The United States and the European Union have failed to break their stalemate over farm subsidies, putting in question the outcome of the Doha Round of Free Trade talks coming up at next month's trade summit in Hong Kong.
This round of free trade talks is called the Doha Development Agenda because it is aimed at giving developing countries more and fairer access to world markets. But, developing countries are not happy with the way the trade negotiations are going. They are urging the richer countries to do more to liberalize global commerce for all nations. They warn the success of next month's meeting in Hong Kong hinges on this.
The biggest area of contention is farm subsidies. The two most powerful trading partners in the world, the United States and the European Union, are at loggerheads over cuts in trade subsidies.
Despite the ongoing haggling, U.S. Secretary of Agriculture, Mike Johanns is optimistic that significant progress can be made in Hong Kong, though he concedes not as much as ministers would like. He says developing countries would benefit greatly from a reduction in tariffs and subsidies in agriculture and in manufactured goods, as well as from a reduction of barriers in services.
"In agriculture, the World Bank says 93 percent of the benefits will come from market access," said Mr. Johanns. "So we need to do everything we can to keep the pressure on improvements in this area. This is where we can make a big difference for the Least Developed Countries and the Developing countries."
The United States has offered to cut domestic farm subsidies by 60 percent. The EU also has offered 60 percent cuts in subsidies, but it gives its farmers more than twice as much financial support as the United States. Therefore, Washington has rejected the EU proposal as too low. It wants the EU to cut farm supports by 80 percent, a proposition that the European Union has rebuffed.
U.S. Trade Representative Rob Portman acknowledges that meetings at the World Trade Organization this week were not very successful. But, he says some progress has been made in narrowing differences. He says he hopes more compromises can be achieved over the coming weeks and in Hong Kong.
"A successful completion of the Round means that there will be new market access opportunities across the board," said Mr. Portman. "Seventy percent of the tariffs paid by developing countries are paid to other developing countries. So, south to south trade is very important. And, to the extent the Doha Round is successful, it will reduce barriers to trade, not just in developed countries like the United States which is very important, but also in the developing countries."
Trade negotiators say they are still on track to complete the Round by the end of next year. It is generally agreed that the trade talks must end before President Bush's "fast track" authority to negotiate trade deals expires in 2007.