Every time you think the Doha Development Agreement is about to just go away someone comes along with yet another idea for resuscitating the long-running world trade negotiations.
At press time, agricultural negotiators from the major countries were gathering at the World Trade Organization offices in Geneva for one more attempt to salvage the talks that began in Doha, Qatar, in 2001.
The primary topic was expected to be a text released in mid-July by Crawford Falconer, chairman of the WTO’s Committee on Agriculture. The text calls for significant reductions in aggregate measures of support for the United States, including an 82.2 percent cut in AMS for the U.S. cotton program.
A few days before the sessions were scheduled to begin the week of Oct. 8th, the U.S. government submitted its domestic support notifications to the World Trade Organization for the years 2002-2005.
U.S. officials said the United States and other countries have an obligation to notify the WTO about its agricultural subsidies, which acting Agriculture Secretary Chuck Conner said remained below the $19.1 billion amber box ceiling for those years, showing the United States is in full compliance with its WTO commitments.
In general, countries are required to report those numbers to the WTO more frequently, but U.S. officials seemed to have timed their release to make several points about the role the United States has been playing in trying to restart the trade negotiations.
“Frankly, I’m less interested in talking about why they weren’t reported until now, but the fact is we are reporting them,” said Ambassador Joe Glauber, chief agricultural negotiator for the Office of the U.S. Trade Representative. “We’re bringing four years forward right now and again putting us, I think, ahead of a lot of other countries.”
Given the “transparency” of the U.S. negotiating position, anyone could go on the USDA or USTR Web sites and look at the data in recent years, Glauber said during an Oct. 4 press briefing.
The numbers show the United States stands ready to make substantial reductions in its agricultural subsidies – if other countries are willing to open their markets to more U.S. products, he said.
U.S. officials reported that this country’s amber box outlays, those considered to be particularly “trade distorting levels of support,” totaled $9.6 billion in 2002; in 2003, $7 billion; 2004, $11.6 billion; and 2005, $12.9 billion, figures significantly below the $19.1 billion ceiling.
“Given the proposed cuts in trade-distorting support that we made in our October 2005 proposal, where we proposed to cut domestic support by 60 percent down to $7.6 billion, I’d note that in seven of the past eight years our AMS levels would have exceeded that $7.6 billion cap,” Glauber said.
The numbers also show that, in several of those years, the U.S. overall trade distorting support levels would have exceeded the upper end of the Falconer text proposals by a considerable amount.
The Falconer text could pose a number of challenges for U.S. farmers, according to analysts who have reviewed the paper.
For openers, the Falconer text would put a “hard cap” in a range of $13 billion to $16.4 billion per year for U.S. overall trade distorting support, which would mean a 66 percent to 73 percent reduction when fully implemented, possibly in 2013.
“This includes the total aggregate measure of support or AMS, known as the amber box, deminimus and blue box payments or expenditures,” says Ross Korves, trade policy analyst with Truth About Trade and Technology, an Iowa-based farm policy think tank.
“The current U.S. limit is $48 billion per year, and the United States had previously proposed a $22.5 billion cap with unofficial talk of a $17-billion limit,” he notes. “The United States would obviously push for the top end of the range at $16.4 billion while other countries push for the low end. Media reports indicate some countries have suggested the United States have an $11-billion cap.”
In his briefing with reporters, Glauber pointed out on four occasions that the U.S. acceptance of the domestic support limit was contingent on other nations agreeing to the Falconer plan for cutting tariffs on agricultural products.
The latter calls for reducing agricultural tariffs for developed countries 48 percent to 52 percent for tariffs of 0-20 percent; 55 percent to 60 percent for tariffs of 20 percent to 50 percent; 62 percent to 65 percent for tariffs of 50 percent to 75 percent and 66 percent to 73 percent for tariffs of greater than 75 percent.
Developing countries such as Brazil and China would make two-thirds of the reductions made by developed countries with wider bands that go up to tariffs of 130 percent, according to Korves’ interpretation of the Falconer text.
Glauber told reporters that the Falconer text’s proposed tariff reductions are “fairly aggressive.” What are unknown, he said, are the provisions in the Falconer text that deal with deviations in the tariff formula.
“This is one thing that we believe needs to be fleshed out, both in the ag market access side and the non-ag-market access side. We need to get detail on those provisions so that we can accurately evaluate the market access because our feeling is whatever is done on domestic support has to be commensurate with the gains we see in market access.”
That lack of detail on market access and questions about how deep the administration may be willing to cut domestic subsidies to get an agreement worries farm organization leaders. On Oct. 5, twelve of the largest farm groups wrote President Bush, asking him to insist on market access gains equal to any cuts in domestic farm supports.
“The undersigned organizations remain deeply concerned with the status and direction of the Doha Round of WTO agricultural negotiations,” the letter said. “Correcting the severe imbalance reflected in the current (Falconer) agricultural text is essential to secure the support of American agriculture.”
The groups, which included the American Farm Bureau Federation, American Soybean Association, National Association of Wheat Growers, National Corn Growers Association, National Cotton Council and USA Rice Federation, said any cuts in trade distorting domestic support must be commensurate with gains in market access.
“Unfortunately, the current text for the agriculture negotiations proposes to further reduce U.S. domestic support well below the U.S. offer of October 2005, while the ranges for overall tariff cuts are set lower than those proposed by the United States,” the latter said. “Even more troubling, the current agriculture text does not address key measures that could seriously erode any market access gains.”
Without significant improvements in the current World Trade Organization negotiations, the groups said, there is “little hope of achieving balance between what the U.S. is being asked to give up in reduced domestic support and what our trading partners are offering on increased market access.”
National Cotton Council leaders, who appear to have more to lose than any farm group in the completion of the Doha Round, have been more succinct in their assessment of the Falconer text.
“The new Falconer text is heavy on domestic support cuts and light on market access gains,” Mark Lange, the NCC’s president and CEO said recently. “The Falconer draft also singles out cotton for unfair and inequitable cuts. If implemented, the Falconer text would gut the U.S. cotton program, leaving U.S. cotton producers with no effective safety net mechanism.”