Farm Groups Nix Deeper Support Cuts

The Bush administration sought agreement from U.S. farm groups for a 70% cut in their most trade-distorting subsidies as way to save world trade talks, but was roundly rejected, industry sources told Reuters News Service on May 30.

However, discussions between the two sides on how the U.S. might offer trading partners more concessions on less trade-distorting "blue box" supports – such as spending caps on specific product payments – were better received, say the sources, who spoke on condition of anonymity after talks with U.S. trade officials.

World Trade Organization (WTO) member nations are running out of time to reach agreement on the so-called Doha Development Round, launched in 2001 with the aim of lifting millions out of poverty by slashing global trade barriers.

Talks have stalled repeatedly on the subject of farm trade. WTO chief Pascal Lamy says a deal to cut tariffs and subsidies in farm and industrial goods must be reached by the end of June. Ministers are due to meet in Geneva starting June 26 for a final push.

The U.S. has offered to cut its "amber box" payments – its WTO allowance for most trade-distorting subsidies to its farmers – by 60% but is under pressure to offer more in order to get the European Union and developing countries to open their markets.

"They wanted to increase the domestic support offer ... to 70 ... and we told them no," says one industry source. "We told them we weren't willing to put more on the table when we hadn't gotten anything in return."

"The U.S. was talking about various ways of sweetening the pot on domestic support, trying to do things like product specific caps for blue box. I don't think people have been screaming about that," the second industry source says.

"The expectation among the commodity groups in the U.S. is that if the agreement comes together and the domestic support package is of the magnitude that the U.S. has proposed, there will be serious changes. These kind of details don't change things too much ... it is in effect window-dressing for Geneva."

Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.