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Doha Talks: Commerce Sec. Gutierrez Leans on Brazil

Reuters writer Doug Palmer reported yesterday that, “The United States recognizes agriculture is the central issue for developing countries in the nearly 6-year-old world trade talks, Peter Allgeier, the U.S. ambassador to the World Trade Organization, said in Geneva…But refusing to negotiate seriously on manufacturing and services trade liberalization until ‘the dust has settled on agriculture … is a formula for failure,’ Allgeier said.”

I. Doha
II. Farm Bill
III. Biofuels

I. Doha

Reuters writer Todd Benson reported yesterday that, “The United States urged Brazil on Wednesday to use its influence with developing nations to ensure that the long-running Doha round of global trade talks do not end in a stalemate.

“The appeal came a day after Washington said tough demands made by developing nations could derail the talks, launched nearly six years ago to lift millions out of poverty and boost the global economy by opening up world trade. (Right: Lauren Etter reported in today’s Wall Street Journal that, “The stalling ethanol industry wants Congress to mandate greater use of the biofuel.” (from The Wall Street Journal Online)).

“‘It’s time now for Brazil … to use the significant influence that it has around the world,’ U.S. Commerce Secretary Carlos Gutierrez said at an event with business leaders in Sao Paulo, Brazil’s financial capital.” [A complete transcript of the remarks delivered by Sec. Gutierrez can be found here].

“‘Brazil can persuade other advanced developing countries,’ he added. ‘To the extent that Brazil shows support and publicly states its support for the WTO agreement, and where it’s going, and what they’re negotiating this week in Geneva, that will have an impact on other developing economies.’”

The article indicated that, “Gutierrez declined to specify which countries Brazil could persuade to show more flexibility in the talks. But the remarks appeared to be aimed at South Africa, which on behalf of big developing nations like India and Brazil recently said Washington’s offer to reduce farm subsidies was insufficient.”

Mr. Benson also reminded readers that, “Last month, President Luiz Inacio Lula da Silva said on a state visit to Washington that Brazil was ‘willing to do whatever is necessary’ to reach an agreement, raising hopes for a breakthrough in the talks.”

Also, the Associated Press reported yesterday that, “The United States on Wednesday urged Brazil to lead other developing nations in making concessions needed to reach a global trade agreement.

“U.S. trade officials have criticized developing nations — including Brazil — for refusing to agree to open up their manufacturing markets in World Trade Organization talks, despite recent concessions by Washington on the sensitive topic of farm subsidies.

“U.S. Commerce Secretary Carlos Gutierrez said during a visit to Brazil Wednesday that the South American nation’s support is key for reaching a compromise, which he said was ‘closer than people think.’”

The AP article added that, “Echoing the view of many of 151-member WTO’s developing nations, Roberto Azevedo, the Brazilian Foreign Ministry’s top trade official, said Wednesday in Geneva that major industrial concessions could not be made as long as the U.S. was holding out on agriculture.

“The U.S. position ‘is unfair, unreasonable and irrational,’ Azevedo told reporters.”

Reuters writer Laura MacInnis, in an article from yesterday, included the same quote from Roberto Azevedo: “The United States is being ‘unfair, unreasonable and irrational’ in its approach to global free trade talks, a top Brazilian official said on Wednesday.

“Foreign Ministry Undersecretary Roberto Azevedo, hitting back at U.S. accusations that tough demands by developing countries stood to derail a new World Trade Organization (WTO) pact, said poorer nations were being backed into a corner in the nearly six-year-old negotiations.”

Ms. MacInnis noted that, “‘The U.S., the EU, the other developed countries are picking and choosing the provisions of the agriculture text they can live with. On the other hand, they are asking the developing countries to take the (industry) text as a ‘take it or leave it’ business which is frankly unfair, unreasonable, and irrational,’ he told reporters in Geneva.

“‘I can imagine that what they are essentially trying to do is put the blame on the shoulders of others if the round doesn’t go forward,’ he added.”

And a separate Associated Press article from yesterday indicated that, “The United States has been under considerable pressure to limit payments to American farmers of major crops such as corn, cotton, rice, soybean and wheat. Critics of the subsidies say they drive down prices, making it impossible for small farms to compete in international markets and more difficult for poorer countries to develop their economies by selling agricultural produce abroad.

“Washington’s move last month has shifted some of the pressure to emerging economic powers. But Azevedo said the U.S. move was ‘ambiguous’ and that the world’s richest nation needed to do more.

“He cited the example of cotton, for which the U.S. has rejected outright a call for an 82 percent cut in trade-distorting handouts, without even making a counterproposal. For the most egregious subsidies to American producers of corn, rice, soybean and wheat, the U.S. is demanding subsidy limits up to 38 percent higher than what was entailed in the WTO draft deal, he said.

“Azevedo also criticized the 27-nation European Union for trying to find new ways to shield its most sensitive farm sectors from foreign competition, by ‘giving with one hand and taking away with the other.’”

Meanwhile, Reuters writer Doug Palmer reported yesterday that, “The United States recognizes agriculture is the central issue for developing countries in the nearly 6-year-old world trade talks, Peter Allgeier, the U.S. ambassador to the World Trade Organization, said in Geneva.

