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US will make Doha deal cuts

Published: 3:51PM Thursday July 17, 2008 Source: Reuters

The United States is prepared to make "enormous" cuts in farm subsidy spending limits and its barriers to foreign goods to reach a breakthrough next week in world trade talks, US Trade Representative Susan Schwab says.

"We have already signaled our willingness to put an enormous amount of market opening and subsidy discipline on the table in the context of an agreement," Schwab said in a speech to the Washington International Trade Association.

"The question now is whether these developing countries will reciprocate," she said, referring to India, Brazil, China and others forecast for strong growth in coming years.

Schwab and 30 to 40 other top trade officials from around the world are headed to Geneva this weekend in the hope of reaching a breakthrough on agriculture and manufactured goods trade in long-running world trade talks.

World Trade Organisation Director General Pascal Lamy has called the meeting, scheduled to formally begin on Monday and to potentially run for six days, the "moment of truth" for the Doha round, now in its seventh year.

The United States has been under pressure in the talks to cut its spending cap on trade-distorting farm subsidies to around $US13 billion, which because of high prices and other factors is more than it spends currently.

Still, US farmers say they are being asked to give up more in government support than they would receive in new export income because many developing countries do not want to open their markets.

Schwab did not say how far the United States was prepared to cut its current WTO-cap on farm subsidy spending to reach a deal. Instead, she said the fate of the round largely depend on how much major developing countries like China, India and Brazil are willing to open their markets.

At the same time, more than 80 of the WTO's poorest members would either not have to make any market openings or make only very small ones, Schwab said.

"The hardest part, in many ways, in concluding a deal is knowing when to close it," Schwab said. "In a few days, that's what we will be aiming to do and we know it will take more than US leadership."

Many US farm group representatives will be in Geneva next week for the talks, and key lawmakers like Senate Finance Committee Chairman Max Baucus, a Montana Democrat, will be watching from afar.

Baucus, like many other farm state lawmakers, has long insisted other countries must offer significant new market openings if they want the United States to sharply cut its spending cap on trade-distorting subsidies.

"He is hopeful that the ministerial can produce an acceptable way forward, but still believes that no deal is better than a bad deal for US farmers, ranchers and firms," a Baucus aide said.

Agreement next week on key tariff- and subsidy-cutting formulas would accomplish a task that negotiators were originally suppose to do five years ago.

Even so, it is expected to take many more months of negotiations before a final deal could be reached.

"Unless substantial progress is made next week, we fear that the Doha round will flounder for the foreseeable future," Bill Reinsch, president of the National Foreign Trade Council, a US industry group, said in letters on Wednesday to developing country ambassadors in Washington.

"If, however, countries step up to the challenges and hard choices necessary ... there is an opportunity for substantial progress towards concluding negotiations in 2008 and completing the Round in 2009," Reinsch said.

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