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European Union

US Offers to End Farm Export Subsidies, Slash Domestic Subsidies in Trade Talks Bid

Strategic Insights

— 1 min read

In a last-ditch effort to revive the Doha round of trade talks, the US has offered to eliminate farm export subsidies by 2010 and slash domestic subsidies by more than half in five years. The proposals, announced by US Trade Representative Rob Portman, aim to address the contentious issue of agricultural subsidies, which has been a major sticking point in the talks. The EU has long been demanding deeper cuts in US farm subsidies, which are seen as distorting world trade.

Key Takeaways:

  • The US has offered to eliminate farm export subsidies by 2010, a deadline demanded by the Group of 20 developing countries and some European leaders, including Tony Blair.
  • The proposed cuts in domestic farm subsidies would be 60% higher than the 55% reduction the EU was demanding from the US.
  • The US suggests halving a ceiling agreed last year on farm subsidies regarded as less distorting of trade, while retaining "counter-cyclical payments" that compensate farmers for low prices.
  • The US proposals are designed to put the ball back into the EU's court by offering cuts demanded by EU Trade Commissioner Peter Mandelson.
  • The concessions are part of efforts to break the deadlock in the Doha round of trade talks, which aims to liberalize trade between developed and developing countries.
  • The US plans to discuss its proposals at a meeting of trade ministers in Zurich next week, with a crunch ministerial meeting of the World Trade Organisation scheduled for Hong Kong in November.

Statistics:

  • 2010: The proposed deadline for eliminating farm export subsidies.
  • 60%: The percentage reduction in domestic farm subsidies proposed by the US, higher than the 55% reduction demanded by the EU.
  • 55%: The reduction in domestic farm subsidies demanded by the EU from the US.
  • $20km: The value of annual farm subsidies in the EU.
  • 84%: The percentage of global farm subsidies provided by developed countries, including the US and EU.
  • 16%: The percentage of global farm subsidies provided by developing countries.
  • November: The date of the crunch ministerial meeting of the World Trade Organisation in Hong Kong.

Sources:

  • "The Financial Times", Rob Portman, US Trade Representative, "Writing in the Financial Times, Rob Portman offers to eliminate farm export subsidies by 2010..."
  • "Estonia, Latvia, and Lithuania take force" (no date given)
  • "Clash sparks reform hopes", Page 9 (no date given)
  • "Rob Portman, Page 19 (no date given)
  • "Hunger for barriers, Page 20 (no date given)

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