US offers to make steep tariff cuts

The top United States trade official laid out a new proposal on Monday on agricultural tariffs and subsidies, saying the European Union and Japan must

now promise to do more to improve their own offers.

With two months remaining before a deadline for a framework global trade treaty, ministers from World Trade Organisation members were once more confronting the thorny issue of United States and EU farm subsidies.

“The US is willing to take some pain,” US Trade Representative Rob Portman said. “But those who subsidise more need to reduce more.”

Portman said that the United States is ready to make “steep tariff cuts” as ministers from the world’s largest commercial powers gathered to revive global trade talks. He called on the EU and Japan to come up with improved offers for reducing agricultural support programmes.

The EU “uses about three times more support than we do,” he said.

“The ratio needs to be about two to one to be rational, balanced and practical.”

According to the offer, the United States would make cuts of 60% in trade-distorting farm subsidies.
But Portman said the EU and Japan would have to make cuts of 80%, since their subsidy levels are higher.

Brussels has so far offered to cut its subsidies in products including wheat, dairy goods and rice by 65%. The US proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.

European Union Trade Commissioner Peter Mandelson called the proposal a “constructive step”, but said it still needed further assessment. The United States has “indicated readiness to match the EU’s willingness to eliminate all exports subsidy programmes,” Mandelson said in a statement.

“We now need to move to a serious discussion of timetables for phasing out support,” he said.

A ministerial meeting in Paris last month failed to break the deadlock, although the EU took a step in that direction, presenting a detailed but tentative offer to cut import tariffs at talks with Portman and ministers from India and Brazil.

Canada’s trade minister, Jim Peterson, commended the US proposal, which he said could give a fresh impetus to negotiations.

“I believe this initiative by Mr Portman is just what we needed,” Peterson said. “This is a positive start but we still have a long way to go.”

Both Portman and Mandelson are under pressure to make difficult concessions, trade officials said.

WTO Director General Pascal Lamy has said that the EU and the United States will have to make adjustments in agriculture policy if progress is to be made in the present round of global trade talks, which is already well behind an original December 2004 deadline.

Lamy believes the EU needs to open its market more to foreign producers while the US should offer to cut the level of financial support it gives its farmers, his spokesperson, Keith Rockwell, told The Associated Press.

“Movement in those two areas would be helpful not only for the agriculture negotiations overall, but for the entire round.”

At a Hong Kong summit scheduled for the end of the year the WTO’s 148 members are supposed to agree on an outline for a global trade deal.

EU farm reforms adopted in 2003 will convert the bulk of the bloc’s production subsidies such as animal-welfare and environmental-management grants to farmers—deemed far less trade-distorting under WTO rules. Washington envisages no such change to its “countercyclical” subsidy programme, which provides payouts to farmers when prices fall, allowing US producers to charge artificially low prices.

Washington’s trade partners say the cuts they are seeking would mean changes to the 2002 US farm Bill, which comes up for renewal in 2007. After that, a new global trade treaty would be harder to negotiate, diplomats say.

The Doha round—named for the Qatari capital where it was launched in 2001—is set to conclude next year. It sets out to boost the global economy by lowering trade barriers across all sectors—with particular emphasis on developing countries. - Sapa-AP