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Doha Talks: Twists & Turns

Reuters writer Jonathan Lynn reported on Friday that, “Trade diplomats gave a guarded response on Friday to a U.S. offer to slash its maximum farm subsidies but the mediator of the World Trade Organization (WTO) agriculture talks said he saw significant progress.

“‘There are real negotiations going on,’ said New Zealand’s WTO ambassador Crawford Falconer, who chairs the agricultural negotiations.

The Associated Press reported on Friday that, “U.S. President George W. Bush is likely to meet Brazilian President Luiz Inacio Lula da Silva in New York next week in what could be an important encounter for the WTO’s six-year drive to conclude a new global trade pact.” The two leaders met at Camp David back in March, where Doha was also discussed. (White House Photo).

Mr. Lynn indicated that, “Falconer told reporters he was ‘reasonably confident’ other trading powers would conform to the ranges of subsidy and tariff cuts he proposed in a July negotiating text, following Washington’s indication that it would do so this week.

“‘They are arguing about what might work,’ he said.”

The article noted that, “Negotiators have been focusing on agriculture since the beginning of September, when talks resumed in Geneva after a month-long break during which diplomats mulled over proposals from Falconer and his industrial goods counterpart meant to help bring the nearly six-year-old talks to a conclusion;” and, the article reiterated that, “The long-stalled agriculture negotiations got a boost this week when the United States agreed for the first time to cap its trade-distorting farm subsidies in a range proposed by Falconer.

“That offer is dependent on other countries also accepting the ranges suggested in the July text, for instance on tariffs.”

An article posted yesterday at the MercoPress Online included this quote from Ambassador Falconer, “‘There’s been some tangible progress — not enough to warrant me to bring the champagne out of the cellar, but enough for me to check whether there is champagne in the cellar,’ he told a meeting of WTO delegates, according to a participant.”

However, an article posted yesterday at The Hindu Online (India) noted that, “The latest US offer to cap its trade distorting farm subsidies between 13-16.4 billion dollar a year is not likely to find favour with India, which feels ‘it is the first phase of a drawn-out battle’ between rich and poor countries in the Doha Round of talks.

“‘The US has not offered much and there is still a long way to go,’ a senior official associated with the current round of trade talks in Geneva said here.”

Interestingly, DTN writer Chris Clayton reported on Friday (link requires subscription) that, “While the Senate Agriculture Committee is preparing to write its draft of the 2007 farm bill, the Bush administration has not briefed either Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, or [Ranking Member Saxby Chambliss (R-Georgia)] on the details of any new WTO proposal by the administration, the senators’ staffs told DTN Friday afternoon.

“Acting Agriculture Secretary Chuck Conner declined Thursday to answer questions about the administration’s trade negotiations in Geneva this week.”

Meanwhile, the Associated Press reported on Friday that, “U.S. and European Union trade officials said Friday they hope recent progress in World Trade Organization talks to reduce farm tariffs and subsidies will persuade major developing countries such as Brazil and India to open up their manufacturing markets.

“U.S. President George W. Bush is likely to meet Brazilian President Luiz Inacio Lula da Silva in New York next week in what could be an important encounter for the WTO’s six-year drive to conclude a new global trade pact.

“The two leaders would be joined by their top trade negotiators, U.S. Trade Representative Susan Schwab and Brazilian Foreign Minister Celso Amorim, according to U.S officials.”

More specifically, the AP article indicated that, “U.S. Ambassador Peter Allgeier said he hoped Washington’s commitment to negotiate within the ranges of a draft WTO agriculture agreement would prompt Argentina, Brazil, India and others to make a similar commitment on a parallel WTO proposal for cutting industrial tariffs.

“‘We haven’t seen that yet,’ Allgeier told The Associated Press at the WTO’s Geneva headquarters.

“E.U. Ambassador Eckhart Guth said the U.S. move represented a step forward and added that he was optimistic ‘progress in agriculture will also trigger progress in other areas,’ a reference to talks on industrial commerce that will restart in earnest next week.”

