U.S. To Propose Capping Farm Subsidies At WTO

By Agence France-Presse The United States on July 25 proposed new global trade rules that would cut "trade-distorting" agricultural subsidies. A key element of the U.S. plan would limit so-called "trade-distorting" agricultural subsidies at 5% of the value of agricultural production, which the U.S. said would cut global subsidies by US$100 billion. Certain "non-trade-distorting" subsidies would still be permitted as long as certain criteria are met, U.S. officials said in announcing the plan, to be submitted to the World Trade Organization. The move came in the wake of U.S. legislation enacted in May, harshly criticized as protectionist, that would give some US$180 billion in subsidies to U.S. farmers over 10 years. The new proposal would require the U.S. to halve its new subsidies in the latest farm bill. But it would likely require steeper cuts in EU farm subsidies under the so-called Common Agricultural Policy. A spokesman for the EU's executive commission described the new U.S. plan as "inconsistent" with the May bill. The EU and the United States have long been at bitter odds over farm subsidies, with each side accusing the other of unfairly supporting its agriculture sector. U.S. officials said, however, that the plan would allow freer trade in agriculture with fewer subsidies. "Our proposal lays out our vision for reforming and liberalizing global trade in agricultural goods," said U.S. Trade Representative Robert Zoellick. "This proposal is aggressive, visionary and assures U.S. leadership as we move forward in the WTO negotiations," added U.S. Agriculture Secretary Ann Veneman. "Under current WTO rules, the scales are unbalanced and this proposal would put U.S. farmers and ranchers on an equal footing with others around the world." The proposal also calls for WTO members to reduce all agriculture tariffs to a maximum of 25%. The global average agricultural tariff allowed under the plan would drop from 62% to 15%. Zoellick said that the average U.S. agricultural tariff is 12%, while the average worldwide tariff is 62%, with many tariffs in excess of 100%. WTO trade talks on agriculture began in January 2000 and numerical targets for subsidy and tariff reductions are due to be solidified in time for the next WTO ministers' meeting in Mexico in September 2003, with proposals due next March. Copyright Agence France-Presse, 2002