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Financial Times- Schwab: “This farm bill is not our Doha round offer.”

A Reuters news article, which was posted yesterday at DTN (link requires subscription), reported that, “Brazil regards the United States’ latest offer to cut agricultural subsides as a positive move, Brazilian Foreign Minister Celso Amorim said on Monday ahead of a meeting of the BRIC group of countries.

“‘We have this feeling that there is a positive move by the U.S. regarding agricultural subsidies. (Brazil’s) President Lula will confirm that and will show his willingness to negotiate,’ Amorim told reporters in New York.

“The BRIC group of emerging market countries — Brazil, Russia, India and China — is meeting in New York Monday to discuss the Doha Round of world trade talks and other issues ahead of the annual United Nations General Assembly this week.”

The article added that, “The United States last week agreed to cut its farm subsidy ceiling to between $13 billion and $16.4 billion a year, according to the mediator of the farm talks, New Zealand ambassador to the World Trade Organization, Crawford Falconer.”

A separate Reuters news article from yesterday reported that, “Hopes for a breakthrough in the Doha Round of world trade talks grew on Monday after the presidents of the United States and Brazil both said they were willing to be flexible on farm subsidies and import tariffs.

“‘We had a good discussion on Doha, a shared commitment to a successful round of trade talks,’ U.S. President George W. Bush said after meeting with Brazil’s president Luiz Inacio Lula da Silva for about an hour in New York.

“‘I assured the president that the United States would show flexibility, particularly on our agricultural differences, in order to help achieve a breakthrough,’ Bush added.”

The Reuters article indicated that, “Lula said positive news on the world trade talks could be announced ‘in the next few days.’”

And the article noted that, “During the meeting, Bush confirmed the United States was ready to cut its maximum agricultural subsidies to between $13 billion and $16.5 billion a year, as proposed in July by the mediator of the farm talks, New Zealand’s ambassador Crawford Falconer, according to Brazil’s foreign relations minister Celso Amorim.”

According to a transcript of the public remarks delivered by the two Presidents, Pres. Bush stated that, “And finally, we had a good discussion on Doha. We share a commitment to a successful round of trade talks. And I assured the President that the United States would show flexibility, particularly on agricultural goods in order to help achieve a breakthrough. So I want to thank you for the conversation. It’s a joy being with you.”

President Lula stated that, “And on the Doha Round, Brazil is willing to do whatever is necessary so that we can reach a deal very (inaudible). If we manage to convince important countries like China, India, South Africa, Argentina, Mexico, plus the European Union and Japan, I think that we can in the next phase announce good measures as related to the Doha Round, as also on the climate change.”

The Associated Press added yesterday that, “Bush was also meeting Monday with Brazilian President Luiz Inacio Lula da Silva, expected to focus on the frustrating, six-year drive for a global free trade pact. Recent progress in the World Trade Organization talks could induce major developing countries such as Brazil and India to open up their manufacturing markets, a major sticking point in the deal.”

Meanwhile, the “Washington Insider” section of DTN stated yesterday (link requires subscription) that, “Something appears to be happening at the Doha Round negotiations in Geneva now, but because many of the discussions are private, it is not really clear just what has taken place or how important those developments may be.

“For example, on Wednesday, U.S. negotiators made the news when they announced that they had agreed to accept a proposed cap on U.S. farm subsidies between $13 billion-$16.4 billion per year as a basis for further negotiation. Since the U.S. position since September 2005 had featured a proposed cap of about $23 billion, the recent statement was widely regarded as a significant, new U.S. concession.

“However, the U.S. team said that there was no new offer, and that the United States had never ‘said it would reject the figures in the chairman’s text.’ U.S. Trade Representative Susan Schwab said she had made a similar statement earlier this month at the Asia-Pacific Economic Cooperation forum in Sydney, without any accompanying fanfare.”

After a discussion of additional details, the DTN item concluded by saying that, “Thus, despite last week’s flurry of activity, and at least some new optimism coming from the talks, they still appear to be headed for a very modest outcome. And, while there is still some chance that the long-expected, very adverse ruling in the Brazilian cotton case will stimulate interest and effort in the Congress to support more active U.S. leadership in the current Round, there still is no evidence that the lawmakers will take any significant steps to reduce the vulnerability of U.S. programs to future WTO litigation, Washington Insider believes.”

Additionally, Alan Beattie reported yesterday at The Financial Times Online that, “Asked about the troubled ‘Doha round’ of global trade talks, Charles Rangel, the New York Democrat who chairs the House of Representatives’ ways and means committee, which regulates foreign trade, is blunt.

“A long-time supporter of Hillary Clinton, he told the FT last week: ‘At this point in time I don’t think we have to deal with Doha . . . I think President Clinton is going to have to deal with it.’

