Far from accord on trade talk parameters

by Morton Sosland
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Seldom have flour millers around the world faced more uncertainty about the likely direction of trade-related decisions than now. This assessment is a bit of an anomaly, considering that members of the World Trade Organization agreed at their Doha launching session last November to decide on the parameters for agricultural trade talks no later than March 15, 2003. That deadline — instead of prompting any sort of progress toward an accord on the direction in which agricultural trade should head — seems to have exacerbated the disagreements and even hostility that have marked these negotiations for a long time.

The United States moved to gain the upper hand by revealing the details of what it would like to be the agenda of the Doha Round considerably ahead of the March 15 deadline. While rejecting the American proposals as not even a suitable basis for compromise, the European Union said that rather than revealing its hand early, it intended to wait until near the deadline for submitting its proposals. The other nations that make up the so-called "Quint" group of agricultural ministers have also questioned or rejected the U.S. proposals in a manner that reveals a focus on national objectives. Japan hailed it "disadvantageous for Japan." Canada and Australia worried about conflicts with U.S. domestic policy, as well as the part of the American proposal calling for the elimination of all export monopolies and the full-fledged opening of export markets in all W.T.O. member countries.

Basic elements of the U.S. proposal for agricultural trade include: eliminating all export subsidies within five years; reduction in average global tariffs on agricultural imports from the current 62% to 15%; and limiting trade-distorting supports of agriculture to no more than 5% of the value of a country’s agricultural production. The U.S. urges that the reductions that would be required of each country reflect the so-called Swiss formula, which mandates the sharpest percentage cuts for countries with the highest tariffs, while low-tariff nations would be required to make only minimal adjustments.

It is the latter approach, which was seen as requiring more of the E.U. and Japan than of the United States, that rankled the agricultural ministers of these nations. The E.U. particularly criticized the omission from the U.S. proposal of any mention of reductions in export credits or food aid grants, which the E.U. believes America has used while criticizing European export subsidies. In regard to domestic support cutbacks as proposed by America, Franz Fischler, the E.U. commissioner of agriculture, charged, "They want to reinvent the calculation to suit them."

Looming large in the claims and counter-claims were the questions of how U.S. trade proposals will be made to fit into the new agricultural support program passed by Congress and signed into law by the President. This program, in effect, legislates all the large payments made to American farmers in recent years. "They are in somewhat different directions," said Lyle Vanclief, Canada’s agriculture minister, in noting how U.S. trade proposals appear to run counter to domestic supports.

Of greatest importance for progress in trade talks was the granting of fast-track negotiating authority to President Bush by the U.S. Congress. Passed by a very narrow margin in the House and winning by a wide margin in the Senate, this authority to negotiate trade agreements that are subject only to "yes" or "no" approval by Congress (without any modifications) was essential to any progress in agricultural or other important trade negotiations. Hints have been heard that the Bush administration went along with the 2002 farm bill in order to gain the fast-track authority, and now that the latter is in hand, steps to stimulate trade will rule, perhaps even overriding some of the more egregious provisions in the new basic farm support program. If that’s the case, then trade prospects, now totally confused and a cause of great hostility among nations, may turn out to be a positive for the advancement of flour milling around the world.

Morton I. Sosland