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U.S. Ready to End Agricultural Subsidies, Negotiator Says

The United States is ready to eliminate subsidies of agricultural exports and export credit programs, says Peter Allgeier, Deputy U.S. Trade Representative.

In a May 17 statement to the World Trade Organization (WTO) General Council, Allgeier said the United States welcomes the European Union's (EU) recent indication that it foresees agreement with other countries on eliminating export subsidies by a certain date.

Such an agreement would help get WTO trade negotiations "back on track for significant progress" during the remainder of 2004, Allgeier said. The negotiations stalled in 2003 over such issues as agriculture, nonagricultural goods, services and trade facilitation for developing countries.

Allgeier said the United States is willing to negotiate with the EU and other trading partners a plan to achieve more global agricultural market access. Blending various market access proposals into a single proposal that can be agreed to by WTO members "is the most urgent task facing us in the next 10 days," he said.

The next round of agricultural negotiations is scheduled for early June.

Negotiations on tariff reductions and eliminating nontariff barriers are scheduled for July.

Allgeier said the United States encourages the advancement of more proposals from countries on ways to improve global competitiveness in services, which account for the largest portion of economic activity in both developed and developing countries.

Speaking of the development focus of the WTO negotiation agenda adopted in Doha, Qatar, in 2001, Allgeier said trade leaders should "find the right balance" among achieving the overall goals of the negotiations, being sensitive to the development needs and constraints of poor countries, and finding a way to integrate developing countries into the world trading system.

Following is the text of Allgeier's prepared statement:

Office of the U.s. Trade Representative

Statement by the United States
before the WTO General Council
May 17, 2004

[Deputy U.S. Trade Representative Peter Allgeier]

In recent weeks we have perceived a growing tendency toward common ground on both the objectives and the content of a meaningful framework package for the DDA [Doha Development Agenda] by the time of the summer break.

It was particularly noticeable at last week's meetings of the OECD [Organization for Economic Cooperation and Development] Members and the various developing countries that participated in events at the OECD and in informal gatherings at the time of the OECD.

This is especially important at this time when we face a strategic economic opportunity, namely, to contribute -- through ambitious multilateral trade liberalization -- to the expansion and deepening of economic growth stemming from the resurgence of economic growth in the United States and strong growth in China, India and on the part of some of the countries in East Asia.

Developing countries especially need to be plugged into strong economic growth-through significantly improved access to major markets, in both developed and developing countries and through the reinforcement of domestic economic reforms that occurs through trade liberalization.

We must put the negotiations on track for significant progress during the rest of this year. In order to do that, we must have a clear and intense focus on those subjects that will help us most to move forward. It's not that we would jettison other topics of importance to various countries. It's simply that we cannot get to second base or third base, if we don't manage to get to first base.

Right now -- in the next several weeks -- getting to first base involves developing frameworks for the core market access issues of agriculture, non-agricultural goods, and services, as well as developing modalities for the negotiation of trade facilitation. And we need to ensure that we send positive messages on the importance of suffusing development considerations throughout our work.

Agriculture:

It is universally recognized that agriculture is the most critically important element in the DDA negotiations and that we must address effectively all three pillars of the agricultural structure.

Not only is the United States committed to obtaining historic reform in each of these three pillars, but we are beginning to perceive the outlines of a consensus framework for the negotiations on agriculture.

Let me briefly sketch out our perceptions:

In export competition, we welcome the indication from the European Union that it foresees agreement on the elimination of export subsidies by a date certain.

This would be an historic achievement. We are ready to make our contribution to this historic achievement by eliminating, in parallel to the elimination of classical export subsidies, the subsidy element in export credit programs and to discipline the use of food aid to ensure that it is used only for legitimate humanitarian purposes and does not interfere with commercial sales.

Of course, we would expect others to contribute by parallel discipline on trade-distorting practices such as monopoly export state trading enterprises and differential export taxes.

It also appears that we are getting closer to a framework for reining in, on the way to elimination of, trade-distorting domestic supports. We believe it is within our collective grasp to define a framework in this area that would enable us to achieve substantial cuts and policy reforms that will be far superior to what was achieved in the Uruguay Round.

It is in the third pillar of agriculture -- market access -- that we have the most work to do in the next few weeks. We must develop this framework at the same level of detail as the other two. The United States put forward an ambitious formula proposal that was deemed to be too ambitious by many countries. Together with the European Union we subsequently proposed a blended formula approach, which has been criticized by a group of countries. We are not wedded to our specific proposals, but it is the responsibility of the critics to put forth their suggestions on how to achieve ambitious market access results in agriculture. We all need such proposals in advance of the next round of agricultural meetings in early June. We are encouraged by the commitments in Paris by countries from the G-20 [Group of 20] and the Cairns Group to provide such proposals in that timeframe. In our view, this is the most urgent task facing us in the next 10 days.

Non-agricultural Market Access:

Obtaining a framework for negotiations in market access for industrial goods is equally important to achieving our goal of spreading and deepening economic growth and to contributing to development.

There appears to be a general understanding that we have identified the core elements that are needed to move forward to refine the framework. Those elements include: a non-linear formula for tariff cuts; sectoral negotiations, probably employing a "critical mass" approach, such as was used in the Information Technology Agreement; effective treatment of non-tariff barriers; and appropriate treatment of recently acceded members (RAMs).

As in agriculture, we need to achieve the proper balance between ambition and sensitivity to countries' concerns, particularly the issues relevant to developing countries.

Trade Facilitation:

To fully gain the results of tariff reductions and the elimination of NTBs [non-tariff barriers], we should launch negotiations in July on trade facilitation. There appears to be a convergence of opinion in favor of this. We need to move forward in developing modalities that will enable all of us to achieve real benefits in this area.

Services:

In services, which account for the majority of economic activity in both developed and developing countries and which are intimately related to all our countries' competitiveness in the global economy, we need to encourage more countries to make offers as well as to improve the quality of many countries' offers.

Development:

As I mentioned at the beginning of this intervention, the development considerations must permeate all of our work, especially in these vital areas of market access.

The challenge is to get right the balance among three factors: (1) the overall ambition in the negotiations; (2) a truly operational sensitivity to the real development constraints and needs facing the developing countries; and (3) a reliable pathway for the ultimate integration of developing countries into the world trading system.

This is a very sensitive and complicated issue, given the great diversity in the circumstances and levels of development among the developing countries.

We are prepared to work with countries to find the right balance. Some suggestions have been made recently on this subject. If others wish to work on such approaches, we are disposed to do so. The negotiations should not result in excessive burdens on the poorest and most vulnerable developing countries. For such countries, in our view, some of the core elements should be to complete the binding of their tariff schedules and to participate in the negotiations on trade facilitation. Successful results in the latter would contribute enormously to countries' attractiveness to investors -- both foreign and domestic -- who are trying to tap into the global sourcing network.

While giving confidence to the poorest developing countries that the requirements of the final DDA results will not be excessively burdensome for them, we should encourage and support those developing countries who want to employ the power of trade liberalization in reinforcing their domestic reform programs. This support and encouragement involves both trade capacity building and the provisions of the negotiations themselves.

Conclusion:

The areas that I have addressed certainly do not constitute an exhaustive list of the possible DDA results, or even the limits of the work that faces us between now and the end of July. Indeed, we need to develop a pragmatic way to reflect, in our July results, the ongoing work on the other topics. We recognize that there are other topics of importance to countries. But at this point, we are trying to focus attention on the core areas that would have the greatest impact on all of the Members' economies and without which it is inconceivable that we could complete the Doha Development Agenda.

There should be no doubt that the United States is committed to continue to play our leadership role, in collaboration with the entire membership, in the coming months to achieve an effective framework package by the end of July, so that the negotiations can proceed to their next stage immediately following the summer break.