Pressure mounts on US at WTO farm talks

EU Trade Commissioner Peter Mandelson and Brazilian officials have made US subsidy cuts a condition of slashing import tarrifs. Picture / Reuters.

WASHINGTON - The United States goes into a key world trade meeting next week under pressure from the world's trading nations to unblock gridlocked talks by offering deeper cuts to its farm subsidies.

It is a particularly uncomfortable position for Washington, which until recently appeared to be winning a public relations battle over which country was trying hardest to get a new World Trade Organisation pact.

Lauding its "ambitious" offer to cut its most trade-distorting agricultural supports by 60 per cent, the United States seemed to have Europe and developing countries such as Brazil on the defensive over their reluctance to meet Washington's exacting demands to slash their agriculture import tariffs.

But the tables have turned lately.

Critics have seized on a WTO analysis of the US farm proposal which they said shows Washington would have room to increase its overall spending on farm supports.

Meanwhile, European Trade Commissioner Peter Mandelson and top Brazilian officials have said repeatedly they will move, but only if Washington makes deeper cuts to its subsidies and provides more realistic market access suggestions.

"For the first time in a long while people are pointing at the US and saying it's selling empty proposals and has onerous demands on market access that are completely outside the parameters of what everybody else is talking about," said Catrin Smaller, trade expert at the Institute for Agriculture and Trade Policy in Geneva.

Even were it to offer a bigger domestic subsidy cut, Washington would struggle to scale back its market access demands, which it must deliver for big US agribusinesses if it is to get congressional support for any final deal, experts say.

Alarmed US commodity groups and farm lawmakers have loudly refused to give trade officials the mandate to make an extended offer.

"The US is in a corner," Smaller said. "What it comes up with will determine whether the round can finish this year."

The Doha Development round of talks was launched in 2001 with the aim of lowering trade barriers around the world to boost the global economy and lift millions out of poverty.

Ministers meet next week in Geneva to try to agree on a blueprint for farm and industrial goods. Failure would likely scupper chances of the round finishing in 2006, which could kill it completely as special US presidential powers to negotiate trade pacts expire next year and are not expected to be renewed by Congress.

White House National Security Adviser Stephen Hadley, travelling to Europe with President Bush told reporters on Tuesday: "What we really need is to see a response from the group of 20 countries and from the Europeans that is comparable to this offer.

"If they can move in that direction, we're going to be in the zone of getting an agreement by the end of the year."

- REUTERS