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10 October 2005
U.S. Offers Plan on Agriculture for Hong Kong Trade Talks
Two-stage proposal aimed at breaking deadlock in multilateral negotiations
U.S Trade Representative (USTR) Rob Portman October 10 outlined a plan on agriculture subsidies designed to end a stalemate on multilateral trade negotiations.
“Our ambitious initiative demonstrates a seriousness of purpose,” Portman said in statement released in Zurich, Switzerland. “The United States is committed to breaking the deadlock in multilateral talks on agriculture, and unleashing the full potential of the Doha Round.”
The lengthy trade negotiations stalled almost from their 2001 launch at Doha, Qatar, over agriculture. Trade ministers at the July 2004 World Trade Organization (WTO) General Council meeting appeared to break the stalemate by agreeing on a framework for conducting the agriculture negotiations, but since then talks essentially have stalled again.
In spite of the apparent stalemate, Deputy U.S. Trade Representative Peter Allgeier told a WTO Trade Negotiations Committee in Geneva in July that the United States remained committed to finding compromises that would move the Doha Development Agenda toward an agreement on both industrial trade and agricultural trade. (See related article.)
In September, Portman and European Union Trade Commissioner Peter Mandelson met in Washington in an attempt to find common ground on the sensitive agricultural issues that have stalled the Doha round almost since it was launched in 2001. (See related article.)
Trade ministers are scheduled to meet December 13-18 in Hong Kong to continue work.
“The U.S. proposal is offered in earnest,” Portman said. “We are ready to make meaningful changes to American farm programs provided our trading partners deliver tangible market access for U.S. agricultural exports and our offer is also met by substantial reductions in trade-distorting measures, with deeper cuts by the biggest trade subsidizers.”
The U.S proposal is a two-stage plan. The first stage would involve substantial reductions of trade-distorting agricultural support measures and tariffs, along with the elimination of export subsidies, to be phased in over a five-year period. In stage two, which would take effect five years after implementation of stage one, an additional five-year phase-in period would deliver the elimination of remaining trade-distorting policies in agriculture.
“Our time is short,” Portman said in the Zurich statement. “I urge all of us to redouble our efforts and maximize the nine weeks left before the WTO Ministerial in Hong Kong.”
A policy brief summarizing the proposal is available on the USTR Web site.
For additional information on U.S. trade policy, see USA and the WTO.
Following are the USTR press release announcing the proposal and the text of the proposal:
(begin text)
United States Office of the Trade Representative
U.S. Offers Bold Plan on Agriculture to Jumpstart Doha Round Ambitious Initiative Demonstrates Seriousness of Purpose, Says Portman
10/10/2005
ZURICH – Today, the U.S. Trade Representative outlined a bold plan on agriculture to jumpstart multilateral trade negotiations known as the WTO’s Doha Development Agenda. With this proposal, Ambassador Rob Portman advocated for the adoption of President Bush’s vision of a tariff free world, and offered a specific plan on agriculture to help achieve this goal.
“Our ambitious initiative demonstrates a seriousness of purpose. The United States is committed to breaking the deadlock in multilateral talks on agriculture, and unleashing the full potential of the Doha Round,” Portman said.
“The U.S. proposal is offered in earnest,” he noted. “We are ready to make meaningful changes to American farm programs provided our trading partners deliver tangible market access for U.S. agricultural exports and our offer is also met by substantial reductions in trade-distorting measures, with deeper cuts by the biggest subsidizers.”
“Our time is short. I urge all of us to redouble our efforts and maximize the nine weeks left before the WTO Ministerial in Hong Kong,” Portman added.
The U.S. proposal ensures substantial reductions of trade-distorting support measures and tariffs, along with the elimination of export subsidies. In a first stage, WTO Members would phase-in deep cuts in trade-distorting support and tariffs, thereby creating effective new market access opportunities and reforms of subsidy policies. After a period of consolidation, an additional phase-out period would deliver on the elimination of remaining trade-distorting practices in agriculture.
(end statement)
(begin proposal)
Office of the United States Trade Representative
U.S. Proposal for WTO Agriculture Negotiations
10/10/2005
The United States proposes ambitious results in all three pillars of the agriculture negotiations: export competition, market access, and domestic support. The U.S. proposal is contingent on comprehensive reform in all pillars and meaningful commitments by all members, except the least developed countries. Special and differential treatment and other provisions of the July 2004 Framework will be developed in the negotiations to complement the elements below.
