Hong Kong 13-18 Dec. 2005

The Sixth WTO Ministerial Conference  
Hong Kong, China, 13 to 18 December 2005.

The United States launched a plan on Monday to slash farm subsidies and break deadlock at WTO trade talks in time for a December deadline, winning a broad welcome from the European Union.

The US proposal, for a 60-per cent cut in US subsidies and an 80-per cent cut by the European Union and Japan, was seen as a move likely to boost the so-called Doha negotiations to open up trade through the World Trade Organisation.

European Union Trade Commissioner Peter Mandelson welcomed the proposal for a US cut of 60 per cent, and said that the European Union would offer even more.

The EU had been pressing the United States to come up with new ideas, Mandelson said. ‘Europe is ready and willing.

‘It’s the step that we asked them to take. They have, and I welcome it.

‘We’ll be making proposals and we’ll be going further than the US.’ The US proposal, he said, balanced talks that had been held on customs duties on agricultural produce.

So far the EU has offered a cut of 65 per cent in its permitted ceiling for support for farmers. But 13 EU countries reminded Mandelson on Friday that he must not overstep determined limits when he was negotiating at the WTO.

Under the US plan, leading nations would end farm subsidies in 18 years’ time in 2023.

The initiative came from US Trade Representative Rob Portman who was hosting a meeting of leading WTO countries here in a late effort to break out of stalemate in the four-year-old negotiations.

Portman called on Japan and the European Union to match Washington’s ‘bold’ offer.

The United States is committed to breaking the deadlock with this bold proposal,’ Portman told reporters.

The US today is taking a risk. The offer we are making is contingent on significant efforts by our trading partners.’

We hope others will come forward to accept our challenge,’ he said. Portman gave more details of his proposal which had emerged overnight to cut US farm subsidies by 60 per cent over the next five years, and urged the EU and Japan, which spend more than Washington, to slash their subsidies by 80 per cent.

The ultimate goal was to eliminate aid to farmers by 2023, he said.

Australia, a major farm trade player, is a long-standing critic of subsidies in the US and EU. Canberra’s Trade Minister Mark Vaile welcomed the US move as he arrived in Zurich.

The US proposal is a good start,’ he said. ‘I urge other large agricultural subsidisers to follow the lead.’

Earlier, Canadian Trade Minister Jim Peterson had commented: ‘I think this is a positive start but there’s a long way to go.

We are encouraged by what we’ve seen, but the EU and Japan are important players and we want to see what their positions are...I believe this initiative is just what we needed.’

The day-long discussions in Zurich mark yet another attempt to resolve differences and draft a treaty in time for the WTO’s conference in Hong Kong, now just two months away.

Much of the meeting was expected to focus on the positions of the United States and European Union, who are under pressure from developing countries to do more to open their markets to farm produce.

Freeing up the farm trade has been a central stumbling block in the Doha Round talks among the 148 trading nations in the WTO—although talks on industrial goods and services, such as insurance and banking, are likewise far from a breakthrough.

Portman said his proposal tallied with an existing WTO plan to halt export subsidies for farmers by 2010.

Such efforts will help ‘jumpstart’ the talks, he said.

‘We’ve come to the stage that unless we’re all willing to take a risk, the Doha Round could collapse.’
Developing countries and campaigners say help for US and EU farmers enables them to sell their produce at artificially low prices, meaning unfair competition for poor producers.

Besides the US and EU, the other members expected in Zurich are a cross section from the WTO: Australia, Brazil, Canada, China, Egypt, Hong Kong, India, Japan, Kenya, Malaysia, Mexico, Rwanda, South Africa, South Korea and Switzerland.

WTO members still hope that the Hong Kong summit will cap four roller-coaster years of negotiations and produce at least the bare bones of a treaty reducing customs duties, subsidies and other barriers to commerce.

The aim is also to use trade to lift developing countries out of poverty.