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Issues facing WTO ministers in Cancun

(Monday, Sept. 8, 2003 -- CropChoice news) -- Jerry Hagstrom, DTN: CANCUN, Mexico (DTN) -- Trade ministers are scheduled to arrive in Cancun today and Tuesday for a World Trade Organization meeting, amidst increasing evidence that they face challenges to their agricultural agenda from a group of 20 poor countries led by Brazil.

U.S. Trade Representative Bob Zoellick, chief agriculture negotiator Allen Johnson and Agriculture Secretary Ann Veneman all pledged to push for more market access worldwide for U.S. products late last week. That means pushing both rich and poor countries to reduce the taxes on imports (tariffs) that make U.S. products too expensive for their consumers.

But the Group of 20 countries is planning a strategy session Tuesday to push its agenda of increasing poor countries' access to rich countries' markets without reducing poor countries' restrictions on imports. The poor countries argue they should not have to increase their imports of farm products from rich countries because that would hurt their farmers and cause social unrest and riots. They also argue that the farm subsidies in the United States and Europe create unfair competition for their farmers. The Group of 20 also insists that countries retain the right to self-certify themselves as developing countries, which allows them greater leeway in maintaining subsidies and import controls. Some European and American farmers now call Brazil and China "hypercompetitive" because they have become commercial agricultural exporters and still claim developing country status.

Brazil's decision to join with other poor countries such as China, India, the Philippines, South Africa and smaller countries in Latin America, makes it harder for the United States to prevail with its argument that all countries should reduce their tariffs and subsidies. Brazil is an efficient agricultural producer and U.S. producers of sugar, orange juice and soybeans have become very concerned about competition from that country. All the U.S. producer groups argue that Brazil subsidizes its production more than its leaders admit. But Brazil has also been a member of the Cairns Group of exporting countries that has often been aligned with the United States in agricultural trade negotiations. The Cairns Group, which includes Australia and Canada, agrees with the United States that all countries should reduce tariffs. But, when the poorer countries established their own group and positions in Geneva in August, they did not ask Australia to sign their proposal until after it was already written. At that point, Australia declined to sign it.

The conflict between the richer Cairns Group countries and the poorer countries goes to the heart of the history of agricultural trade development over the past quarter century.

Agriculture was mostly left out of the trade liberalization movement until the Uruguay Round that began in 1986. Trade theorists said that high tariffs on farm products and farm subsidies distort markets and keep farmers, particularly in poor countries, from benefitting from their competitive advantage in commodity production. But food production had become a highly regulated industry in most countries and politicians did not think it was worth going to the trouble of challenging farmers by reducing farm subsidies or reducing tariffs. However, the market-oriented Reagan administration decided to take up the challenge. In the Uruguay Round they offered to reduce or possibly eliminate U.S. farm subsidies if other countries would follow suit. Meanwhile, Australia, a strong producer of wheat, beef, lamb and sugar, had had its own farm programs, but had abandoned some of them as too expensive to maintain. In 1986, Australia organized the Cairns Group to push for free trade in agriculture in the Uruguay Round. The United States and the Cairns Group formed an alliance that achieved some reductions in tariffs and limitations on subsidies. But the reductions were achieved only after the United States and the European Union reached agreement on how to maintain basic subsidy programs. The Uruguay Round agreement also contained a provision that countries could not use animal and plant health safety laws to keep out foreign products -- a provision that Veneman, a Uruguay Round negotiator, has said was one of the round's most important achievements.

But since the Uruguay Round was completed in the early 1990s, the agricultural situation has become more complicated. American farmers were never satisfied with the Uruguay Round agreement because it called for percentage reductions in farm subsidies and the European Union started its reductions from a much higher level. Developing countries were never satisfied since the European Union, the United States, Japan and smaller developed countries were allowed to continue subsidies and tariffs. U.S. farmers have become increasingly frustrated over trade disputes with the European Union, Mexico and other countries.

When the Office of the U.S. Trade Representative submitted its agricultural proposal for the Doha Round, it made market access a central issue in the negotiations. But over the last few months it's become increasingly clear that other countries do not want to give increased access to U.S. products, even if they believe they should have increased access to the U.S. market.

The European Union has said recent reform of its Common Agricultural Policy should be enough of a commitment to free trade and that it needs to continue to accept products from its former colonies in Africa, the Caribbean and the Pacific (the ACP countries).

Whether the Cancun meeting achieves the goal of setting a framework for further agricultural trade liberalization or not, the meeting is likely to be an intellectual hothouse, with advocates of all forms of agriculture competing for media attention. The European Union has scheduled a "Sustainable Trade Day" Tuesday. It is expected to emphasize the European view that neither developed nor developing countries should expect to export as much as U.S. officials and farm groups have said. Mainstream U.S. agriculture groups have scheduled daily press events, with a reception Wednesday and an afternoon conference Saturday at which members of Congress may speak.

But activist groups that question globalization are likely to win more media attention. The Consumer's Choice Council of Washington, the Mexican National Commission for Knowledge and the Use of Biodiversity and the Heinrich Boell Foundation of Germany have scheduled an "ecolabeled" foods dinner Wednesday and a conference on "corn at the nexus of debates over trade, hunger, biotechnology and agricultural subsidies" Thursday.