US makes offer to cut crop sops to push trade talks

The Bush administration will try to jump-start stalled negotiations over a global trade deal on Monday by offering to make steep cuts in dom...

The Bush administration will try to jump-start stalled negotiations over a global trade deal on Monday by offering to make steep cuts in domestic farm subsidies and export subsidies if other countries make similar concessions, senior administration officials have said.

The US offer comes after weeks of closed-door negotiations between the United States trade representative, Rob Portman, and members of Congress who have said they would not approve any deal unless they were convinced that American farmers could make up for the loss of government aid through new access to foreign markets. US farm subsidies total more than $19 billion annually.

Portman described elements of his proposal in an op-ed article published in the Financial Times on Monday, a venue aimed at influencing European politicians and business leaders. He said he would explain it fully at a meeting in Geneva this week of trade officials from Brazil, India, the European Union and other members of the World Trade Organization.

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It is far from clear whether the Europeans and developing nations will find the American offer specific enough to satisfy their own demands. Nor is it clear that any concessions they offer in return will satisfy the administration and Congress. The discussions this week are the latest round in trade talks begun in 2001 in Doha, Qatar, aimed at reducing trade barriers in goods as well as services.

The administration has been under pressure for months to flesh out President Bush’s commitment to cut domestic farm subsidies in preparation for a summit meeting in Hong Kong in December that is supposed to create an overall framework for an accord, which is scheduled to be reached by the end of 2006.

But Bush also has received strong pressure from members of his own party and from many Democrats not to touch the politically popular subsidies. As a result, the United States has resisted going first, saying other nations must indicate how much they will cut tariffs that put American farm exports at a tremendous disadvantage.

Portman, in his article in the Financial Times, urged “ambitious tariff reduction” with cuts of 55 per cent to 90 per cent over five years. Those would hurt many other nations more than they would hurt the United States, which generally has had somewhat lower tariffs than other rich nations, with some exceptions for products that have long had political protection. He also proposed a 60 per cent cut by the US in some kinds of farm subsidy programmes. But it is unclear if that is enough for America’s trading partners, especially Europe and Japan. “All countries must also simultaneously deliver real market access,” Portman wrote.

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European leaders have agreed to eliminate all export subsidies for farm products, but they still have high tariff barriers and pay tens of billions of dollars a year in farm subsidies. The United States has lower tariffs on most farm imports, but it retains high barriers for products like sugar and orange juice — both of which have powerful lobbies in Washington — and it pays out billions of dollars in subsidies to producers of cotton, corn, beef and other commodities.

The reluctance by US and EUto reduce tariffs on imported crops and subsidies for domestic farmers has been assailed by large developing countries, including Brazil and India, which are demanding more access for their own products in exchange for lowering barriers to manufactured goods and services. — NYT