Embassy of the United States

USA and the WTO

Differences Over Agriculture Persist as WTO Meeting Nears End   United States criticizes EU position on restricting food aid to cash only By Bruce Odessey Washington File Staff Writer Washington -- With only hours to go before a World Trade Organization (WTO) meeting was scheduled to end in Hong Kong, ministers still were scrambling to achieve some sort of progress in long-stalled trade negotiations. A draft text released by WTO Director-General Pascal Lamy for the trade ministers to tackle showed how far apart participants remained over opening markets in industrial goods, services and especially agriculture. The draft ministerial declaration would set a 2010 deadline for eliminating agricultural export subsidies. That deadline was proposed by the United States and a group of developing countries but resisted by the European Union (EU), which accounts for about 90 percent of such spending. Ministers had agreed in a July 2004 framework for the agriculture negotiations on elimination of export subsidies but left the deadline for further negotiation. (See related article.) An impasse over agricultural trade issues essentially has blocked progress in other areas of the negotiations, formally called the Doha Development Agenda, almost since they were launched in 2001. In an attempt to break the impasse, the United States submitted in October a proposal on agriculture that would set a 2010 deadline for eliminating export subsidies, drastically reduce tariffs and eventually eliminate domestic support payments to farmers. The impasse resumed, however, because the European Union (EU) has refused to budge from its own subsequent agriculture proposal, which analyses show offers little or no real additional market access. (See related article.) According to published reports from Hong Kong, the EU still was resisting the 2010 deadline on export subsidies without parallel disciplines by other developed countries on use of food aid and on monopoly state trading enterprises such as government-backed grain and dairy marketing boards in Canada, Australia and New Zealand. FOOD AID ISSUE REMAINS CONTENTIOUS Andrew Natsios, administrator of the U.S. Agency for International Development, issued a statement from Hong Kong reiterating U.S. criticism of the EU position that would restrict food aid to cash only, not commodities. "They are isolated," Natsios said. "This position is not supported by the United Nations, internationally recognized food aid experts, and developing countries who may not be able to offer food aid if it were restricted to cash only." He cited the drop in food aid contributions by the EU after it switched to cash only.  He dismissed as exaggerated the EU assertion that food aid donated by the United States from surplus commodities pushes down global prices to the detriment of farmers in developing countries. "The U.S. has offered a reasonable proposal that ensures food aid provides food, which is what those who face emergency situations and chronic hunger require," Natsios said.  "The EU should end their intransigence on an issue of critical importance to those who are in need.   The hungry poor in the developing and least developed world wait." Lamy's draft text omits a proposal backed by the United States for setting a simple formula on reducing industrial goods tariffs with the deepest cuts for the highest tariffs.  Instead, the draft declaration possibly would allow different countries to set different tariff ceilings. Language in the draft would link progress in reducing agricultural tariffs to progress in reducing industrial tariffs, a provision that reflects the EU position. DEVELOPING COUNTRIES DIFFER ON TRADE IN SERVICES Before release of the draft text, U.S. officials held a briefing in which Deputy U.S. Trade Representative Susan Schwab cited differences among developing countries over negotiations about trade in services. At a small session on services, she said, some developing countries wanted to strengthen obligations and some wanted to weaken them. "I think that the reason that you find as many developing countries as you do embracing the services negotiation is this recognition ... services trade has the potential to be an unbelievable tool of development, of economic development," Schwab said. "The presence of an efficient and effective express package delivery entity in your country opens your access to 98 percent of the world's consumers. At the briefing, Deputy U.S. Trade Representative Peter Allgeier said the United States was ready to accept duty-free, quota-free treatment for 90 percent to 95 percent of goods from the world's poorest, least-developed countries. Allgeier also cited the U.S. commitment to more than double by 2010 to $2.7 billion its annual assistance spending for developing countries to build the capacity to engage in trade. He emphasized that the commitment represents new money, not existing money shifted from one program to another, and comes in the form of grants, not loans. "It doesn't get any better than that," Allgeier said.  "You accept the money; you don't have to pay it back." A transcript of the briefing, the Natsios press release and a fact sheet on the U.S. agriculture proposal is available on the Office of the U.S. Trade Representative (USTR) Web site. For ongoing coverage of the WTO talks in Hong Kong, see WTO Hong Kong Ministerial Meeting. (The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)