*EPF507 06/30/00
U.S. Announces New Agriculture Proposal for WTO
(Widespread support outside EU claimed for U.S. position) (900)
By Bruce Odessey
Washington File Staff Writer

Washington -- Clinton administration officials have announced a proposal for negotiating new global rules on agricultural trade, which they described as ambitious and aggressive.

Secretary of Agriculture Dan Glickman and U.S. Trade Representative Charlene Barshefsky briefed reporters in Washington June 29, the day before the U.S. delegation was scheduled to submit the proposal formally to the World Trade Organization (WTO) agriculture committee in Geneva.

Barshefsky said the proposal covered every major agricultural trade issue including market access, competition and domestic support.

She said a goal of the U.S. proposal is for farmers to compete against each other, not against foreign government treasuries.

"We call for substantial reductions or elimination of tariffs, expansion of remaining tariff-rate quotas, elimination of export subsidies, disciplines on the use of export restrictions on agricultural products, disciplines on state trading enterprises, simplification of rules applying to domestic support and establishment of a ceiling on trade-distorting support that applies equally to all countries," Barshefsky said.

She said it allowed certain special treatment for developing countries.

WTO negotiations in agriculture began in March 2000, as required by the 1994 Uruguay Round agreement, even though WTO members failed to launch a wide round at the December 1999 ministerial meeting in Seattle.

Barshefsky called attention to certain aspects of the U.S. proposal. First, she said, it would not reduce domestic support by an equal proportion in every participant; instead, it would require all participants to reduce their supports to a fixed ceiling calculated as a percentage of total agricultural production in their countries.

Second, she said, it would not exclude any product sector -- no one could remove a sensitive item from negotiation.

The U.S. proposal faces certain opposition in the European Union (EU), which has tabled its own proposal that would maintain direct payments to its farmers.

Glickman said, however, he sensed division in the EU on agricultural trade.

"We may be able to form alliances with parts of Europe," Glickman said.

Barshefsky cited a number of reasons that could help the U.S. position prevail. First, the 18-member Cairns Group of agriculture-exporting countries supports the U.S. proposal, as do most developing countries, which now view EU trade practices as harmful to them, she said.

Second, she said, the "peace clause" preventing WTO challenges to agricultural export subsidies expires at the end of 2003. Barshefsky said the more than $7,000 million in annual EU export subsidies could then become subject to WTO dispute settlement.

"That's a hefty chunk of change," she said.

Third, she said, unless the EU restricts the costs of its agricultural programs, accession by EU applicant countries "is out of the question" because of the expense.

Fourth, she said, WTO participants could find some tradeoffs for concessions in agricultural negotiations in services negotiations, which have also resumed, and industrial goods negotiations, for which many major trading countries are preparing.

At least some provisions of the U.S. proposal -- restrictions on state trading enterprises -- face certain opposition from other agricultural exporting countries such as Canada and Australia.

WTO agriculture negotiation participants have agreed to submit their initial proposals by December and take stock of their work in March.

The U.S. proposal would require participants to do the following:

-- reduce domestic support and set the same ceiling for all countries, based on a fixed percentage of total agricultural production over a fixed period. It would require annual cuts in support over a fixed number of years.

It would exempt support measures that have no or minimal trade-distorting effects as well as certain measures needed by developing countries. It would eliminate the existing exemption for trade-distorting measures claimed as necessary for reducing production.

-- eliminate export subsidies in annual stages over a fixed number of years.

-- substantially reduce or eliminate all tariffs, including in-quota duties, in annual stages over a fixed number of years and to reduce or eliminate disparities in tariff levels among countries. It would also eliminate a special temporary safeguard measure for restricting imports triggered by a certain volume of imports or drop in prices.

-- increase tariff-rate quotas annually over a certain number of years and establish disciplines on their use.

-- give special consideration to the least-developed countries in cutting tariffs.

-- reform import state trading enterprises, ending exclusive import rights and increasing transparency in their operation, including product quality decisions.

-- make procedures for approving sale of products developed through biotechnology or other new technology more transparent, predictable and timely.

-- reform export state trading enterprises, ending exclusive export rights and requiring WTO notification of acquisition costs, export pricing and other sales information.

-- prohibit use of export taxes as a competitive advantage.

-- complete negotiation of export credit rules in the Organization for Economic Cooperation and Development (OECD) as already required by WTO agreement.

-- enhance food security through a number of measures, including stronger WTO rules on export restrictions to increase the reliability of global food supply.

-- negotiate where possible elimination of tariffs in certain sectors and harmonization of tariffs at lower levels in others.

The text of the U.S. proposal can be found at www.fas.usda.gov.

(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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