U.S. and E.U. officials try to break deadlock in trade talks by cutting tariffs

The top U.S. and EU trade officials laid out new proposals Monday on cutting agricultural tariffs and subsidies in an effort to break a deadlock in global trade talks.

With two months remaining before a deadline for a framework global trade treaty, ministers from World Trade Organization members were once more confronting the thorny issue of U.S. and EU farm subsidies.

"The U.S. is willing to take some pain," U.S. Trade Representative Rob Portman said. "But those who subsidize more need to reduce more."

Portman said the United States is ready to make "steep tariff cuts" as ministers from the world's largest commercial powers gathered to revive global trade talks. He called on the EU and Japan to come up with improved offers for reducing agricultural support programs.

The EU "uses about three times more support than we do," he said. "The ratio needs to be about two to one to be rational, balanced and practical."

According to the offer, the United States would make cuts of 60 percent in trade-distorting farm subsidies. But Portman said the EU and Japan would have to make cuts of 80 percent, since their subsidy levels are higher, the AP says.

In response to the U.S. offer, the EU put forward a new proposal later Monday to make deeper cuts in its farm subsidies, but stopped short of Washington's demands.

Brussels offered to cut its subsidies in products including wheat, dairy goods and rice by 70 percent, five percentage points higher than its previous pledge. The U.S. proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.

"We will be going further than the U.S.," said EU Trade Commissioner Peter Mandelson. "Europe is ready and willing."

Washington's proposal "could be" the breakthrough negotiators have been seeking, said Australia's Trade Minister Mark Vaile.

A ministerial meeting in Paris last month failed to solve the deadlock, although the EU took a step in that direction, presenting a detailed but tentative offer to cut import tariffs at talks with Portman and ministers from India and Brazil.

Canada's trade minister, Jim Peterson, commended the U.S. proposal, which he said could give a fresh impetus to negotiations. "I believe this initiative by Mr. Portman is just what we needed," Peterson said. "This is a positive start but we still have a long way to go."

Developing countries hope that farm trade liberalization will boost their economies.

"It's our right to call for fair trade where we have a comparative advantage, and that's agriculture," said Rachid Mohammed Rachid, Egypt's trade minister.

WTO Director-General Pascal Lamy has said that the EU and the United States will have to make adjustments in agriculture policy if progress is to be made in the present round of global trade talks, which is already well behind an original December 2004 deadline.

Lamy believes the EU needs to open its market more to foreign producers while the U.S. should offer to cut the level of financial support it gives its farmers, his spokesman, Keith Rockwell, told The Associated Press. "Movement in those two areas would be helpful not only for the agriculture negotiations overall, but for the entire round."

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.

EU farm reforms adopted in 2003 will convert the bulk of the bloc's production subsidies into programs such as animal-welfare and environmental-management grants to farmers, deemed far less trade-distorting under WTO rules. Washington envisages no such change to its "countercyclical" subsidy program, which provides payouts to farmers when prices fall, allowing U.S. producers to charge artificially low prices.


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