03/22/05 Subsidy debate and world trade, Finale

While there is pressure on Congress from within the U.S. ag community to not allow cuts in farm program payments, there is pressure by much of the world on the U.S. to reduce or eliminate such programs as part of world ag trade reform negotiations. Some analysts say the dramatic cut in farm payment programs proposed under President Bush's 2006 fiscal year budget was a signal sent to those nations to show we are serious about subsidy reductions and forwarding world ag trade discussions. More pressure from the world on this issue came when the World Trade Organization upheld a European Union complaint against the U.S. cotton payment program. Such a ruling is believed to have greater implications on the future of U.S. farm subsidies, especially those that exceed W.T.O. rules. Much of the pressure comes from a group of twenty-one developing nations. It was these same nations that upset the apple cart at World Trade Organization ag trade reform negotiations in Cancun almost two years ago. Their contention is that if we have to give up some of our tariffs to allow greater market access, then developed nations like America, the European Union, and Japan must do the same. In fact, many of the more vocal nations are as bold as to say they deserve special and in differential treatment. Now the U.S. is quick to point out that before it plans to cut any of its cotton subsidies, or for that matter, quite a few of its ag payment programs, it would like to see the developing nations do the same. Agreeing with the U.S. stand is World Bank Economist Kym Anderson. ANDERSEN: Turns out that the developing countries would not have to cut their actual tariffs very much if they were to fully engage in this round as distinct from what they would do if they invoke special or in differential treatment. It seems to me there's nothing for them to lose and there's a lot for them to gain, because if they were to forgo that preferential treatment, they could argue for more market access from the rich countries and or more compensation for tariff erosion. And in addition, just how did powerful economic nations like Brazil, India, and China become "developing" nations? By their own determination under world trade rules. And it is a point that U.S. Trade Analyst Charles J. O'Mara says needs some major clarification to resolve the dispute over the special and in differential treatment rules. O'MEARA: My judgment in fact the rule should be established for which there is criteria that determine developing country status.