Posted August 15, 2005,
Scott Miller for the Wall Street Journal via Cropchoice: In
global trade talks that have largely centered on the conflicting
interests of rich and poor nations, a dispute between the U.S. and
Europe over farming is throwing negotiations dangerously off course.
The showdown, being played out in Geneva this week and likely into
the autumn, could help determine whether the so-called Doha Round
talks will make a leap toward their scheduled conclusion next year,
or risk collapsing.
On the surface, Europe and the U.S. would seem to have little about
which to fight. Political leaders in Europe and the U.S. agree that
farm trade must be made fairer for developing countries and that
barriers must be reduced. But the two are unable to agree on how
to get there, each unwilling to make concessions on issues such
as tariffs and subsidies until the other moves first.
Washington's chief agriculture negotiator, Allen Johnson, said
in an interview that without more European Union action such as
cutting tariffs and subsidies, "It's hard to see how others,
including the U.S., can push their own reform."
EU officials use similar language, saying that they believe their
own proposals take them "off the hook" and that the ball
is now in the U.S.'s court.
Agriculture long has been the linchpin of the current round of
talks, which also includes many thorny issues on opening trade in
services and manufactured goods. According to a World Bank study
last month, almost two-thirds of the economic gains that would come
from dismantling all merchandise trade barriers would come from
agriculture. Poor nations, many of which rely on farming, are reluctant
to make concessions in areas important to the U.S. and the EU until
they are convinced the richer players are making farm concessions
"The only people who can really break the standstill are the
U.S. and the EU," said Amy Barry, trade specialist at aid group
Talks this week were supposed to produce an initial blueprint of
a final Doha package. Ministers from the 148 member nations of the
World Trade Organization were then to fill in the details at a meeting
in Hong Kong in December. The risk is that much of the preparatory
work for the Hong Kong meeting will be left undone, raising the
prospect that the meeting could go nowhere and cutting the chances
of completing trade talks by late next year.
One reason negotiators want to finish Doha is that in 2007, the
U.S. president's power to put trade deals on a fast track is set
to expire. Negotiators worry that Congress then will have vastly
increased powers to block U.S. approval.
Europe maintains it has taken steps toward compromise that the
U.S. hasn't matched, agreeing in China earlier this month to begin
work on a new tariff-cutting formula that appears to make the most
reductions in tariffs on products with the highest levies, but about
which it has provided few details. "We are now off the hook
and I hope that there will be a similar contribution from the U.S.,"
said Europe's agriculture commissioner, Mariann Fischer Boel.
The EU would like the U.S. to further limit domestic subsidies,
focusing especially on countercyclical payments made to farmers
when prices fall. Such payments swing widely but can be large. In
2003, they amounted to $655 million. But they jumped to $5.65 billion
in 2004. The U.S. has offered to limit such subsidies but only if
the EU promises to follow suit.
Europe also is eager to see the U.S. overhaul its food-aid program,
which, in EU eyes, amounts to a production subsidy. Under the U.S.
program, the government buys food such as corn from its farmers
and donates it to poor countries. Europe wants the U.S. to consider
policies such as providing poor nations with money to buy food closer
to home, helping regional trade. The U.S. says that as it provides
60% of the world's food aid, it would be foolish to end the program.
The U.S. wants Europe to cut tariffs on farm products. Europe charges
major trading partners average agriculture tariffs of 25%. The U.S.
figure is 15%. The EU says it is willing to negotiate such reductions.
[ July 27, 2005 ]