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Official rebuts criticism of US WTO proposal on domestic agricultural support

GENEVA, Switzerland - 06/19/06 - A deal on agricultural market access is still beyond reach with little time left for World Trade Organization (WTO) negotiations, according to a top-ranked US trade official.

After a week of agriculture negotiations, participants remain far apart over tariff cuts, exceptions for politically sensitive products and limits on temporary safeguards to restrict import surges, according to Assistant US Trade Representative Jason Hafemeister.

"We're not there and we still have some serious differences in this area of the negotiations," Hafemeister said in remarks to the media last Friday in Geneva, Switzerland.

The WTO aims for conclusion of the broader negotiations, formally called the Doha Development Agenda, by the end of 2006, well ahead of the mid-2007 expiration of the U.S. president's trade negotiating authority.

Almost since its 2001 launch, the Doha round has remained nearly stalled over the politically difficult agricultural trade issues, especially market access.

"Without market access we don't deliver on the Doha promise," Hafemeister said.
 
"Without market access we don't create the gains from trade.  Without market access we can't have a balanced package in any saleable sense anywhere."

To meet the deadline for the end of the year, he said, agriculture negotiators "must agree at least on modalities, or a specific framework and timetable, before the WTO takes its summer break in August. Whether that's June or July, I'm not particular."

Ministers from some key countries are expected to convene in Geneva the last week of June to try to advance the negotiations.  A potentially crucial WTO General Council meeting is scheduled for the last week of July.

Last October, the US proposed deep cuts in domestic support spending for farmers by wealthy countries and in agricultural tariffs by wealthy and rapidly growing developing countries.

US Trade Representative Susan Schwab reiterated just days ago that the US proposal remained conditional on other countries offering "significant new market access" for US exports through tariff cuts.

By nearly all analysis, tariff cuts proposed by the European Union (EU) would amount to no real increase in market access.  Under any existing proposal, the EU would still be allowed to spend on domestic support multiple the level allowed to the US.

At the Geneva briefing, Hafemeister rebutted EU's claims that under its proposal the US could still spend as much or more money on domestic support as it spends now.

He said the US would have to cut the most trade-distorting domestic support, in a category the WTO calls the amber box, from $19 billion to $7.6 billion a year and cap counter-cyclical spending, which assists farmers when commodity prices fall.

"When you combine those two together, the two most trade-distorting boxes, there are real cuts, and there's no avoiding that," Hafemeister said.

Even an increase in what is called de minimis spending could not evade real cuts in domestic support, he said. 

Under the existing WTO agreement, de minimis trade-distorting product-specific domestic support - in which the aggregate value does not exceed 5% of the total value of production - is not subject to reductions. 

The US proposal would cut the de minimis ceiling to 2.5%.

Hafemeister rejected an EU demand for even more US concessions.

"We've made a very strong offer, it hasn't been responded to, and it's not really a good use of our time to continue to explore strengthening our offer when we're still very unbalanced with what's on the table," he said.

If a WTO pact is forged, it could form part of the parameters for new US farm subsidy legislation but not dictate its contents, commented Senate Agriculture Committee chairman Saxby Chambliss, (R-Georgia).

"We're going to look at good policy and let the dollars follow the policy," he said.

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