supply and lower prices on world markets.

Mr. Portman, Mr. Mandelson and other world trade officials are working to strike a broad agreement by mid-December, when the WTO is scheduled to hold a summit in Hong Kong.

Despite yesterday’s attempt at a breakthrough, the U.S. and EU positions remain far apart in important details, not all countries welcomed the proposals, and the offers face skeptical farmers and lawmakers back home.

“It is the Congress in Washington — not the world’s trade negotiators in Geneva — that will write the Farm Bill in 2007,” said Sen. Max Baucus, Montana Democrat, referring to legislation governing billions of dollars in agricultural and food programs.

Japan quickly rejected Mr. Portman’s proposal, saying the U.S. was not willing to make sufficient cuts in its own farm programs, Agence France-Presse reported. “There is a very big gap between the U.S. proposal and our position,” Agriculture Minister Mineichi Iwanaga said.

Others were doubtful that the U.S. offer would benefit poorer nations. Developing countries, which have made the sharpest demands for reductions in rich-country farm subsidies, are in return being asked to open their markets to more imports.

Oxfam International, an anti-poverty group, said yesterday’s proposal would reduce some subsidies but allow others to rise.

“[The U.S.] is simply shifting payments around from one place to another rather than cutting them significantly. This will make hardly any difference for the millions of poor farmers suffering from unfair U.S. competition in sectors such as corn, rice or cotton,” said Celine Charveriat, head of Oxfam’s Make Trade Fair Campaign.

Mr. Portman’s proposal calls for the eventual elimination of all trade-distorting subsidies, but would not curtail so-called “green box” subsidies, which are not linked directly to production but instead often focus on conservation or similar measures.

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