*EPF413 02/13/2003
House Leader Says U.S. Might Quit WTO Without Agriculture Reform
(Republican Thomas cites WTO vote looming in 2005) (530)

By Bruce Odessey
Washington File Staff Writer

Washington -- A Republican congressional leader on trade issues says Congress could vote to quit the World Trade Organization (WTO) unless WTO negotiations substantially reduce barriers to trade in agriculture.

Congress must vote on whether to stay in the WTO in 2005 -- 10 years after the WTO succeeded the General Agreement on Tariffs and Trade (GATT).

In the view of Representative Bill Thomas of California, chairman of the House of Representatives Ways and Means Committee, trade legislation in the closely divided Congress passes only with support from members of major agriculture-producing states, members unhappy to date with WTO results.

And right now, Thomas said, he had little optimism that the European Union (EU) would reduce its agriculture subsidies significantly during the WTO negotiations.

Thomas made the remarks at a February 13 forum organized by the American Enterprise Institute (AIE), a prominent Washington think tank.

A March 31 WTO deadline is looming for agreement on modalities, or specific details and time frames, for the agricultural negotiations. Agreement appears difficult -- a draft proposal released by Stuart Harbinson, chairman of the agriculture negotiations, was quickly denounced by the EU as too ambitious and by the United States as not ambitious enough. Harbinson's paper proposes phasing out export subsidies and reducing tariffs.

The U.S. proposal tabled in July calls for elimination of export subsidies, sharp reduction of domestic subsidies and lowering of average allowed tariffs from 62 percent to 15 percent.

Thomas criticized what he viewed as EU stalling on significant reform of its Common Agricultural Policy subsidies program and EU blocking imports of food produced with biotechnology that have been scientifically demonstrated to be safe. He also criticized the WTO dispute-settlement system as unbalanced with few countries besides the United States implementing decisions that go against them.

Without reforms of agricultural trade and dispute settlement as well as decisions based on sound science, Thomas said, "don't expect our vote to renew WTO."

Thomas said he expected Congress would implement in 2003 changes in U.S. law to comply with three WTO challenges successfully brought by the EU against the United States: a settlement on music copyrights, repeal of the 1916 Antidumping Act and repeal of export tax breaks (Foreign Sales Corporation, or FSC, and the successor Extraterritorial Income acts).

He said he welcomed the opportunity from the FSC decision to attempt major reform of what he views as outmoded provisions of U.S. tax code on international business. Later at the AEI session, Senator Max Baucus, senior Democrat on the Finance Committee, indicated he was leaning toward a less comprehensive solution than Thomas, including tax credits for research and development replacing the FSC export tax breaks.

Baucus said he had no doubt the United States would prevail in a WTO challenge to EU barriers to biotech food. He pressed the Bush administration to take such action arguing that so far it has given "too much weight to foreign policy considerations."

On another issue, Thomas criticized lack of French and German cooperation on Iraq but dismissed speculation that Congress would retaliate with trade sanctions.

(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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