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Corn+Soybean Digest

WTO Official: U.S. Must Cut Ag Subsidies

The World Trade Organization’s (WTO) chief negotiator on agriculture on April 30 sharply criticized the U.S. position on farm subsidies and said both the U.S. and the European Union (EU) must compromise in the area of import tariffs.

In a 26-page paper, New Zealand diplomat Crawford Falconer said the U.S. offer to limit farm subsidies to $22 billion per year would allow it to increase actual spending, something that was "inconceivable."

Falconer spelled out his expectations on subsidies, saying that the ceiling for U.S. subsidies would have to go below $19 billion, but acknowledging that the U.S. would not likely be willing to drop the ceiling to the “low teens” as some WTO members have demanded.

"The center of gravity for what is in play here for the U.S. is certainly below 19 and somewhere above the low teens...My guess is that if we end up with an agreement at all this year, the number will have to be in the teens," he said.

In the area of market access, Falconer said the key would be deciding how much to slash the highest import duties, because others would then fall into place.

Cuts in the highest tariffs will have to be somewhere between the 60% offered by the EU and the 85% sought by Washington, he said.

At the same time, the average cut must be above the 50% the EU has indicated it might be prepared to make, Falconer said.

The number of so-called "sensitive products" – farm goods that the EU and other major importers want to shield from the deepest tariff cuts – should be set at 1-5% of tariff lines, below the 8% officially sought by Brussels, Falconer said.

He rejected the argument made by some developing countries that farm products they are allowed to designate as "special" should be excluded from tariff cuts altogether because of their importance to subsistence farmers.

U.S. officials in Geneva and Washington told the Associated Press that they were still reviewing Falconer's “challenge” paper, which said it was now or never to deliver on a treaty aimed at adding billions of dollars to the global economy and lifting of millions of people out of poverty through free trade.

“This is not a passive observation or a series of 'dumb questions.' We are well past the time for that,” the New Zealand ambassador said. “It is a matter of admitting the objective facts staring us in the face. If we do not get serious momentum over the next few weeks – I hesitate to say months – we will either fail or we will put this whole exercise in the freezer for some considerable time until a better generation than us can thaw it out.”

The release of Falconer’s paper comes after little progress was made at a meeting last week of the WTO’s six most powerful members – the U.S., the EU, Australia, Brazil, India and Japan.

WTO negotiators have set a new deadline of year-end for completing negotiations in the so-called Doha round of world trade talks that has dragged on for nearly six years. However, many believe it is already too late for the talks with President Bush’s “fast-track” trade authority set to expire at the end of June.

Editor’s note: Richard Brock, The Corn And Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at

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