The United States, Europe and a group of developing countries are assessing the latest proposals for a compromise on slashing state subsidies to farmers submitted as part of global trade liberalization talks. But trade experts say the negotiators may not reach a deal in time for the ministerial meeting in Hong Kong six weeks from now where the framework deal on trade in farm produce, services and manufacturing is supposed to be struck.
Experts say that a new deal to lower barriers to trade requires an elaborate series of compromises that would reconcile competing national interests in agriculture, services and manufacturing. Ever since the World Trade Organization negotiations were launched in Doha, Qatar in 2001, a formula for reducing trade distorting agricultural subsidies has been the toughest challenge. In early October the United States sought to break the logjam by offering to significantly reduce its farm subsidies, provided that Europe and Japan matched the U.S. commitment.
"The motivation here was to try to get the negotiations jump-started. Things had been dawdling. Hong Kong looms. And after a lot of internal discussion, we came up with this proposal, which we think is quite meaningful and serious," sapd Carol Goodloe, a senior economist at US. Department of Agriculture.
Many developing countries complain U.S. and European farm subsidies drive prices of produce so low they cannot compete on world markets.
The European Union last week proposed to make some cuts in its farm subsidies, but the United States said the proposal fell short of expectations and was disappointing. Australia, a strong advocate of free farm trade, said the EU proposal broke no new ground.
Jeff Schott, a trade specialist at the Institute for International Economics, a non-government research organization in Washington, says he is not surprised that the European offer does not satisfy the Bush administration.
"Because it doesn't go far enough to produce a balanced package overall in the Doha Round. Nor does it address the important development agenda of the Doha Round. But it probably was expected given the intense opposition to agricultural reform by a number of EU member states," he said.
Mr. Schott says the refusal of the European Union to significantly reduce farm subsidies diminishes the prospects that a meaningful framework agreement will be reached in Hong Kong. "The events of the past month have demonstrated that a big package of trade reforms is necessary to meet the ambitious objectives of the Doha Round. And those reforms have to cut across agriculture, manufacturing and services. But the prospects of achieving that ambitious result, particularly by expected deadline of the end of 2006 for the trade talks, has now become a very unlikely prospect," he said.
Other trade specialists say that the weakness of the EU offer on agriculture results from the fierce opposition of France, whose president, Jacques Chirac, promised to block any proposals that would substantially reduce government subsidies to farmers.
WTO negotiators are meeting in Geneva November 7 in yet another attempt to come to an agreement.