“Mr Rangel’s heavy discounting of Doha’s immediate prospects is echoed widely across Capitol Hill and most of Washington.”

Mr. Beattie added that, “With the Democrats in charge of Congress and President George W. Bush’s political capital dwindling weekly, there is a widespread feeling that, at least until next year’s presidential elections, any progress in trade talks will be narrow, halting and weighed down with scepticism about the benefits of globalisation.”

With respect to U.S. farm policy and the 2007 Farm Bill, Mr. Beattie stated that, “On the global scale, flickers of movement at the Doha talks in Geneva are not registering on Capitol Hill.

“The House of Representatives has just passed its version of the ‘farm bill’, which will set agricultural support for American farmers for the next five years.

“Even more lavish than the current one, it could require radical surgery if the US accedes to demands from its Doha negotiating partners for cuts in farm subsidies.

“Ms Schwab [Susan Schwab, US trade representative] says American farmers would prefer to get more export market access than subsist on federal payouts. ‘This farm bill is not our Doha round offer.’

“But a former administration official says American farmers will make tougher demands on developing countries to cut agricultural tariffs as a trade-off for reducing US subsidies, making an agreement yet harder.”

Reuters writer Simon Denyer reported yesterday that, “The United States and Europe have failed the developing world by letting global trade talks drag on and insisting on agricultural subsidies that keep 160 million people in poverty, the Commonwealth said on Monday.

“The Doha round of world trade talks had been billed as one that would finally benefit the poorest nations of the world, but after nearly six years they have made little progress.

“Commonwealth Secretary-General Don McKinnon said Europe and the United States bore a great deal of responsibility for that, and could and should do a lot more to dismantle unfair subsidies which kept many millions of people trapped in poverty.”

And, an item posted yesterday at Sify.com stated that, “Visiting commerce minister Kamal Nath took great pains to stress that India was not adopting a ‘difficult’ position at World Trade Organisation (WTO) talks but seeking corrections in the multilateral system to remove trade-distorting farm subsidies.

Earlier this month, US trade representative Susan Schwab, accused India, South Africa, Argentina and Brazil of jeopardising the Doha Round by repulsing efforts to reach a deal on cuts to agricultural and industrial tariffs.”

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Yesterday, Acting U.S. Secretary of Agriculture Chuck Conner held a tele-news conference with farm reporters (transcript and audio available here).

In part, Sec. Conner stated that, “While there is much that can be accomplished with bilateral free trade agreements, a multi-party format, such as the WTO’s Doha Development Round of talks, holds the potential for much greater gains. We remain committed to full participation in the Doha Round and will continue to press for a successful conclusion.

“There has been some movement since Secretary Johanns and Ambassador Schwab ended their talks with the G4 group this summer. Intense talks on the agricultural text have been going on at the staff level in Geneva for the past three weeks. Just this morning I spoke with some of our technical experts who have been in Geneva. I would characterize their perspective as optimistic while recognizing that much, much work remains before an agreement can be reached. As Ambassador Schwab has said, ‘The U.S. is willing to show some flexibility in reducing domestic support, but we must see corresponding market access.’ We will not, ladies and gentlemen, unilaterally disarm.”

Later, the transcript included this exchange between a reporter and Sec. Conner:

“REPORTER: [Y]ou mentioned in your opening remarks a little while ago that technical negotiators you had talked with in Geneva were optimistic about the state of playing the Doha negotiations. I’m wondering what feedback your negotiators are receiving from some of our other trading partners, specifically Brazil and India, with regards to the U.S. acceptance of the Falconer text on domestic support. Are you getting any feedback from them that indicates they are willing to talk about greater market access for American farmers and like our acceptance of the Falconer text?

“SEC. CONNER: I think in my remarks earlier I characterized us as remaining optimistic on this but also expressing that there’s a lot of very, very difficult work to do going forward. You have identified some of that work. We continue to believe that there’s an opportunity here for a deal, and we have expressed a willingness to be flexible in terms of our own domestic supports which have caught the attention of a lot of folks around the world. But we have also made very, very clear that our reduction in domestic supports in this country will be totally predicated on the amount of market access given to our producers.

“We continue to make that case strongly all over the world. We’ve been making that case strongly the last three weeks in Geneva with our technical experts there, and I believe the rest of the world is hearing this message at this point and they understand that the U.S. is willing to discuss these things, we are prepared to be flexible, but they must be as well.”