An article posted at The Economic Times Online (India) on Friday, noted that, “Brazil welcomed on Friday the US’ agreement to negotiate on the basis of a WTO proposal to cut farm subsidies as a ‘step forward’ in foundering global trade talks.

“‘It is a good step forward,’ said Foreign Minister Celso Amorim. ‘My reading is much like that of the (WTO) director general — that negotiations can wind up rapidly with goodwill,’ Amorim said, before leaving Manaus to visit Haiti.

“Brazil and India head the Group of 20 emerging countries, which is pushing the US and the European Union to open their markets to agricultural exports from developing countries by cutting tariffs and farm subsidies.”

For more background on Brazil, including issues associated with biofuels, Alexei Barrionuevo reported in Sunday’s New York Times that, “But as [Brazilian President Luiz Inácio Lula da Silva], now in his second term, sat down for a 75-minute interview here in the presidential palace, those worries hardly seemed to faze him. He was nothing but upbeat, and with good reason.

“Despite the controversies, Mr. da Silva’s approval rating hovers above 60 percent. Brazil, Latin America’s largest economy, has grown by 3.5 percent a year, slower than China and India but a marked improvement over the 1990s. Debt levels and unemployment are down. Reserves are up. Inflation is one-third what it was five years ago.

“‘We are experiencing an auspicious moment in Brazil right now,’ Mr. da Silva, 61, said in his first extended discussion with an American journalist since 2004. ‘Brazil is experiencing its best economic period.’”

The Times stated that, “That boom combined with his broad popularity among Brazil’s working class has provided Mr. da Silva, a former metal worker with a sixth-grade education who worked in an auto plant, with remarkable political resilience.

“‘He is the Teflon president,’ said David Fleischer, a political analyst here and an emeritus professor at the University of Brasília. ‘Nothing sticks to Lula.’

“That includes the scandals that by now could have debilitated another presidency. But Mr. da Silva continued to deny knowing anything about the most recent one, in which members of the governing party are accused of paying congressional deputies more than $10,000 a month to vote for favored legislation.”

The article added that, “As Mr. da Silva heads to New York on Sunday for a United Nations meeting, he is relentlessly pitching Brazil’s agricultural potential and energy experience, especially in ethanol, which Brazil makes from sugar cane, a source more efficient than corn.

“With ample arable land that is the envy of the world, and a 20-year head start on developing a biofuels industry, Brazil is the only country exporting ethanol in any significant quantities.

“Mr. da Silva predicted that within 15 years a global biofuels industry would be developed, with the commodity being shipped around the world on tankers for a global price.

“‘I believe that the world will yield to biofuels,’ he said.”

However, with respect to Brazilian biofuels, an item posted at the DTN Ethanol Blog on Friday stated that, “Low sugar and ethanol prices have been fueling the debate in Brazil [on how] this will affect investments and the forthcoming growth in the industry, which intends to lead the world’s rush for biofuels. Projected investments in new mills are seen around 17 billion [real], but the market suffers from poor regulatory structure and a lack of long-term planning, officials said. ‘The industry is growing faster than a sustainable rate. That is why prices are falling so much,’ said Plinio Nastari, president of Datagra consultancy. With expected demand for 720 million tons of cane by 2013/14, the sector should not grow more than 7.3 percent per year to avoid worsening the current oversupply, Nastari said.”

For more on Lula’s perspective on how the U.S. and Brazil could potentially work together in the biofuels sector, see this piece from The Washington Post, which was published on March 30, 2007 and stated that, “The agreement between Brazil and the United States provides for diversifying the production of biofuels through triangular alliances with third countries. This networking can include oil-producing countries interested in blending ethanol or biodiesel into their own fossil-fuel stocks. This is a recipe for increasing incomes, creating jobs and alleviating poverty among the many developing countries where biomass crops are abundant.”

As Presidents Lula and Bush prepare to meet in New York to discuss world trade negotiations, recall that on March 31, 2007, the two Presidents held a joint news conference, in which the Doha talks were discussed.

