A damper on WTO talks?

Posted in Other | 03-Nov-05 | Author: Elizabeth Becker| Source: International Herald Tribune

US Agriculture Secretary Mike Johanns.
WASHINGTON While the world is debating European and American proposals to cut agriculture subsidies in a bid to revive World Trade Organization negotiations in Hong Kong next month, the U.S. Congress may be poised to undermine the effort.

U.S. lawmakers are scheduled to vote Thursday on whether to extend the huge commodity subsidies for American farmers to 2011 from 2007, adding a new complication to the already complex negotiations for a global trade agreement.

Any vote to extend the subsidies could raise doubts about the ability of the Bush administration to coax increasingly vocal farm-state politicians to support the proposed cuts.

Rob Portman, the United States trade representative, last month sought to stoke stalled WTO negotiations on a global free-trade pact by proposing to reduce some U.S. farm subsidies by as much as 60 percent.

He also promised to "make meaningful changes to American farm programs" as long as other trading partners offered subsidy cuts that are similar.

Europe has since made two proposals to cut certain agricultural subsidies based on reductions already agreed to by European countries.

The United States said both offers fell short, but the European trade commissioner, Peter Mandelson, cannot put more cuts on the table unless European Union member states agree to sweeten the offer.

By contrast, the Bush administration can make trade offers, but then Congress must approve the whole trade proposal.

If Congress agrees on Thursday to extend payments for commodity subsidies, that would make Portman's negotiating position difficult.

Representative Stephanie Herseth, a Democrat from South Dakota, suggested on Wednesday that the best approach would be to extend the farm subsidies during a briefing by Portman and the agriculture secretary, Mike Johanns, before the House Agriculture Committee.

Johanns strongly cautioned against such an approach, saying the current system needed to be re-examined for many reasons, including the fact that it only helped a third of American farmers.

"We really owe it to the agriculture community to have a discussion and decide what best serves all of agriculture," he said.

But even if Congress agrees to continue the subsidies until 2011, the extension could be eliminated when Congress considers the final global trade package after the Doha round, so named because the talks began in the Qatari capital, is completed in 2006.

A spokeswoman for Portman said the Bush administration believes that the proposed four-year extension of the core farm subsidies was political posturing.

"This doesn't bother us - there's always posturing," said the spokeswoman, who asked for anonymity because of the sensitivity of the upcoming votes. "Any trade agreement has to come back for congressional approval, and I wish I knew how this story ends but I don't."

Other politicians are less sanguine.

A bipartisan group of congressional lawmakers planned Wednesday to release a letter urging their colleagues to pledge they would cut farm subsidies, rather than extend them, as a show of faith in crucial WTO negotiations scheduled in Hong Kong in December.

The proposal to extend the subsidies is part of a Senate package of budget cuts that has already been approved by the Agriculture Committee. It was intended to avoid giving other lawmakers a voice in shaping farm policy, according to Senator Saxby Chambliss, a Republican of Georgia and the chairman of the committee.

"I assure you that those changes would most likely not be in the best interest of American agriculture," he said, referring to all the cuts.

Keith Williams, spokesman for the Senate Agriculture Committee, played down the subsidy extension as "simply a budgetary administrative matter" that was meant to ensure that the current farm bill would be "respected" amid changing economic circumstances. He said the proposal was not intended to hurt trade negotiations. He said Chambliss had promised the administration that he would write a new farm bill in 2007 that would reconsider all subsidies.

For Ken Cook, president of the nonprofit Environmental Working Group, which tracks U.S. farm subsidies, an extension would be cause for concern. He said it would leave open the possibility of leaving subsidies "intact through 2011."

Both the House and Senate versions of the farm budget favor cuts in environmental and conservation programs, which are considered less harmful for global trade, and largely keep intact the commodity subsidies, which are considered especially harmful to farmers in poor countries because they allow U.S. farmers to place their products in the international market at a reduced price.

The farming lobby in the United States is roughly as powerful as the one in France, which has sought successfully to prevent Europe from conceding more agricultural subsidy cuts in response to the American offer. Many farm state politicians have warned the Bush administration that it should not attempt to shape the upcoming 2007 farm bill through the WTO.

But the WTO talks will inevitably affect the next U.S. farm bill, and politicians are offering proposals this week to protect their constituents.

On Wednesday, Senator Charles Grassley, Republican of Iowa and chairman of the Finance Committee, proposed capping the size of the subsidy given to farmers. That would help his state, which receives the greatest overall amount of farm subsidies but whose farms are smaller on average. But that may touch off a fight with southern states, where spending caps are anathema to rice and cotton farmers, who receive the largest subsidies.