Later, the transcript included this transaction between DTN’s Chris Clayton and Sec. Conner:

“REPORTER: Thank you, Mr. Secretary. Kind of following up on some of those comments you just mentioned about trade-distorting supports, you mentioned optimism about getting a WTO deal done. Some of the people last week with these discussions coming out of Geneva, the other trade negotiators, some of the countries, were skeptical the administration could deliver on a deal. They want to follow and see what happens with the Farm Bill. In your opinion right now, would the House bill qualify for what’s going on and be acceptable for what’s going on with WTO negotiations? Would what you know about the Senate deal qualify, or how do you marry basically what’s happening right now between these two different situations?

“SEC. CONNER: Well, Chris, let me just say that as I mentioned in my opening remarks the extent of our negotiations at this point in Geneva deal with the fact that we are there expressing a willingness to be flexible on our domestic supports if other countries are willing to be flexible on their market access.

“That is the extent if you will of the negotiations at this point is for us to express that flexibility, waiting on other countries really to match that willingness to be flexible in terms of their own trade-distorting activity in terms of market access into those countries.

“Now in terms of the Farm Bill, we simply don’t know because obviously there is no Doha Agreement, and again we’re talking in some very, very broad categories at this point in terms of that agreement. If there was a Farm Bill that would be passed, obviously if that differed in any way from a Doha agreement, changes would have to be made in the Farm Bill as a result of that Doha agreement, and we’d deal with it that way accordingly.”

Reuters writer Charles Abbott reported on the news conference in an article from yesterday and noted that, “The Bush administration wants Congress to pass a ‘reform-oriented farm bill’ that denies crop subsidies to wealthy Americans and protects farmer income against crop and market collapses, the acting U.S. agriculture secretary said on Monday.

“‘We need it (the bill) done quickly,’ said Chuck Conner in his first news conference as acting secretary. He said President George W. Bush ‘is eager to sign a farm bill this year.’”

Mr. Abbott also explained that, “Revenue protection, a major Bush administration initiative, would send additional payments to growers when nationwide income for a crop is below a target. Current policy, in which counter-cyclical payments are triggered by low prices alone, fails growers with crop losses, the administration says.

“Senate Agriculture Committee chairman Tom Harkin said last week he might offer revenue protection as an option for farmers. The House bill gives growers the choice of revenue protection or traditional supports.

“Revenue-based counter-cyclicals ‘to me are the absolute best disaster help you can give our producers,’ said Conner. He said they were preferable to an ever-ready disaster relief system advocated by senators from Plains states.”

Dan Looker, writing yesterday at AgricultureOnline reported that, “Conner said that he believes a permanent disaster program now being considered by members of the Senate Agriculture Committee would discourage use of crop insurance and that the amount under discussion, about $1 billion a year, wouldn’t necessarily be big enough. Compared to past disaster relief bills of $4 billion to $6 billion, that $1 billion allotted for permanent disaster aid ‘at best would be a small down payment,’ he said.

“Instead of permanent disaster relief, proposals for revenue-based counter-cyclical payments ‘are the absolute best disaster help that we can give producers out there,’ he said.”

Mr. Looker indicated that, “And, [Sec. Conner] said, he expects to announce within two to three weeks whether or not the USDA will allow early withdrawals from the Conservation Reserve Program in 2008.”

On a separate aspect of the 2007 Farm Bill, Reuters writer Missy Ryan reported yesterday that, “A new U.S. Senate blueprint on food aid, which would boost funding for long-term assistance and experiment with buying crops from foreign farmers, received mixed reviews this week from U.S. farm and aid groups.

“‘We’re fairly pleased’ with the proposal on trade and food aid from Sen. Tom Harkin, chairman of the Senate Agriculture Committee, said Jennifer Spurgat, who is keeping tabs on the congressional debate on the 2007 farm bill for the National Association of Wheat Growers.”

Ms. Ryan stated that, “Both Harkin’s plan, a copy of which was obtained by Reuters, and a bill passed in July by the House of Representatives, seek to make food aid more effective. For example, it would allow more U.S. crops purchased for the program to be stored overseas, near countries at risk of food shortages.

“But Harkin’s draft, expected to be taken up by the Senate Agriculture Committee in coming weeks, differs from the House bill is several key sections.

“It would set aside $600 million a year to longer-term food aid programs designed to bolster agriculture and health in fragile countries, rather than just responding after crises have hit. That is $150 million a year more than what the House bill provided.

“It also gives $100 million over four years to a controversial pilot program to purchase U.S. food aid from farmers overseas, deviating from long-standing procurement rules that require U.S. crops.

“The Bush administration has been pushing for years to get a share of aid funding freed up to buy crops close to disaster areas, which it believes will bring help more quickly, but that idea has been a perpetual loser among U.S. farm groups and shippers who have a stake in the current system,” the article said.

Keith Good