“But refusing to negotiate seriously on manufacturing and services trade liberalization until ‘the dust has settled on agriculture … is a formula for failure,’ Allgeier said.

“What U.S. business groups find most frustrating is the refusal of the so-called NAMA-11 group — which includes India, Brazil and other advanced developing countries — to say they are willing to negotiate a final manufacturing agreement on the basis of a draft text released in July.

“Unless they’re willing to do that, ‘it’s hard to see how these negotiations are going to conclude,’ said Mary Irace, vice president for trade at the National Foreign Trade Council, whose members include many major U.S. exporters.”

Mr. Palmer concluded by reporting that, “Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, said he suspected the developing country statement was a clumsy attempt to shift the focus of the talks back to agriculture and away from manufacturing.

“‘If it isn’t a tactical move, it is a very foolish attempt at brinksmanship. Holding backing (in the manufacturing negotiations) is a clear recipe for stalemate and ultimate failure in the talks in the near term,’ Schott said.”

Despite the apparent current lack of agreement between the U.S. and Brazil on specific Doha negotiating points, Dow Jones News writer Gerald Jeffris reported yesterday that, “After the failure of talks on the Free Trade Area of the Americas and slow progress in advancing the Doha round agenda of the World Trade Organization, executives from Brazil and the U.S. have decided to take the matter of improving trade relations between their countries into their own hands.

“This month, executives from top companies on both sides will hold two events – one in Brasilia and another in Washington – to try to set a path for advancing trade integration. On Thursday, trade authorities in Brasilia will host a meeting of top executives to discuss integration. And later this month on Oct. 16 and 17, the U.S. Chamber of Commerce will hold a seminar of the U.S.-Brazil Business Council in Washington.

“According to their planners, the events will address trade integration matters that have been neglected in the wake of stalled bilateral and multi-lateral talks between the countries.”

In a broader look at trade issues, Greg Hitt reported in today’s Wall Street Journal that, “In a rare foray into trade policy, Secretary of State Condoleezza Rice is arguing the proposed Colombia deal, along with pending pacts with Peru and Panama, makes good business sense and is of ‘critical strategic value’ in the Western Hemisphere.

“President Bush himself is stepping into the fray. Tomorrow, he is expected to travel to Miami, where he is expected to press reluctant lawmakers to approve the Latin American trade deals and resist election-year pressures to turn away from free trade.

“The push for action on the bilateral agreements comes as the Doha Round of global trade talks appear to be sinking deeper into deadlock. The effort reflects concern among senior Bush officials over the growing sentiment among Americans against expanded free trade and globalization.

“‘We have to take it seriously,’ said Susan Schwab, Mr. Bush’s trade envoy, of the deterioration in public support. Ms. Schwab has been lobbying Capitol Hill with one-on-one meetings aimed at building congressional support for the Latin American trade deals.”

Mr. Hitt added that, “In last year’s elections, skepticism toward trade and worries that the American worker isn’t getting a fair shake in the global marketplace helped to propel Democrats to power in Congress. The same forces are already roiling the 2008 campaign.”

II. Farm Bill

Reuters writer Charles Abbott reported yesterday that, “Senators writing the new U.S. farm law ought to reduce, or even eliminate, crop subsidies and boost land stewardship and rural economic development, a group of small-farm advocates, environmentalists and budget-cutters said on Wednesday.”

The Reuters article added that, “‘We really need to have a serious effort to reform the farm bill in the Senate, and it’s going to be hard going,’ said Ken Cook of the Environmental Working Group. He faulted the House bill for ‘phony reforms’ of farm subsidy limits.

“Oxfam America and nine other groups announced during a telephone news conference a series of television and newspaper advertisements with the tagline, ‘Make the farm bill fair.’ Oxfam America said it paid for the $225,000 campaign.

“Although united for reform, Oxfam and its allies in the teleconference have differing goals. Some, like EWG and the Land Stewardship Project, based in Minnesota, want more money for land stewardship and rural development. Taxpayers for Common Sense would phase out crop supports altogether.

“‘We’re hoping to see some meaningful reforms at the end of the day,’ said Liam Brody of Oxfam America, which says excessive U.S. subsidies hurt poor farmers around the world.”

To view one of the Oxfam Farm Bill advertisements, just click here.

Chris Clayton reported yesterday at the DTN Ag Policy blog that, “Sen. Chuck Grassley, R-Iowa, had a different take on some criticism last week about Senate Majority Leader Harry Reid’s lack of involvement in the farm bill. Reid, D-Nev., has a different approach from former Sen. Tom Daschle, D-S.D., who worked aggressively on the 2002 farm bill. Grassley said Reid is pretty consistent in keeping out of committee work and relying upon the chairmen to get their work done. That is what he has seen on the Senate Finance Committee

“‘So the fact (Reid) is not intervening with Sen. Harkin doesn’t surprise me and that’s the way I think it ought to be,’ Grassley said.”

