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Negotiators Fail to Agree on Agriculture Subsidies

(Wednesday, April 2, 2003 -- CropChoice news) -- Elizabeth Becker, NY Times: WASHINGTON, March 31: Negotiators failed today to meet their deadline for figuring out how wealthy nations can reduce their huge agriculture subsidies, the issue at the heart of a current round of negotiations at the World Trade Organization.

The poorer nations were promised that this round of trade talks, named after Doha in Qatar, where they began in November 2001, would especially benefit them and require the first major reductions in what amounts to $300 billion a year in subsidies paid by the world's richest nations to their farmers.

The developing nations have said that if these subsidies are not scaled back, then the entire round of talks would be in doubt. That would jeopardize the opening of markets favored by the wealthy nations, especially in services like banking, telecommunications and information technology.

Supachai Panitchpakdi, the director general of the W.T.O., issued a statement today saying it was a "great disappointment" that the negotiators had missed today's deadline on agriculture, but he said he thought trade officials were committed to finding a compromise.

There is little disagreement that these subsidies are among the biggest trade barriers for poor nations. They are blamed for depressing world grain and fiber prices, for leading to the dumping of excess grain in wealthy nations and for undercutting farmers in developing nations. Because agriculture is often the one route out of poverty for some nations, the subsidies are seen as a chief reason for the growing disparity between the haves and the have-nots.

In dispute is how the two biggest providers of subsidies Europe and the United States will cut back the payments. If they can agree, then Japan, Korea and Switzerland are expected to follow.

Robert B. Zoellick, the United States trade representative, said today that he was disappointed in the deadlock but played down suggestions that this was another example of the widening gap between Washington and Europe during this time of war.

While noting there was "a lot of sensitivity" about trans-Atlantic relations, Mr. Zoellick said he was working very hard with his counterpart, Pascal Lamy, the European Union's trade commissioner. Mr. Zoellick praised the European Commission proposals to overhaul the community's agriculture.

"All of us face political difficulties in these negotiations," said Mr. Zoellick, referring to the missed deadline at the W.T.O. "We need to help one another work through them, seeking constructive solutions."

The European reaction was less muted. The countries of the European Union especially France have been criticized for being more attached to farm subsidies than the United States.

Franz Fischler, the agriculture commissioner for the European Union, said today that he, too, was disappointed and suggested that the proposal rejected at the W.T.O. required European farmers to make greater sacrifices than American farmers.

"If we are to make these substantial reductions to our tariffs and trade-distorting support, we need, and want, our partners to go down this same road," Mr. Fischler said.

The European Union subsidizes its farmers in a different fashion, placing a stronger emphasis on environmental concerns and relying heavily on export subsidies for their producers.

The United States has almost no export subsidies and has proposed cutting subsidies to 5 percent of the value of farm production. Yet the 2002 farm bill signed by the administration drastically raised permanent subsidies. Moreover, trade negotiators are asking for an end to much of the nonemergency food aid given by the United States, which they say is a disguised form of dumping.

The final deadline for serious negotiations on agriculture and the other outstanding issues of this round is this September, when the trade ministers meet in Cancún, Mexico.

By missing today's deadline, negotiators are compiling a growing backlog of critical issues.

The W.T.O. failed to meet its December deadline to agree on a trade deal that would help developing nations fight AIDS, tuberculosis, malaria and other diseases. But the United States, with the strong approval of the American pharmaceutical industry, exercised the veto that every nation possesses and stopped the deal. Negotiators say they fear that a compromise will have to wait until September.

Even though nations have yet to agree on a formula for reducing farm subsidies and opening markets for agriculture products, the campaign against subsidies has been hitting its mark, propelled by human rights groups, the United Nations and even the World Bank.

President Jacques Chirac of France promised African leaders this month that he would suspend shipments of subsidized grains to their continent.

But this was seen as a gesture, not a solution, for countries that have been told to climb out of poverty through trade, not foreign aid. They have then found that the free trade of food, the one commodity they all produce, is hampered by subsidies, tariffs and export subsidies for farm products.

Mr. Zoellick is credited with pushing the reform of the trade rules for agriculture at Doha. Trade negotiators say, however, that they are worried that the agreement is too vague, promising "substantial reductions in trade-distorting domestic support" that can lead to many interpretations.

At a news conference today, Mr. Zoellick said these hurdles were not insurmountable, especially because he considered the chance to reduce subsidies a "once in a generation opportunity."

"Trade cannot promote the development of countries across Latin America, Africa and Asia without much freer movement of farm products," he said.