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European Union

WTO Trade Talks: EU and US Propose Cuts in Financial Support to Farmers

Strategic Insights

— 1 min read

The United States and the European Union have proposed significant cuts in financial support to farmers, aiming to break a deadlock in the Doha Round of trade talks at the World Trade Organisation. The proposed cuts, amounting to billions of dollars, are seen as a positive step towards opening up markets in rich countries to produce from the developing world. However, development campaigners have dismissed the proposals as "smoke and mirrors" that would have little impact on the actual level of support and protection to rich-country farmers.

Key Takeaways:

  • The US has proposed a 60% cut in payments to farmers and a reduction in import tariffs on farm produce by between 55 and 90%.
  • The EU has proposed a 70% cut in its payments to farmers and either a 50 or 60% cut in the highest import tariffs, which start at 90%.
  • The proposed cuts are contingent on significant efforts by trading partners, with the US and EU trying to reallocate subsidies from the WTO's amber box to the green and blue boxes.
  • The actual spending on subsidies by the EU is lower than its permitted levels, at $44 billion compared to $67 billion.
  • Oxfam's Celine Charveriat argues that the US proposal would allow it to increase subsidies under its new plan, rather than cutting them significantly.
  • Development campaigners, including Oxfam, have dismissed the proposals as offering little real relief to poor farmers suffering from unfair US competition.
  • Some trade experts, such as Canadian Trade Minister Jim Peterson, welcome the proposed cuts as a positive start, but acknowledge that there is still a long way to go.

Statistics:

  • The proposed cuts in financial support to farmers amount to billions of dollars.
  • The EU's permitted subsidies level is $67 billion, but it actually spends $44 billion.
  • The US has implied that the EU starts from a much larger level of support, with American's AMS permitted subsidy level at $19.1 billion compared to actual spending of $14 billion.
  • The US and EU proposals are expected to be opposed by Japan and Switzerland, which protect their largely inefficient agricultural sectors.

Sources:

  • Celine Charveriat, Oxfam
  • Jim Peterson, Canadian Trade Minister
  • Rob Portman, America's trade representative
  • The Washington Post
  • The Times (London) CAPTION(S): The proposals involve big cuts to financial support to farmers, but some say they are not enough. Photograph by PATRICK FRILET / REX

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