*EPF412 06/29/00
U.S. Agricultural Trade Reform Proposal Presented at WTO
("Simpler, fairer" domestic support approach offered (670)
By Wendy Lubetkin
Washington File European Correspondent

Geneva -- The United States has submitted a comprehensive agricultural reform proposal at the World Trade Organization (WTO) that calls for elimination of export subsidies, reform of domestic policies and substantial reductions in tariffs.

Greg Frazier, special trade negotiator for agriculture and food policy, said the United States wants to set benchmarks for the next round of agricultural trade negotiations that are "bold, comprehensive."

The package includes not only familiar, longstanding U.S. proposals -- such as eliminating export subsidies -- but also new proposals on some issues, Frazier told reporters in Geneva June 29.

In particular, a new approach to limits on domestic supports for agriculture would simplify the complicated "colored box" approach adopted at the conclusion of the Uruguay Round and replace it with a "simpler, fairer" approach.

"Domestic support is probably the one area that is the most new in the U.S. proposal," Frazier said. "It is also one of things that is going to generate the most attention and perhaps the most controversy."

Under the existing approach, spending that distorts trade goes in the amber box and must be reduced. Spending that does not distort trade goes in the green box and need not be reduced. Spending that distorts trade but is required to limit production goes in the blue box and need not be reduced.

"We remain deeply concerned about the disparities in domestic programs which go to agriculture, particularly those programs which we consider and believe are in fact trade distorting," Frazier said. "You go back home and to you talk to farmers and they say, 'What is this green box? What is this blue box? What is this amber box?' People need to have confidence in the system; they need to understand it. It needs to be simple and needs to be easy to explain."

The U.S. proposal "gets rid of the boxes" and proposes two categories of domestic programs: exempt programs, those considered non-trade distorting, and non-exempt, those considered trade distorting. The non-exempt category would be subject to a reduction commitment following the next round of talks.

"Put simply, farmers ought to be competing against farmers, and not against treasuries," Frazier said. "And so what we have designed in our program is to put a ceiling on the non-exempt spending."

Under this proposal, each country would be permitted to spend on trade-distorting programs up to a fixed percentage of its total agricultural production, he said.

"So at the end of the day, we would in fact have a level playing field. We don't have a level playing field right now," he said. "We think that is one of the main problems that needs to be addressed."

Criteria for the two new categories would be defined in WTO negotiations.

Some reporters characterized the U.S. proposal as aimed at alleged EU abuse of blue box subsidies. Frazier said the U.S. proposal "is not an attack on Europe [or] anyone else."

He said the Office of the U.S. Trade Representative (USTR) consulted extensively with agricultural interests and with members of Congress to forge a solid political and business coalition to back the proposal.

"Now I am not saying that everybody in American agriculture is 100 percent behind this and doesn't have some questions or concerns about certain elements," he said. "But we do have a broad coalition, an extremely broad coalition of American agriculture behind it."

The U.S. proposal was made available to WTO members earlier this week in Geneva prior to formal presentation to the Special Session of the WTO Committee on Agriculture meeting June 29-30 at WTO headquarters.

The Committee on Agriculture comprises all members of the WTO and oversees the implementation of the Uruguay Round reform program for trade in agriculture.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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