Agricultural Trade Talks Move Forward in WTO

Published September 1, 2004

Global trade in agriculture received a big boost from the World Trade Organization (WTO) on July 31, when member countries meeting in Geneva, Switzerland voted 147-0 to approve a “framework for future progress” in negotiations to free up international agricultural trade.

The developed countries are now on board, and the developing countries have agreed to future talks. At stake is the lowering of high domestic support payments in developed nations and high agricultural tariffs in developing countries, which currently average around 60 percent.

According to the Bridges Weekly Trade News Digest, a publication of the Geneva-based International Centre for Trade and Sustainable Development, “After almost a year of stalled negotiations following the breakdown of talks at the last Ministerial [2003] meeting in Cancun, members had set the end of July [2004] as a deadline for agreeing on a negotiating framework package. The 31 July agreement has allowed countries to send an important political message that the Doha Round is still alive.” The Doha Round of international trade agreement negotiations began with a full Ministerial meeting in Qatar in November 2001.

Tariff Cuts Expected to Benefit U.S. Farmers

The American Farm Bureau Federation, the world’s largest farm organization, was quick to comment on the progress. In an August 2 press release, Farm Bureau President Bob Stallman was upbeat concerning the turn of events, which he hopes will lead to lower tariffs and more trade around the world.

“The [July 31] framework text adopted by the WTO General Council will continue the process of negotiation toward the goal of expanding world markets for American agriculture,” Stallman said. “The commitments by both developed and developing nations to substantial tariff reductions and deeper cuts from higher tariffs will lead to expanded market access for U.S. farmers and ranchers.”

Stallman also was pleased with progress toward agreement on elimination of export subsidies, used mostly by the European Union to compensate farmers in excess of market prices, and the continuation of “food aid” from the United States to needy countries.

“The export competition measures in the text will benefit American farmers and ranchers by eliminating export subsidies and bringing rules to bear on the market-distorting operations of state-trading enterprises. We will also preserve the ability to provide food aid to those in need,” Stallman noted.

New Deal for World Agriculture

According to a release from the U.S. Trade Representative’s Office on July 31, the new deal for world agriculture includes:

  • An ambitious and balanced plan for reform of trade-distorting agricultural subsidies, elimination of agricultural export subsidies, and substantial improvement in market access for all farm products.
  • In cutting farm tariffs, all countries other than the least developed will make a contribution, and there will be deeper cuts in higher tariffs.
  • Substantial improvement in market access applying to all agricultural products, even “sensitive” ones such as sugar, cotton, and milk.
  • Allowing developing countries lesser tariff reduction commitments. The text recognizes the vulnerability of poor, subsistence farmers as a matter of concern for further discussion.
  • Elimination of agricultural export subsidies.
  • Elimination of trade-distorting practices in the sales of State Trading Enterprises (STEs). For the first time, the framework calls for specific disciplines and greater transparency on STEs, and offers the possibility of negotiating the elimination of the monopoly powers of such entities.
  • Countries with higher currently allowed levels of domestic support for agriculture will be subject to deeper cuts.
  • Trade-distorting forms of domestic support for agriculture will be cut substantially, with caps on support levels for specific commodities and cuts in the overall level of trade-distorting support.
  • In the first year of implementation, each member’s total trade-distorting support will be cut by 20 percent from currently allowed levels, an amount equal to the cut of these subsidies during the entire Uruguay Round, where agricultural tariffs and subsidies were initially cut by WTO consensus in the mid 1990s.
  • The agreement maintains the viability of food aid programs for humanitarian and development needs.

Much Negotiation Remains

“The Doha Round is back on track,” said Trade Commissioner Pascal Lamy of the European Community, but he injected a note of caution, saying, “We have only walked half of the way.” Lamy’s sentiments were echoed by U.S. Trade Representative Robert Zoellick. “We have laid out a map for the road ahead,” Zoellick said, but “the speed limits for how far and how fast we will lower trade barriers” remained to be negotiated, as reported by Bridges.

Bridges reported that at least one international nongovernmental organization remained skeptical. Celine Charveriat of Oxfam International, a confederation of development, advocacy, and relief agencies working to fight poverty around the world, lamented the lack of “cast-iron commitments” and a “clear timeline for reform.” Charveriat said, “If rich countries do not immediately put their promises into action, this declaration will become just one more stage in a long journey of disappointment.”

Representatives from developing nations, however, were more forgiving of the paucity of firm commitments.

“This more than adequately addresses India’s concerns,” said that country’s commerce minister, Kamal Nath, referring in particular to the provisions for future reductions in domestic price supports and treatment of developing countries. The Chinese ambassador to the WTO, Sun Zhenyu, said, “Generally speaking, the framework is not bad, though the developing countries are not [yet] fully satisfied.”

According to Bridges, “Members postponed the 1 January 2005 deadline for concluding the talks to an as-yet unspecified date, at least until the sixth WTO Ministerial Conference to be held in Hong Kong in December 2005.”

John Skorburg ([email protected]) is managing editor of Budget & Tax News.