Mr. Clayton added that, “Grassley said he thinks that if the Agriculture Committee has three or four days without interference from floor votes in the Senate then the farm bill could get done in a week. That may require some later evenings, he added. Right now, the farm-bill markup is slated to start Oct. 23.

“Grassley also defended direct payments, noting they are not trade distorting. If there is a World Trade Organization agreement, those payments would not have to be restructured, he said. Further, in the time direct payments have been used, it has always been under the philosophy that farmers could always have some support they can count on regardless of price or productivity.”

To listen to Senator Grassley’s news conference with reporters yesterday, just click here.

Philip Brasher, writing yesterday at the Des Moines Register’s Cash Crops Blog, indicated that, “Republican Sen. Charles Grassley is defending his fellow Iowan’s handling of the farm bill.”

Mr. Brasher added that, “Last week, the Senate Finance Committee approved a tax measure to fund the farm bill, so Harkin’s work should now move along, according to Grassley. Grassley is the finance committee’s top Republican.

“Harkin ‘can’t be condemned for not coming forth with a bill if he doesn’t know how much money he’s dealing with,’ says Grassley.”

An article posted yesterday at AgricultureOnline stated that, “The Heartland, Habitat, Harvest, and Horticulture Act of 2007– the agriculture tax package — passed out of the Senate Finance Committee last week, freeing up some of the funds previously spoken for in the new farm bill.

“Today, Senator Chuck Grassley, the top Republican on that committee, told Iowa agricultural journalists how he would like to see those newly freed funds spent.

“Grassley urged Senate Agriculture Committee Chairman Tom Harkin and Ranking Member Saxby Chambliss to use those dollars for conservation programs and value-added agriculture. He would also like to see some of the money go to the African-American farmers who were denied entry in the Pigford settlement case.”

III. Biofuels

A news release issued earlier this week by the International Food & Agricultural Trade Policy Council (IPC) stated in part that, “The U.S. and the EU are presently considering significant increases in their biofuels mandates in transportation fuel. IPC’s latest study, An Examination of U.S. and EU Government Support to Biofuels: Early Lessons, finds that, in the absence of commercially viable second-generation biofuels, ambitious mandates coupled with high tariffs that serve to largely limit tax incentives to domestic producers risk a disproportionate focus on U.S. and EU first-generation biofuels. The report also demonstrates that the lack of internationally agreed technical and sustainability standards, as well as a lack of clarity about international trade obligations, can increase this tendency. The report urges the U.S. and EU to adopt policies that serve to promote uses of biomass that are most energy-efficient and show the greatest promise of reducing greenhouse gas emissions, regardless of national origin.

“‘Energy and environmental concerns should be foremost in policymakers’ minds,’ stresses IPC Chairman Piet Bukman. ‘Policymakers also need to be mindful of the repercussions of U.S. and EU policies on developing countries.’”

The complete IPC report is available here.

In a related article, Lauren Etter reported in today’s Wall Street Journal that, “The stalling ethanol industry wants Congress to mandate greater use of the biofuel. But many of the industry’s former friends have turned against it amid soaring prices for corn and other grains.

“Congress gave a big boost to ethanol in 2005, when it mandated that oil refiners blend 7.5 billion gallons of renewable fuels such as ethanol into the nation’s gasoline supply by 2012. The farm lobby was united behind ethanol as a way to strengthen rural economies. Environmental groups backed it as a way to fight global warming and lessen the nation’s dependence on foreign oil. Even the petroleum industry was supportive.

“Since then, dozens of ethanol plants have sprouted around the country, turning corn into fuel. The rise of the industry has helped to boost grain prices and create jobs in farm states.

“But ethanol production today is close to reaching the 7.5-billion-gallon level in the 2005 law. Oversupply has forced down prices and driven some ethanol producers into trouble. Producers and corn farmers are lobbying hard for Congress to boost the requirement anew to ensure that demand can soak up the rising production.”

The Journal article added that, “In June, the Senate passed a bill increasing the mandate for renewable-fuels use to 36 billion gallons by 2022, with 15 billion gallons coming from corn-based ethanol. A House bill would leave the current goal in place. Lawmakers in both houses are preparing to work on reconciling the bills, though the timing isn’t clear.

“Opposition to the ethanol industry’s goals has grown significantly stiffer. The so-called barnyard lobby — representing the meat, livestock and poultry industries — says high corn prices are hurting its profits. The price of corn-based animal feed has increased about 60% since 2005, according to the U.S. Department of Agriculture.”

In more developments on this issue, Steven Mufson reported in today’s Washington Post that, “House Speaker Nancy Pelosi (D-Calif.) told key committee chairmen yesterday that she does not plan to convene a formal conference committee on an energy bill but that informal negotiations will be held to produce a final bill.

“House Democrats blamed Senate Republicans for blocking a formal conference committee to reconcile the two vastly different energy bills the House and Senate passed this year.

“But some lobbyists said informal talks might make it easier for Pelosi and Senate Majority Leader Harry M. Reid (Nev.) to iron out differences among House Democrats themselves over key matters such as automobile fuel efficiency and mandates for the use of ethanol and renewable sources of electricity.”

Keith Good