New offers from the United States and European Union to cut aid to their farmers could herald a breakthrough in deadlocked global trade talks, just two months before a deadline for a framework treaty, ministers said Monday.
U.S. Trade Representative Rob Portman gave negotiations a boost early Monday with a new proposal on agricultural tariffs and subsidies, saying the E.U. and Japan must promise to do more to cut aid to their own farmers.
The E.U. responded with a proposal to make deeper cuts in its own farm subsidies. But the necessary reforms are expected to be a tough sell to farmers on both sides of the Atlantic who have profited from generous government handouts.
"It's a step in the right direction," said Australian Trade Minister Mark Vaile. "We now need to push forward to achieve real progress in lowering barriers to agricultural trade."
At a Hong Kong summit scheduled for the end of the year, the WTO's 148 members are supposed to agree on an outline for a global trade deal as part of the Doha round of negotiations. But progress has stalled, largely because of the thorny issue of farm subsidies. The Doha round -- named for the Qatari capital where it was launched in 2001 -- is set to conclude next year. It aims to boost the global economy by lowering trade barriers across all sectors.
"The U.S. is willing to take some pain," Portman said. "We are ready to make meaningful changes to American farm programs provided our trading partners deliver tangible market access for U.S. agricultural exports."
According to the U.S. offer, Washington would make cuts of 60 percent in trade-distorting farm subsidies. But Portman said the E.U. and Japan would have to make cuts of 80 percent, since their subsidy levels are higher.
"The United States is committed to breaking the deadlock in multilateral talks on agriculture," Portman said, noting that the E.U. "uses about three times more support than we do." The U.S. proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.
In response, E.U. Trade Commissioner Peter Mandelson put forward an offer to cut farm subsidies in products including wheat, dairy goods and rice by 70 percent -- five percentage points higher than its previous pledge. Other subsidizers -- including the United States -- would make lower but proportional cuts, the E.U. proposal said.
"If we do not advance this negotiation in concrete terms this week -- and among ourselves today -- we will have to acknowledge that we may simply run out of time for Hong Kong," Mandelson said.
But Japan's agriculture minister, Mineichi Iwanaga, said his country could not accept the U.S. offer as a basis for discussion.
"There is a very big gap between the U.S. proposal and our position because the [U.S.] domestic support reductions are insufficient," Iwanaga said.
Some interest groups said the U.S. offer would not result in significant cuts in aid to farmers because the proposal relates to only the maximum amount Washington is allowed to spend on subsidies, rather than current subsidy levels.
"What looks on the surface like a genuine attempt to move the talks forward is in fact a very clever piece of maneuvering by the U.S.," said Celine Charveriat of international aid agency Oxfam. "The devil is in the details, and these details are very devilish indeed."