U.S. agrees to 20% cuts in agriculture subsidies

Concession brightens prospects for WTO pact


GENEVA - The United States yielded to pressure from developing countries yesterday and agreed to make a 20 percent cut in some of the $19 billion in subsidies it pays to U.S. farmers each year.

The agreement came 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 a.m. yesterday, Robert B. Zoellick, the U.S. 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 U.S. cotton growers.

These countries - Benin, Burkina Faso, Chad and Mali - have waged an emotional campaign against U.S. cotton subsidies that they say have left tens of thousands of their farmers destitute.

The U.S. 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 Cancun, Mexico, primarily over the U.S. 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.

The subsidies, they say, 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 yesterday 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. Zoellick so far has failed to get significant concessions to open up new markets for U.S. 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 Cancun - 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 U.S. delegation was just as positive. "We think this cotton agreement provides a shot in the arm to these talks," said a U.S. trade official who asked not to be identified as the discussions continued. "We were very pleased to work with the Africans."

Poorer nations have also complained that the United States often used food aid as a way to dump surplus food grown by U.S. farmers.

The United States also agreed to limit the use of its export credits, which have amounted to an export subsidy.

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