US ready for WTO farm deal if others are - Schwab

WASHINGTON, July 19 (Reuters) The United States is ready to strike a deal reducing farm subsidies and tariffs if the European Union, India and others can be more flexible in world trade talks, the chief U.S. negotiator said on Tuesday.

President George W. Bush ''has given us some very good, very clear instructions as to what we need to bring home, what we're willing to pay for it,'' U.S. Trade Representative Susan Schwab told reporters shortly after returning home from trade talks at the G8 summit in St. Petersburg, Russia, and later in Geneva.

Schwab said Bush and most other leaders attending the St.

Petersburg meeting ''were extremely interested in getting a successful conclusion to the Doha Round (of world trade talks) in the very near future and pledged to give their trade negotiators, their trade ministers the flexibility to get a good agreement put together by the end of this year.'' The United States is prepared to do more to cut domestic farm subsidies, but needs a signal from the European Union and advanced developing countries that they will cut tariffs deeply enough to generate new trade flows, Schwab said.

''President Bush has indicated the U.S. will be more flexible on domestic support when we see more flexibility on market access from our trading partners,'' Schwab said.

The St. Petersburg summit gave the struggling world trade talks a much-needed boost, but the jury is still out on whether the leaders' instructions will lead to changed positions at the negotiating table. Key ministers will be meeting in Geneva beginning on Sunday in hopes of achieving a breakthrough on agriculture and manufacturing issues by the end of July.

The United States has offered to cut its WTO allowance for its most trade-distorting farm subsidies by 60 percent to .2 billion annually, but trading partners complain that it would still be able to spend up to .6 billion annually under a combination of other programs, compared to the approximately billion it now spends each year.

At the same time, Washington has proposed cutting farm tariffs by an average of 66 percent, compared to a EU proposal for 39-percent average cuts and the G20 group of developing countries plan for 54-percent cuts.

The EU has accused the United States of making ''unrealistic'' market access demands, but Washington contends that most of the benefits of a trade deal for developing countries would come from opening new markets.

Schwab did not rule out the possibility that new flexibility for the United States might also mean accepting lower tariff cuts than it has demanded previously.

''We're going to have to see what's put on the table. Too early to make that assessment,'' Schwab said.

The United States was prepared to strike a deal two weeks ago in Geneva, but other countries were unwilling to move, Schwab said. If that situation has changed and countries are ready to be more flexible, ''I'm very comfortable that we'll be in a good position to get a good deal,'' she said.

Reuters DKS GC0603