*EPF409 07/25/2002
U.S. Unveils a Proposal Aimed at Reshaping Agricultural Trade
(Envisions elimination of tariffs and subsidies) (730)

By Andrzej Zwaniecki
Washington File Staff Writer

Washington -- The United States is proposing to make global trade in agricultural goods decisively more fair and free by slashing tariffs and eliminating trade-distorting supports, U.S. Trade Representative Robert Zoellick says.

During a July 25 news briefing Zoellick said the U.S. proposal, which will be presented at the World Trade Organization (WTO) talks in Geneva the week of July 28, will benefit U.S. farmers and consumers, the world's poorest nations and, eventually, the global economy. The comprehensive package, he said, is based on the objective of leveling the playing field for all countries, working towards the eventual elimination of all barriers to agricultural trade and growing the markets for world agricultural trade.

"If other countries agree with us that agricultural tariffs and subsidies are too high then we urge them to join us at the negotiating table," Zoellick said. "We are ready to cut if others step up to the plate too."

Outlining the U.S. plan in more detail, USTR Chief Agriculture Negotiator Allen Johnson said the U.S. proposal builds on the momentum created at the November WTO ministerial meeting in Doha, Qatar, and moves the process forward in two stages.

In the first phase, he said, the U.S. plan focuses on eliminating export subsidies over five years and harmonizing and equalizing all tariffs and trade-distorting domestic supports at substantially lower levels than currently allowed.

Johnson said that it also calls for ending special rights or privileges in export sales for state trading enterprises such as the Canadian Wheat Board, prohibiting export taxes on agricultural products, and strengthening disciplines on export credits.

He noted a wide disparity in the use of export subsidies between the European Union, which accounts for almost 90 percent of these supports used world wide, and the rest of the world.

In the market access area, Johnson said, the proposal urges the reduction of all agricultural tariffs through a formula that will cut higher tariffs more than lower tariffs, and calls for capping all tariffs at 25 percent at the end of a five-year period.

The proposal, if adopted, would result in the average U.S. tariff on farm products falling from 12 percent to 5 percent, he said.

In the domestic support area, Johnson said, the plan proposes to limit use of trade-distorting supports such as price supports and input subsidies to 5 percent of country's agricultural production value. Trade-distorting supports linked to production limitations would be included in the volume of trade-distorting subsidies capped under WTO rules.

He noted that this reform would result in global average agricultural tariffs falling from 62 percent to 15 percent and a global reduction of over $100,000 million of trade-distorting supports.

In the second phase, Johnson said, the proposal calls for WTO members to agree on a specific date for the elimination of all tariffs and trade-distorting domestic supports.

Zoellick said he believes that the United States can count on the support of the Cairns Group and developing countries for its proposal. He said he expects African as well as other poor countries to be pleased with the U.S. proposal because in the current system they cannot afford to subsidize their farmers and overcome the high tariffs of other countries. But he added they also are disadvantaged by their own high tariffs on imports from within the developing world.

The Cairns Group of agriculture-exporting countries includes Australia, Argentina, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia, Malaysia, New Zealand, the Philippines, Thailand and Uruguay.

In response to a question, Zoellick praised China for the constructive role it has played in the WTO since its accession. He said the United States needs to send China a strong message on the importance of that country's speedy compliance with WTO rules. But because "China will be feeling its way for a while" during the transition period, he said, the Bush administration will "try to work in a way that get results."

Zoellick said that U.S. Agriculture Secretary Ann Veneman, who presented the U.S. proposal at an international conference on farm trade in Japan, will next travel to China, where she will tackle the issues vital for U.S. farmers and other producers with representatives from an expanded range of ministries and offices.

(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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