At that time, President Lula noted that, “Talking with President Bush about the concern of my government to fight hunger and poverty, I mentioned our concern with the Doha Round of the WTO. It is central in our struggle against poverty. And I leave Camp David with the certainty that I’ve never seen in all the previous conversations that I had with President Bush, or with Madam Condoleezza Rice, I never have left a meeting between us with so much optimism as I am this way, that I believe we’re getting closer than we have ever been before to reach an agreement during the Doha Round of the WTO.”

And President Bush stated that, “And for the United States, we’re willing to reduce our agricultural subsidies in a substantial way. We understand. On the other hand, we expect our goods and services — whether they be agricultural goods or manufactured goods — and services to be given access to markets. The interesting thing is, is that Brazil is a strong exporter, and it’s in Brazil’s interest that their goods and services be — have access to markets, as well.”

Also, recall that on September 7, President Bush stated that, “I believe that the best way to open up markets is through the Doha Round of trade negotiations. Doha represents a once-in-a-generation chance to open up markets and to help millions rise out of poverty. The United States is committed to seizing this opportunity — and we need partners in this region to help lead the effort. No single country can make Doha a success, but it is possible for a handful of countries that are unwilling to make the necessary contributions to bring Doha to a halt. As negotiations resume in Geneva, leaders in every country have to make tough decisions to reduce barriers to trade. We must focus on what we have to gain, not what we could lose. The United States has both the will and the flexibility to help conclude a successful Doha Round.”

Regarding the “handful” of “unwilling” countries that President Bush alluded to in his speech, Eoin Callan reported on September 7 at The Financial Times Online that, “The US has accused South Africa, Argentina, India and Brazil of jeopardising the Doha round of world trade talks by thwarting fresh efforts to reach a deal on cuts to agricultural and industrial tariffs.

“Susan Schwab, US trade representative, said a small group of countries had the power to ‘destroy the Doha round’ and cited the four nations as obstacles to progress.”

Meanwhile, Stuart E. Eizenstat and Hugo Paemen, writing on the editorial pages of today’s Washington Post, opined that, “A critical step was taken in July when key WTO committees proposed a framework with ranges of reductions in trade barriers. In agriculture, the WTO committee recommends slashing the U.S. cap on annual trade-distorting support to $13 billion from over $16 billion and cutting the highest E.U. farm tariffs significantly. They also propose a range of cuts in developing countries’ industrial tariffs.

“These proposals provide a sound basis for negotiations this month, but the talks are unlikely to be successful without an additional push at the top. The major players will not do what they know needs to be done unless everyone moves together. The United States and the European Union need to make one last effort to reduce their agricultural subsidies; Brazil needs to reduce its industrial tariff barriers; India must be willing to open its agricultural market; and G-20 members must recognize their responsibilities to open their markets.

“WTO Director-General Pascal Lamy is the only one who can force the recalcitrant countries to bridge the remaining gaps. He must make them recognize that the future of the institution, barely a decade old, is at stake.

“Similar dire circumstances arose during the Uruguay round of talks, in which we were involved. After the trauma of a failed ‘final’ ministerial meeting in December 1990, Arthur Dunkel, then director general of the General Agreement on Tariffs and Trade, precursor of the WTO, submitted his own final proposal. While most countries openly opposed it, they ended up building a compromise on what became known as the ‘Dunkel text.’ After many failed initiatives in the Doha round, it is time for Lamy to guide members to a middle ground. No country will want to be seen as having sabotaged the WTO. The sooner a ‘Lamy text’ is on the table, the better for the WTO, for open trade and for a rules-based multilateral trading system.”

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Associated Press writer Bradley S. Klapper reported on Friday that, “The World Trade Organization ruled in favor of the United States on Friday in a dispute over Turkey’s restrictions on U.S. rice imports” [conclusions of the WTO findings available here; full WTO decision available here; complete background on the case, available here].

“The WTO panel said Turkey has violated international trade agreements by offering lower tariffs to its rice importers as long as they bought significant quantities of domestic rice.

“It also ruled against Turkey’s practice of denying licenses for the import of U.S. rice beyond a minimum guaranteed level during certain periods since 2003, such as during Turkey’s rice harvests.”

