News Analysis: U.S. trade deal hinges on farmersWASHINGTON As trade negotiators meet this week in London and Geneva to break an impasse over global trade talks, the question for the United States is whether it can strike a compromise with other countries before it has agreed on a new way to help its own farmers.
In the past week, the U.S. trade agenda has been blocked by concerns among trading partners who want to see America change its system of farm subsidies. During his visit to Latin America this weekend, leaders complained to President George W. Bush that the $20 billion in annual subsidies paid to U.S. farmers gave its agribusinesses an unfair trade advantage. Earlier, Europeans seeking a deal on agricultural subsidies before World Trade Organization talks in December said they wanted Washington to stick to an offer to cut farm subsidies, even though U.S. laws providing for these payments last through 2007.
Bush said in a speech to the United Nations in September that he was willing to eliminate farm subsidies if other countries pledged similar cuts. But that pledge has not produced the momentum in Congress needed for a breakthrough at the negotiating table.
Instead, U.S. politicians have signaled that they are unwilling to allow trade talks to dictate U.S. farm policy. Both Republicans and Democrats expressed concerns that Bush was willing to forsake the country's farmers to push ahead in another round of trade talks. Last week, the Senate took the first step toward extending the farm subsidies by four years.
More than one Latin American leader has noted that the only time developing countries have been able to get the United States or the European Union to reduce farm subsidies was when Brazil brought cases against them at the WTO.
That may be a sobering thought as top trade negotiators sit down again this week to try to work out a compromise over farm subsidies.
Without a deal on agriculture, the chances are slim that a meeting of the WTO in December will lead to new agreements on reducing trade barriers.
But Bush's pledge at the UN raises difficulties for U.S. negotiators, by leaving little room for either side to undertake "unilateral disarmament" of their subsidies.
The situation has contributed to a belief among American farmers that their trade problems stem from policy makers in Brussels. Farmers across the United States have said that their European counterparts receive three to four times more money in subsidies than they do, and that European bureaucrats block the import of U.S. products, like hormone-treated beef, based solely on spurious health concerns.
Yet the mistrust on both sides has allowed the two trading giants to keep their subsidies largely in place, if only to maintain equity.
Meanwhile, developing countries are targeting the combined $300 billion worth of farm support that rich countries parcel out. Their No. 1 priority in the current round of trade talks is to eliminate these, citing studies showing that rich-country farm supports undermine their ability to help the rural poor and raise standards of living.
Last week, over the objections of the White House, the Senate voted to extend U.S. farm subsidies until 2011, with some politicians saying they did not want trade officials to determine American farm policy.
Rob Portman, the U.S. trade representative, and Mike Johanns, the Agriculture Secretary, said lawmakers needed to acknowledge that the status quo is not working for most American farmers, at least two thirds of whom do not receive subsidies.
The World Trade Organization recognizes that subsidies to preserve the environment, for example, do not distort trade or undermine poor farmers around the world. What concerns the WTO are subsidies that encourage overproduction and lead to exports at below market price.
Without some agreement on a future direction for U.S. farm policy, it could prove difficult for U.S. trade negotiators to keep the farm community behind them in talks at the WTO. And without some agreement to cut subsidies at the WTO, leaders of developing countries like Brazil said over the weekend, it will be hard to put together a regional trade deal.
With no compromises in sight, developing countries are already talking about bringing new cases against the United States and Europe at the WTO. The top candidates for action against the United States appear to be its subsidies of rice and soybeans.
For politicians who worry that trade ministers will dictate American farm policy, having more disputes brought before the WTO could be the worst outcome.