- The Washington Times - Wednesday, October 12, 2005

United States Trade Representative Rob Portman successfully refocused members of the World Trade Organization on the ongoing trade round. But his bid has also revealed, though, how far apart the key players remain on agriculture — the main sticking point of talks. Time is running out for reaching a deal, which would minimize the prospect of divisive and disruptive trade wars at the WTO. An escalation of WTO confrontations would not only weaken the global trading system, but would also put pressure on bilateral relations between allies.

In an Op-Ed published Monday in the Financial Times, Mr. Portman outlined the U.S. position on agricultural trade and filled in some details to a framework agreement on farm trade reached in July 2004. He said the United States would make cuts of 60 percent in trade-distorting farm subsidies. The European Union and Japan, meanwhile, would have to make cuts of 80 percent, since Europe doles out about three times more in subsidies, according to Mr. Portman, who also called for the elimination of all agricultural subsidies and tariffs by 2023.

His proposal yielded quick benefits. The European Union promptly improved its offer on agricultural trade in turn, with EU trade chief Peter Mandelson offering to cut domestic farm support in key areas by 70 percent, up from the 65 percent previously proposed.

Japan, however, called the U.S. proposal a non-starter. Tokyo said the United States had to further improve its offer, which was a clear attempt to deflect attention from its own unwillingness to open up its farm sector.

The Group of 20 developing nations has said wealthy countries have to go further to liberalize farm trade, indicating that WTO members may miss their target of agreeing on a trade blueprint before the December Hong Kong ministerial meeting. The target for concluding talks is the end of 2006.

Reaching a deal on farm trade will test the negotiating skills of U.S., E.U. and G-20 officials. Once that goal is reached, though, the legislatures of each country, including Congress, must approve the agreement. Those legislative negotiations could be equally challenging.

It is in the interest of all major parties to clinch a deal. A case Brazil brought before the WTO contesting U.S. subsidies to its cotton producers illustrates how contentious trade disputes can become. In response to the suit, Deputy Secretary of State Robert Zoellick hinted during his visit to Brazil last week that the United States could retaliate by eliminating U.S. trade preferences towards Brazilian imports.

Trade disputes can spread and as a result damage other important U.S. foreign-policy goals, including the pursuit of terrorists, nonproliferation initiatives and efforts to uphold democratic practices. Clearly the significance of this trade round transcends free trade.

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