US Ready To Cut Farm
Subsidies By 60%
By Sophie Walker and Doug Palmer
WASHINGTON (Reuters) - The United States is prepared to cut its most trade-distorting farm subsidies by 60 percent in the next five years and eventually eliminate them but wants deeper cuts by the European Union and Japan, U.S. Trade Representative Rob Portman said on Sunday.
Striking a deal to cut rich nations' agricultural supports and tariffs is seen as vital if world trade talks are to make progress in lowering barriers on goods and services globally and agree on a blueprint for doing so at a World Trade Organization meeting in Hong Kong in December.
Washington has been under pressure for weeks to come forward with a plan but U.S. negotiators have been loathe to move without more progress on how much other countries would cut their farm tariffs to open their markets to American farmers.
In an opinion piece to be published in the Financial Times on Monday, Portman said the United States wanted to see steep tariff cuts during the next five years, starting from 55 percent up to 90 percent in the highest tariffs in rich countries. In a second stage, tariffs should be brought down to zero, he said in the article, the text of which was obtained by Reuters in advance of publication.
Portman and other American trade officials will host a meeting on Monday in Zurich of their counterparts from the European Union, Brazil, India and a dozen other key World Trade Organization members.
"A ground-breaking result in agriculture is not in and of itself a sufficient outcome," Portman said. "There must also be complementary advances in trade in manufactured goods and services. The U.S. is ready to make tough decisions on agriculture but we cannot do it alone."
The United States also will urge the elimination of export subsidies -- already agreed under a framework agreement struck last year -- by 2010, Portman said.
The EU has proposed a 65 percent cut in spending on its own "trade-distorting" farm subsidies and a 55 percent cut for the United States. That would trim U.S. spending to $8.5 billion from $19.1 billion and the EU to about $27.6 billion from around $80 billion -- although in reality some money probably would be shifted away from crop-specific farm programs to others such as conservation that have less impact on trade.
Developing countries such as Brazil and India have long linked their willingness to give more access to industrial goods from developed countries to the rich nations' readiness to bring down farm barriers.
One diplomat from a G20 developing country alliance told Reuters in Zurich: "We are waiting to see what the U.S. will do. If there are significant concessions, that could have an impact not just on the farm talks but also on negotiations on industrial goods."
Portman also said the United States would be willing to cap "blue box" programs, which have been a concern for other trading partners. Under WTO negotiating guidelines, the blue box is where less trade-distorting supports, like America's countercyclical payments linked to commodity prices, might go.
Countries have been afraid the United States would park some programs in this box to get around making real cuts to its farm program.
Portman has spent weeks consulting U.S. lawmakers, including the chairmen of the House of Representatives and Senate agriculture committees who have given him detailed instructions on what must be in a deal to win congressional approval.
On food aid where the United States has strongly defended its practice of sending commodities rather than cash as proposed by the EU, Portman said the United States was prepared to tighten rules on donation to guard against possible commercial displacement "but not at the risk of further reducing already inadequate food aid for those who need it most."
(With reporting by Richard Waddington in Zurich)



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