American Farm Bureau | December 18, 2000
In preparation for upcoming talks to establish an agenda for the next round of World Trade Organization agriculture discussions, the European Union recently finalized its proposal. The document, which was made available to U.S. negotiators this month, presents few surprises, according to Audrae Erickson, an American Farm Bureau Federation director of governmental relations.
The proposal does not offer substantial reform," Erickson said. "It's what we would expect from the EU-the world's largest user of export subsidies and domestic assistance."
Included in the EU's wish list are proposals that would:
Maintain domestic support categories, or "boxes." Acknowledge non-trade concerns, such as "multifunctionality." Reduce, but not eliminate, export subsidies. Reform tariff rate quota management. Create more stringent food aid rules.
According to the EU, the objective of the next WTO agriculture round should be increased market access for all WTO members. In order to meet this objective, the EU is calling for a commitment to the overall reduction of tariffs and minimum reductions for specific tariff items by all member nations.
Also included in the EU proposal is a "formula" approach that would require all WTO members to make equal percentage cuts on domestic spending, regardless of their current level of farm spending. The U.S. proposal calls for spending ceilings based on a percentage of the value of each country's agricultural output. As the EU spends significantly more on domestic farm support, the U.S. approach would require deeper cuts for the EU, Erickson said.
"The U.S. proposal would revise the 'colored boxes' and base trade-distorting support on the value of agriculture exports," Erickson explained. "If adopted, EU domestic support, now nearly four times what the United States spends, could not exceed U.S. domestic assistance. It would reduce EU domestic support spending to U.S. levels."
The EU proposal, however, would keep the current distinctions, reduce the spending for all members on trade-distorting non-crop support, continue "blue box" spending without limits--a category that benefits only the EU--and expand non-limited domestic spending classifications to include societal goals, such as environmental improvements.
This notion that production agriculture has social and environmental benefits also is known as "multifunctionality" and is opposed by Farm Bureau and the United States when used as a protectionist policy.
"U.S. farmers and ranchers already provide such property improvements but do it in a non-trade-distorting way," Erickson said. "Multifunctionality should not be used to disguise protectionism."
In addition to eliminating blue box payments, the United States is calling for an end to export subsidies, which the EU only wants to reduce.
The EU proposal also calls for strict definitions for the administration of tariff rate quotas (TRQs), which European officials are concerned may not be compatible with current WTO rules despite their positive contribution to increased market access.
"Farm Bureau agrees that TRQ administration is a problem and should be addressed," Erickson said. "TRQs established by other countries have not always resulted in market access for our exports."
A vocal critic of U.S. food aid programs, the EU is calling for substantial changes to WTO guidelines for such initiatives. In addition to proposing that food aid should be offered in grant form, the EU wants a code of conduct to govern food aid operations.
The EU's proposal also would include animal welfare issues, such as the development of multilateral agreements on animal welfare standards, labeling rules and exempt compensation for meeting costly higher standards; product labeling to indicate geographic origin; and food safety issues, specifically the clarification of the "precautionary principle."
The United States submitted its proposal earlier this year, ahead of other major WTO trading partners. The U.S. proposal includes a number of Farm Bureau-supported provisions, such as the elimination of export subsides, substantial tariff reductions, and protections for export credits and food aid programs.
WTO agriculture negotiators are expected to meet in March 2001 to evaluate all proposals and determine the next steps for furthering the agriculture discussions mandated by the Uruguay Round agreement.American Farm Bureau:
