Pressure mounts on US at WTO farm talks

WASHINGTON, June 21: The United States goes into a key world trade meeting next week under pressure from the world's trading nations to unblock gridlocked talks by offering deeper cuts to its farm subsidies.

It is a particularly uncomfortable position for Washington, which until recently appeared to be winning a public relations battle over which country is trying hardest to get a new World Trade Organization pact -- or at least will dodge blame should the negotiations come to nothing.

Lauding its ''ambitious'' offer to cut its most trade-distorting agricultural supports by 60 per cent, the United States seemed to have Europe and developing countries such as Brazil on the defensive over their reluctance to meet Washington's exacting demands to slash their agriculture import tariffs.

But the tables have turned lately.

Critics have seized on a WTO analysis of the US farm proposal which they said shows Washington would have room to increase its overall spending on farm supports.

Meanwhile, European Trade Commissioner Peter Mandelson and top Brazilian officials have said repeatedly they will move, but only if Washington makes deeper cuts to its subsidies and provides more realistic market access suggestions.

''For the first time in a long while people are pointing at the US and saying it's selling empty proposals and has onerous demands on market access that are completely outside the parameters of what everybody else is talking about,'' said Catrin Smaller, trade expert at the Institute for Agriculture and Trade Policy in Geneva.

Coming at US negotiators from the other side, alarmed US commodity groups and farm lawmakers have loudly refused to give trade officials the mandate to make an extended offer.

''The US is in a corner,'' Smaller said. ''What it comes up with will determine whether the round can finish this year.'' A WAY OUT? The Doha Development round of talks was launched in 2001 with the aim of lowering trade barriers around the world to boost the global economy and lift millions out of poverty.

Ministers meet next week in Geneva to try to agree on a blueprint for farm and industrial goods. Failure would likely scupper chances of the round finishing in 2006, which could kill it completely as special US presidential powers to negotiate trade pacts expire next year and are not expected to be renewed by Congress.

Opinions vary on what Washington can do now, but some experts say the problem lies in poor communication about the details of its offer to the farming community. Sources say farm groups recently gave negotiators a flat ''no'' in response to overtures about upping the US offer to a 70 per cent cut in subsidies.

''I cannot understand why the US farm groups are so hung up on not accepting larger cuts in trade distorting (amber box) support,'' said Robert Thompson, head of Washington think tank International Food and Agriculture Trade Policy Council.

''With no limits on (least trade-distorting) green box payments, there is no reason that the total support going to US agriculture would need to fall at all.'' Not many farmers understand the distinction between WTO classifications such as amber and green box, he said, with the result that many believe the oft-cited 60 per cent cut would be to whatever payments they receive now.

But even were it to offer a bigger domestic subsidy cut, Washington would struggle to scale back its market access demands, which it must deliver for big US agribusinesses if it is to get congressional support for any final deal, experts say.

Former government officials suggest the United States should stick to one very appealing option: sit tight.

''Whether or not the US proposal is as ambitious as had been portrayed, at least it put something on the table (that) hasn't been matched by the rest of the world,'' said Clayton Yuetter, US trade representative from 1985 to 1988.

He said other countries were unwise to wait for another US move because some US lawmakers wanted to extend existing farm legislation, given the WTO standoff.

White House National Security Adviser Stephen Hadley, traveling with President George W Bush to Vienna for meetings with European Union leaders, told reporters yesterday: ''What we really need is to see a response from the group of 20 countries and from the Europeans that is comparable to this offer. If they can move in that direction, we're going to be in the zone of getting an agreement by the end of the year.''

REUTERS