LDCs to EU/US: Take Your Ag Proposals and Shove It

♠ Posted by Emmanuel in , at 7/22/2008 07:51:00 PM
Day 2 at the Doha mini-ministerial came and went with nary a trace of improvement as negotiations continue to fray along North-South lines. Earlier on, the EU tried to get the ball rolling on agricultural issues by offering to cut current tariffs on agricultural products by 60% instead of just 54%. LDCs weren't impressed by this, however. Next, the US said that it was now willing to cap agricultural subsidies to $15 billion per annum from a previous ceiling of $48.2 billion. This would look impressive were it not for the fact that the US is currently spending about $7B on agricultural subsidies. This figure appears low since agricultural commodities currently command high prices. However, if and when these prices fall back to being in line with more historic trends, then all sorts of support would kick in once again. In any event, the LDCs weren't impressed by the US offer, either.

As an aside, Indian Finance Minister Kamal Nath returned to India on Tuesday to vote on a motion of confidence over PM Manmohan Singh's leadership. This was sparked by the ruling coalition's erstwhile Communist allies showing their displeasure over nuclear cooperation with the United States. The motion in support of Singh passed 275-256, and Nath should be back in Geneva by tomorrow. From the Economic Times/Agence-France Presse:
Industrialised and developing economies failed to find common ground in global trade liberalisation talks Tuesday, with Brazil shooting down a US proposal a day after a European initiative went nowhere. The United States offered Tuesday to cut official aid to its farmers by two billion dollars to 15 billion dollars a year in a bid to spur movement at WTO trade talks but found no support from key player Brazil.

"Nice try," said a member of the Brazilian delegation, adding that the proposed new subsidy level was "still too high." Brazil has been acting here as an unofficial spokesman for developing countries. Brazil's chief WTO negotiator Celso Amorim subsequently struck a slightly more positive note, saying the US move "proves the engagement of US in the negotiations but with a low level of ambition."

Tuesday's exchange, highlighting a gulf between developed and emerging market countries, came as ministers from some 35 nations met in Geneva to try to break a seven-year deadlock in the Doha round of World Trade Organisation liberalisation negotiations.

Developing countries have voiced deep frustration at what they say have been inadequate offers on market-opening measures from rich participants such as the United States and the European Union.
But on Tuesday, US Trade Representative Susan Schwab said the world's largest economy was now prepared to cut its farm subsidies in exchange for an "ambitious market access outcome." She stressed that the offer was conditional on improved access for industrial products in emerging countries and a guarantee that US farm subsidies would not face any further legal action at the WTO. "These reductions are not offered in isolation and must be accompanied by significant market openings" in both agriculture and industrial products, she told reporters.

The EU welcomed the US move but said there was still room for more flexibility from the Americans as talks continue throughout the week. "This is a reasonable offer at this stage," said EU trade spokesman Peter Power. "It is not the furthest the US could go but we assume this depends on the remaining negotiations and a balance being achieved in other sectors," he added.

Non-governmental organisations were scathing in their reactions however, with the Geneva-based Institute for Agriculture and Trade Policy (IATP) branding it "absurd" and Oxfam International saying it was "vastly inadequate." Fifteen billion (dollars) is around twice what the US is (really) spending at the moment. They would not have to cut a penny off current subsidies as a result of this offer," said Jeremy Hobbs, executive director of Oxfam International. Hobbs also denounced the US bid to secure immunity from any further WTO legal action as "tantamount to admitting intention to break the rules in the future. It adds insult to injury."

The US overture came after an abortive attempt by EU Trade Commissioner Peter Mandelson to jolt the talks into movement on Monday with an announcement that the European Union was ready to extend tariff cuts on agricultural products to 60 percent from 54 percent. But even Mandelson's fellow EU commissioner Mariann Fischer-Boel said the offer was "nothing new" and Brazil dismissed it as "propaganda."

The EU, as is the United States, is linking concessions in farm trade to steps by emerging countries to open up more to manufactured goods.
Argentine negotiator Nestor Stancanelli said he saw "real negotiations" as beginning only Tuesday, pointing to the Doha round's NAMA component -- covering industrial products -- as a main sticking point. "The NAMA text, for many of us, does not reflect the positions of many members ... The NAMA text is presented as if it were already a result," he said.

Meanwhile, the negotiating process was further hampered by the absence of Indian Commerce Minister Kamal Nath, an important participant who was in New Delhi for a crucial government no-confidence vote sparked by left-wing opposition to a nuclear energy deal with the United States. The Indian government narrowly won the vote and Indian Commerce Secretary Gopal Pillai told AFP that Nath was due in Geneva early on Wednesday.

The Doha round of negotiations was launched amid high hopes in the Qatari capital in November 2001 but it has foundered ever since as developed and developing countries bicker over how to cut agricultural subsidies and tariffs on industrial goods.