USTR - Bringing Down the Barriers
                 
The Office of the United States Trade Representative

Bringing Down the Barriers
The U.S. is prepared to tackle its own trade-distorting policies on agriculture if others agree to do the same 06/26/2002

By Robert B. Zoellick
United States Trade Representative

The Financial Times, July 26, 2002
Copyright 2002 The Fiancial Times Limited

The US unveiled a far-reaching and comprehensive package of reforms for global agriculture yesterday. On Monday, we will present this initiative to other countries at the World Trade Organisation in Geneva.

Last November in Doha, the US pushed hard with the Cairns Group of
agricultural exporting nations and many developing countries to establish a strong mandate for freeing trade in agriculture. The new US proposal will provide fresh momentum and add specificity to what we achieved eight months ago. Given that progress on agriculture is the key to a successful Doha agenda, we believe that this energy can spur the new global trade negotiations.

The US agriculture proposal points to the next stage of reducing barriers to agricultural trade and, ultimately, to their elimination. Agriculture, which began to be subjected to comprehensive free trade disciplines only at the beginning of 1995, has lagged far behind the liberalisation achieved in other sectors. The compromise that at last incorporated agricultural trade into the new World Trade Organisation through the Uruguay round accepted many of the status quo barriers and subsidies. Restrictions to trade were turned into tariffs then capped, along with subsidies, at or near existing levels - with the US locked in with lower barriers than its principal trading partners.

The package of reforms that we are now introducing levels the playing field on the way to eliminating barriers altogether. By negotiating big cuts in tariffs and trade-distorting subsidies, it lays the foundation for growth in agriculture, lower prices for consumers and higher incomes for all.

First, we propose scrapping all export subsidies over five years. This is a
reform long demanded by developing countries, which rightly resent having to compete not only with internal agriculture supports but also with the lavish subsidies some developed countries use to pay others to buy their food. Second, we call for a drastic reduction in agricultural tariffs, cutting the average allowed global farm tariff from 62 to 15 per cent. Last, we propose reducing allowable trade-distorting subsidies by more than Dollars 100bn (Pounds 64bn) by setting a cap for each country of no more than 5 per cent of agricultural production.

The US is willing to tackle its own trade-distorting policies provided that
others agree to do the same. Our plan will require significant cuts in tariffs and trade-distorting subsidies for the US and even larger cuts for countries with higher tariffs and more subsidies. It is reasonable and fair to expect those that maintain the highest barriers to move furthest towards liberalisation. Even with these bold cuts, European Union subsidy and tariff levels would remain higher than America's - but we would have closed the gap substantially, and will continue to press to eliminate it.

Developing countries, which cannot afford high subsidies and are hampered by tariffs on their exports, will be particularly well served by our proposal. The US initiative would improve developing countries' access to developed countries' markets by slashing trade-distorting subsidies and tariffs. Developing countries need to cut their tariffs, too. We do these countries no favour by allowing them to be less-than-full partners in the WTO and maintaining high barriers to trade with one another.

Some may ask how the US agriculture proposal could be consistent with our recent farm bill. In fact, the farm bill is a key foundation of the aggressive stance we are taking at the WTO. As the Organisation for Economic Co-operation and Development has noted, the US farm bill "does not increase the level of support overall in any significant way compared to what it was in most recent years . . .and remains significantly below the levels of farm support granted by
the European Union".

The US will protect its national interests fully within established WTO rules - even as we work in concert with other nations to negotiate new rules to open markets much more.

We believe the timing of our proposal is particularly propitious because the European Commission has just recommended a proposal to reform the EU's Common Agricultural Policy. Even though the Commission's proposal does not cut spending and does not address market access or export subsidies, it does seek to move Europe away from trade-distorting subsidies.

The EU will of course calculate its agricultural polices to match its best
interest. Yet the Commission's reform seems to recognise that it is in the EU's interest to reform its agricultural policies if it is to admit new member states. Europe should also embrace substantial reform for its own sake: to lower prices for consumers, preserve the environment and build prosperity. And it is in our mutual interest to help developing countries by freeing trade in agriculture. Make no mistake: the US is committed to lead global agricultural reform. We challenge our trading partners to join us.