Timing
- Two stage process: initial stage of significant reductions in tariffs and trade-distorting domestic support, and elimination of export subsidies, followed by a second stage of reductions culminating in the full elimination of remaining tariffs and trade-distorting domestic support.
- First Stage: tariff and subsidy reductions would be phased-in over 5 years.
- Interlude: reductions pause for five-year period for review of effects of first stage reforms.
- Second Stage: Unless Members agree to change course, further tariff and trade-distorting domestic support reductions would begin after the interegnum, culminating in the total elimination of remaining measures after a 5-year phase-in period, which include safeguard mechanisms to assist transitional adjustment.
Domestic Support
- Amber Box: 60% reduction in the total Aggregate Measurement of Support (AMS) for the United States.
- AMS cuts will be based on harmonization principle agreed to in the July 2004 Framework, requiring the deeper cuts by the larger subsidizers. Cuts will be based on the following parameters:
| Bound AMS level (billion U.S. dollars) | Reduction |
| $25 - | 83% |
| $12 - $25 | 60% |
| $0 - $12 | 37% |
- This provides for a more equitable balance by reducing the disparity in allowed AMS between the United States and the EU from a ratio of 4:1 to a ratio of 2:1.
- Blue Box: Cap on “Blue Box” programs at 2.5% of the total value of agricultural production, instead of 5% as set in the July 2004 Framework.
- de minimis: product-specific and non-product-specific de minimis cut by 50%.
- Product-specific caps: establish product-specific AMS cap on 1999 – 2001 base.
- Overall reduction in trade-distorting domestic support: substantial reductions in the sum of the allowed level of the amber box, blue box, product-specific de minimis, and non-product-specific de minimis based on the following parameters:
| Overall allowed level (billion U.S. dollars) | Reduction |
| $60 - | 75% |
| $10 - $60 | 53% |
| $0 - $10 | 31% |
- Green Box: no material changes in Green Box, specifically no expenditure caps.
- Litigation protection (“peace clause”) for subsidy programs that stay under the new limits or conform to “green box” criteria.
- Special and Differential Treatment. Slightly lesser reduction commitments and longer phase-in periods for developing countries to be determined when base parameters for developed country commitments established. Review of “green box” criteria to specify inclusion of non-trade-distorting development policies.
Market Access
- Balancing the new proposal on domestic support, substantial reductions will be made in tariffs, yielding deeper cuts on higher tariffs as established in the July 2004 Framework, through a progressive formula based on the following parameters:
Developed Countries Developing Countries
| Tiers (%)` | Cuts at … | Tiers (%) | Cuts at … | ||
| … beginning of tier | … end of tier | … beginning of tier | … end of tier | ||
| 0 – 20 | 55% | 65% | 0 – 20 | a | b |
| 20 – 40 | 65% | 75% | 20 – 40 | b | c |
| 40 – 60 | 75% | 85% | 40 – 60 | c | d |
| 60 → | 85% | 90% | 60 → | d | e |
Cap: 75% Cap: x%
- Minimal number of “sensitive products” subject to lesser tariff reductions: 1% of tariff lines, with full compensation via TRQ expansion.
- Meaningful access provided for priority products in key markets through the agreed formula, sectoral initiatives, and bilateral negotiations.
- Developing countries will be subject to slightly lesser reduction commitments and longer phase-in periods to be determined when base parameters for developed country commitments are established. Developing countries must make meaningful commitments which reflect their importance as emerging markets.
- As outlined in the July 2004 Framework, establishment of Special Safeguard Mechanism and Special Products for developing countries to provide transitional protection from import surges while still providing meaningful improvement in market access.
Export Competition
- Export Subsidies: rapid elimination, no later than 2010 for all products with accelerated elimination for specific products.
- State Trading Export Enterprises: elimination of monopoly export rights, termination of special financial privileges, and greater transparency.
- Food Aid: broad discretion for donors to meet needs in emergency situations and low income countries, tighter disciplines to deal with other situations, but no requirement for “cash-only.”
- Export Credits: bring government programs in line with commercial terms to prevent export subsidy.
- Differential Export Taxes: end discriminatory tax levels across exported products.
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(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
