US trade offer breaks WTO deadlock

By Anthony Fletcher

- Last updated on GMT

Related tags: International trade, World trade organization, Us

A firm commitment from the US to cut domestic farm subsidies by 60
percent within a five-year timeframe could revitalize WTO
negotiations and benefit US food makers, according to the
International Dairy Foods Association (IDFA).

The association believes that Portman's offer, which includes substantially reducing tariffs and eliminating export subsidies, will pave the way to achieving an agreement on global free trade.

"We are looking towards the future,"​ Helen Medina, manager of international and regulatory affairs for IDFA, told FoodNavigator-USA.com.

"We are free trade oriented and we want to see real market access for our members. The international scene is aggressively competitive, but we represent companies that believe they can deal with this.

"After all, over 96 percent of consumers live outside the US."

Medina also believes that after months of intransigence, the US commitment to "breaking the deadlock in multilateral talks on agriculture, and unleashing the full potential of the Doha Round,"​ in the words of Portman, represents a major breakthrough for the success of the WTO.

Farm subsidies have been widely considered to be a major hurdle in obtaining a Doha Round agreement on global agriculture and services, and US reluctance to concede much ground has stonewalled any possibility of real change.

"The EU has already tabled a similar proposal and there was a feeling that the US had to make a move,"​ said Medina. "In the end, no one will move until we do, and this commitment I think was a realization of this."

The US proposal calls for reforms in two five-year stages. In the first five years, there would be substantial reductions of trade-distorting support measures and tariffs, along with the elimination of export subsidies. The second stage would deliver the elimination of remaining trade-distorting policies in agriculture.

The move has been met by scepticism in some quarters however. Non-profit groups said that the offer was less significant than it appeared.

Pressure group Oxfam claimed that under the proposal, the US would have to cut its spending on agriculture by only 2 per cent - from $74.7bn to $73.1bn at the end of the Doha round implementation period.

"If this offer goes ahead, trade distorting domestic subsidies will remain almost completely unchanged and dumping will continue,"​ said Celine Charveriat, head of Oxfam International's Make Trade Fair Campaign.

"Meanwhile harsh concessions on market access will be wrung from developing country members in exchange for illusory progress."

Nonetheless, the IDFA is confident that the US commitment will lead to positive change. "There was a rumour that nothing would be done until Hong Kong [the next WTO Ministerial meeting, which takes place this December],"​said Medina.

"It's crunch time. We've got two and a half months left, and no one wants another Cancun. The US had to take leadership."

Trade ministers meeting in Hong Kong will aim to conclude negotiations on the WTO global trade agreement on agriculture and services. The negotiators have already missed their initial deadline of 1 January 2005 for a final agreement on the Doha Round, which began in 2001.

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