[Mb-civic] NYTimes.com Article: U.S. Will Cut Farm Subsidies in Trade Deal

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U.S. Will Cut Farm Subsidies in Trade Deal

July 31, 2004
 By ELIZABETH BECKER 



 

GENEVA, July 30 - The United States yielded to pressure
from developing countries on Friday and agreed to make a 20
percent cut in some of the $19 billion in subsidies it pays
to American farmers each year, as members of the World
Trade Organization met round the clock here to win approval
for a new deal governing world trade. 

Working until 4:00 a.m. on Friday, Robert B. Zoellick, the
United States trade representative, reached an agreement to
cut subsidies for such crops as corn, rice, wheat and
soybeans. He also reached an accord with four
cotton-producing countries in West Africa for eventual
cutbacks in subsidies paid to American cotton growers.
These countries - Benin, Burkina Faso, Chad and Mali - have
waged an emotional campaign against American cotton
subsidies that they say have left tens of thousands of
their farmers destitute. 

The American concessions appeared to brighten the prospects
that negotiators would complete a framework for further
talks on revamping rules for global trade over the weekend.


The latest round of trade talks began in 2001 in Doha,
Qatar, but foundered last year in Cancún, Mexico, primarily
over the American farm subsidies and the European Union's
$3 billion in annual export subsidies. 

If the agreements are approved, the subsidy cuts would go
into effect at a successful conclusion of this round of
talks, probably sometime in 2006. 

Helping the developing world by reducing or eliminating the
$300 billion in agriculture subsidies and supports given to
farmers in the world's wealthiest nations was the top goal
of the latest round of talks at the 147-member trade
organization. 

The World Bank, the United Nations, the International
Monetary Fund and private charities like Oxfam
International have all argued against the subsidies. They
say they are one of the worst injustices in the global
economic system, allowing rich countries to flood the
global market with inexpensive food and commodities that
make it impossible for largely rural, poor countries to
trade their way out of poverty, much less improve their own
farmers' livelihoods. 

Pressure on the United States has increased since the
European Union announced that it was eliminating its export
subsidies. The concessions made by the Bush Administration
on Friday on agricultural subsidies were seen as an
important response to the European action. 

In exchange for reducing agricultural supports, the wealthy
nations are asking the developing nations to reduce their
tariffs on manufactured goods. That issue was left in
general terms for more precise negotiations in later talks.
Mr. Zoellick so far has failed to get significant
concessions to open up new markets for American
agricultural and industrial goods. 

Still, as delegates racked up successive compromises here,
the prospect for an agreement was improving, and delegates
said uniformly that they were committed to making the
negotiations succeed. But talks could run aground on such
issues as how much Japan can protect its rice or Norway its
dairy products. Celso Amorim, the top trade negotiator for
Brazil and an important negotiator here, said there were
still several disputes to be resolved. 

If the talks succeed, they are expected to lead to as much
as a $3 trillion gain in the world economy. 

"What I'm hearing is not at all like Cancún - none of the
extravagant rhetoric of what is unacceptable,'' said Jim
Sutton, a delegate from New Zealand. 

This time the United States and other nations agreed that
cotton subsidies and other supports and tariffs covering
cotton should be treated on a separate fast track. 

Matthew Nwagwu, chief delegate from Nigeria, said, "So far,
the cotton language is good, it's looking very good." He
added, "I think we are going to finalize the agreement.'' 

The American delegation was just as positive. "We think
this cotton agreement provides a shot in the arm to these
talks," said an American trade official who asked not to be
identified as the discussions continued. "We were very
pleased to work with the Africans." 

The four African nations that brought the original cotton
complaint also won an agreement that the global trade body
would work with the World Bank and the I.M.F. to get them
more money for development assistance. 

Since the failure of the talks in Cancún, the United States
lost a case brought by Brazil that challenged its cotton
subsidies as illegal. That case, before the World Trade
Organization's dispute body, could force the United States
to lower its cotton subsidies even without these
negotiations. 

Poorer nations have also complained that the United States
often used food aid as a way to dump surplus food grown by
American farmers. In response, the United States largely
agreed to follow international rules that encourage giving
money and credit to buy food in the region where aid is
needed. The United States also agreed to limit the use of
its export credits, which have amounted to an export
subsidy. 

Not everyone was satisfied with the concessions. A delegate
from the Dominican Republic said the proposed framework
agreement was still a betrayal of developing countries. And
Celine Charveriat, head of Oxfam International in Geneva,
said that the rich countries could create new subsidies by
using loopholes in the agreement. 

Laurens Jan Brinkhorst, the Dutch economy minister and
chairman of a delegation of ministers from the European
Union, disagreed. He argued that the proposed agreement
reflected the growing muscle of the developing world,
especially of countries like Brazil, China and India. 

"The world has changed; we now live in a truly global
world,'' he said, adding that these developing nations had
changed the geopolitical boundaries of the talks and forced
the new agreement. 

Pascal Lamy, the European Union's top trade official,
agreed that talks were going well. "I'm not sure if I'm
happy, but we are working very well,'' he said. 

http://www.nytimes.com/2004/07/31/business/worldbusiness/31geneva.html?ex=1092298924&ei=1&en=121aecfad69594b8


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