The Bureau of National Affairs
WASHINGTON--The United States will propose at the World Trade Organization next week that countries currently providing the highest levels of support for agriculture agree to the deepest cuts, leading to substantial reductions in trade-distorting government backing for the farm sector, U.S. officials said June 21.
Officials said that the U.S. proposal--part of a sweeping U.S. plan being submitted at the start of new WTO trade talks aimed at reforming world agricultural trade--will represent a major departure from past negotiating strategy, which focused on reducing government support by a fixed percentage over time, leaving the United States at a competitive disadvantage.
U.S. Agriculture Secretary Dan Glickman said that the European Union, for example, continues to spend more than the United States on farm support despite the subsidy-reducing agreements negotiated in the Uruguay Round of multilateral trade talks.
"Our proposal will attempt to deal with that problem," Glickman told reporters, "recognizing that a proportionate, across-the-board reduction helps those least who have reduced most. We want to make sure there is a level playing field. That's the underlying part of our new proposal."
U.S. Will Play 'Leadership' Role
Glickman said at a hearing of the House Agriculture Committee earlier in the day that the United States expects to play a lead role in the WTO agriculture talks, launched earlier this year--as it did in the Uruguay Round of negotiations held under the General Agreement on Tariffs and Trade (GATT) from 1986 to 1993. "The U.S. will play a leadership role [in the new talks]...in pressing for significant trade policy reforms," he said, "including eliminating export subsidies in agriculture, reforming state-trading enterprises, improving market access, tightening rules on domestic support, and facilitating trade in new technologies, including biotechnology."
Peter L. Scher, former special negotiator for agriculture at the Office of the U.S. Trade Representative, said last year that negotiating fixed percentage reductions in import tariffs has also been a problem for the United States, noting that U.S. tariffs currently average 3.2 percent, against 40 percent to 50 percent for the rest of the world.
He said that it would, therefore be unfair to the United States if countries were to continue to agree to simply reduce tariffs by an equal percentage--as they did in the Uruguay Round--because to do so would merely perpetuate the existing differential in tariff rates.
U.S. Trade Representative Charlene Barshefsky has said that the United States has stuck with the fixed-percentage approach to negotiating reductions in government support in the agriculture sector--known as the "formula" approach--"far too long."
"[T]hose high EU levels have got to come down disproportionately relative to other countries," she said.
Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Subcommittee on International Trade, said that the new U.S. proposal that is expected to be formally unveiled next week appears to be "very substantial."
"This is something that we will watch very closely as events unfold in Geneva," Grassley said, "because breaking down barriers to trade and gaining market access means so much to farmers."
Another U.S. official--Greg Frazier, special negotiator for agriculture and food policy at the Office of the U.S. Trade Representative--said earlier this month that the U.S. proposal will also focus heavily on addressing the needs of developing countries.
EU Blasts U.S. for Farm Aid
The European Union, meanwhile, strongly criticized legislation (H.R. 2559) signed into law by President Clinton on June 20 that will provide $7.1 billion in emergency aid to U.S. farmers, plus $8.2 billion in crop insurance enhancements, saying that it was inconsistent with U.S. calls for reducing government support for the agriculture sector. European Agriculture Commissioner Franz Fischler, in a written statement issued in Brussels, said that providing supplementary support to U.S. farmers totaling $15.3 billion "severely undermines the credibility of the frequent U.S. statements on the need for a global reduction in agricultural support."
He said that U.S. direct support to agriculture has risen by about 700 percent since 1996.
"Time and again the U.S. denounces other countries, in particular the EU, for providing support to their farmers while at the same time, year after year, they provide special financial packages for their own farmers, over and above that already foreseen under the FAIR Act," Fischler said. "This aid package together with those approved in 1998 and 1999 amounts to over $30 billion in supplementary aid to U.S. farmers."
A statement issued by the European Commission in Brussels said that the estimates for direct payments to U.S. farmers this fiscal year suggest a payout by the federal government of more than $32 billion, or $16,000 per farmer, or more than three times the average paid to European farmers.
Fischler said that the EU will carefully monitor developments in U.S. policy to ensure that the United States lives up to its commitments in the Uruguay Round of trade negotiations. He said that the EU, in particular, will oppose any attempt by the United States to circumvent its WTO-approved spending limit by "misclassifying" its financial handouts.
By Gary G. Yerkey
Copyright c 2000 by The Bureau of National Affairs, Inc., Washington D.C.:
