GIVE YOURSELF THE EDGE:

U.S. breaks with tradition in putting its subsidies into play (Elizabeth Becker, 10/10/05, International Herald Tribune)

The U.S. proposal, which would cut contentious tariffs by 55 percent to 90 percent over five years and reduce some kinds of farm subsidy programs by 60 percent, shows that the administration is serious about this trade round: Bush is spending some of his dwindling political capital to attack the holy grail of farm subsidies.

But the political tradeoff could be big: Wall Street and many other American businesses have increased their lobbying power in Washington. They are desperate to get these talks to work so that new markets will be opened to U.S. business and trade. If the administration can crush farm subsidies, it will also reduce America's gaping budget deficit.

To be sure, that means answering farm state politicians in Congress who see Europe - not the United States - as the guilty party in the global farm debate. But to the outside world, the subsidies have become a rallying cry to eliminate poverty - and farm subsidies are considered one of the worst evils.

The so-called Doha round of trade talks is meant to help developing nations by improving the access for their goods to wealthy markets, and agriculture is the crucial issue for those whose farmers are being crushed by inexpensive food exported by farmers from rich nations who receive heftier subsidies. But that argument does not move many in Congress or the administration who are desperate to reduce U.S. farm subsidies to help whittle the deficit.

Indeed, it is this talk of fairness within the American farm community - and not bleeding hearts for impoverished African farmers - that could become the rationale for reducing farm subsidies.

The European Union gives its farmers huge subsidies, imposes higher tariffs and - worst of all in the view of the administration - closes its market to some of the United States' biggest farm exports. The ban on American beef from cows raised on growth hormones is just one that stirs strong feelings.

According to Bob Goodlatte, the Virginia Republican who is chairman of the Agriculture Committee of the U.S. House of Representatives, the only way to break the logjam is for the United States to negotiate greater market access for its products, not only in Europe but the big developing countries like Brazil and China.

"Our trading partners need to understand that we will do everything possible to ensure the competitive position of American farmers and ranchers," he warned recently. "However, we cannot unilaterally disarm and scrap our farm support programs without other countries doing the same thing at the same time."

To pull off this political hat trick, Portman will have to rely heavily on his personal popularity in Washington and his genial profile abroad.

Just another Revolution for the Lame Duck, but to win this one he should bring in Bono and Bob Geldof and use the anti-poverty campaigners to pressure Democrats and the Europeans to accept free trade.

EU faces pressure to open its farm markets after U.S. offer (Tom Wright, OCTOBER 11, 2005, International Herald Tribune)

The European Union came under pressure Monday to make new concessions to open its farm markets after the United States offered to cut agricultural subsidies to restart global trade talks. [...]

The U.S. trade representative, Rob Portman, pledged to cut some farm subsidies by 60 percent over five years. He also called for an "ambitious" reduction of import tariffs on agriculture products - which is considered a critical sticking point in global trade talks - of between 55 percent and 90 percent. Such reductions would disproportionately hit European markets, which are protected by much larger tariffs than those imposed by the United States.

Portman said it was now up to "those that subsidize more than the U.S." - referring to Europe and Japan - to move to open their protected farm markets to American agricultural products. "We are offering real cuts to U.S. farmers in exchange for market access," he said. "And if we are not able to achieve the market access, they cannot be supportive."

The EU trade commissioner, Peter Mandelson, called the U.S. move a "constructive step" and said Brussels would be willing to cut agricultural subsidies by 70 percent - higher than a previous offer to reduce them by 65 percent.

Posted by Orrin Judd at October 11, 2005 8:24 AM