WASHINGTON – Bush administration officials said Monday they expect U.S. farmers would gain more in export income than the farmers could lose in domestic subsidies under a new framework for World Trade Organization (search) negotiations. Critics said the officials are wrong.
The consensus reached Sunday in Geneva is aimed at reviving WTO talks on liberalizing international trade. It commits negotiators to work toward ending subsidies that help sell exports (search), and to reduce many domestic subsidies that help support farmers.
Exactly how this would be done will be the subject of further talks. But the framework sets forth some principles. Among them:
—In the first year of any new agreement, WTO-allowed caps on domestic subsidies, currently about $19 billion for the United States, must fall by 20 percent.
—Countries with higher subsidies would have to make deeper cuts.
—Government-backed loans to exporters, a sales method used by the United States, cannot be any longer term than 180 days and will be more closely monitored.
—Tariffs have to fall, and higher tariffs would bear deeper cuts.
Gaining access to foreign markets would be a key benefit of the coming talks, said J.B. Penn, the Agriculture Department's undersecretary for farm and foreign agricultural services. The U.S. position is that "we will make these changes if we can get greater access to other people's markets," he said.
This could benefit growers of products such as corn, wheat and soybeans, Penn said. And the increased revenue from sales would more than offset any subsidy losses that may be required under a new agreement, he said.
However, it's too early to be able to say how much impact a new agreement would have on U.S. subsidies, Penn said. "How much we reduce our domestic support depends on how much additional market access we've got," he said.
"If we don't see a package that we find acceptable at the end of the day, we don't have to agree to it," said Allen Johnson, chief agriculture negotiator in the U.S. Trade Representative's Office. "We are willing to reform, but we have got to see others move in the right direction and reform themselves, whether it's subsidies or market access."
Dan Sumner, an agricultural economist at the University of California, Davis, said some U.S. loan guarantees might be crimped under the framework, but Europe's decision to give up its advantage in export subsidies "is huge.
"Europe is going to have to cut more than us," he said.
Officials of several farm trade groups supported the framework.
The consensus could give more world market access to hog producers, said Keith Berry, president of the National Pork Producers Council.
Jack Roney, analyst with the American Sugar Alliance, said it might help U.S. sugar producers by eliminating other countries' export supports, which could push up the world price of sugar to the U.S. cost of production.
Others, however, were critical, saying there would be too much of a burden on U.S. farmers. "Farmers are being asked to sacrifice on the altar of free trade without getting anything in return," said Dave Frederickson, president of the National Farmers Union.
And the National Cotton Council was disappointed that cotton was singled out for special negotiations, said the group's chairman, Woody Anderson. African nations have said U.S. support for cotton is unfair to their small growers.