The AP article indicated that, “Washington said the Turkish practices were hurting U.S. rice exports in a market potentially worth more than $200 million. It said some Turkish importers were being forced to buy up to three times more Turkish rice than imported U.S. rice to qualify for the lower tariff.”

Acting U.S. Secretary of Agriculture Chuck Conner issued a statement on Friday regarding this development, which noted in part that; “Today’s finding by the World Trade Organization in favor of the United States in the Turkey rice dispute is great news for American rice producers. Turkey is a key market for U.S. rice and we felt strongly that Turkey’s system for granting import licenses violated the country’s international trade commitments.”

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DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “Neither House Agriculture Committee Chairman Collin Peterson, D-Minn., nor Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, is planning a short-term, general extension of the 2002 farm bill when sections of that bill begin to expire on Sept. 30.

“Peterson told DTN this week his staff has determined no short-term extension of the 2002 farm bill is needed. He also said he would oppose an extension in a continuing resolution to fund the government after the end of the fiscal year on Sept. 30 because he fears an extension might give senators the idea that a longer extension might be an acceptable alternative to a new farm bill.

“In an interview Wednesday, Peterson said his staff had studied the bill and advised him certain sections of the farm bill related to food stamps and the cotton program might need to be extended, but that a full extension is not necessary.”

Mr. Hagstrom noted that, “Harkin said in a call to reporters Tuesday that he expects the congressional resolution to contain a farm bill extension, but a spokeswoman said Thursday he meant only an extension of authority for funding those programs that expire on Sept. 30. Programs affecting specific crops expire only when the official planting season for the next year begins.”

Carolyn Lochhead, reported in yesterday’s San Francisco Chronicle that, “Dale Coke ponders the perils of farming from his small organic farm in San Benito County near San Juan Bautista. An organic pioneer operating for 25 years, Coke invented the spring mix lettuce now a staple in every grocery chain – an invention born of necessity when he wound up one year with too many different varieties left over to sell individually.

“But this year has been tough. He ran out of water on part of his 250 acres. He faces costly new food safety rules because of last year’s E. coli outbreak in bagged spinach. There’s a quarantine on the light brown apple moth in Monterey County, where he also leases land, and a looming immigration crackdown could force him to fire many workers.”

The article added that, “Even so, he wouldn’t want any of the billions of dollars that go to farmers of corn, cotton, rice and a handful of other crops subsidized or protected by the government since the 1930s to shelter them from risk.”

Ms. Lochhead then included this summary; “In the upside-down world of farm programs, California produces twice as much food as any other state, but mostly without crop subsidies because fruits, nuts and vegetables are ineligible. Fresno County alone produces more food than South Dakota, but South Dakota gets more than 10 times as much federal crop money.

“That’s the way it’s been since the 1930s, and that’s pretty much the way it would stay under the $286 billion farm bill that passed the House in July and the Senate is now considering – yet another five-year plan for agriculture, billed as a temporary remedy for stricken farmers 75 years ago, renewed by Congress as farm income breaks U.S. records.”

With respect to direct payments, the Chronicle article stated that, “One program gives up to $40,000 to farmers for doing absolutely nothing. Called ‘direct payments,’ the checks are based on a farmer’s history growing subsidized crops. The plan was to wean farmers off the government by phasing out the payments over seven years. That was 12 years ago.

“This year, the House raised the payment cap from $40,000 to $60,000. For the very large family farms rapidly dominating U.S. agriculture, the checks would be much higher: $120,000 for a couple, or $360,000 if two married children work with them.

“The purpose of the money is to shield farmers from risk. Yet California farmers deal with risk without the aid and outproduce every other state.”

And, regarding the increased funding for specialty crop growers that was included in the House version of the Farm Bill, the article indicated that, “This year, specialty crop growers got a $1.6 billion share of those programs and increases in fruit and vegetable spending in food stamps and school lunches. The money was considered a breakthrough, but it is shared nationwide and remains a token compared with other crop spending, especially given California’s $32 billion in agricultural sales.

“Research on organic farming, a high priority for California, got $5 million a year, another first, while the House bill proposes to spend $8 billion a year on crop subsidies.”

Keith Good