The chief mediator in troubled World Trade Organization (WTO) farm talks added to pressure on Washington to make concessions, spelling out US subsidy cuts needed for a deal.

The European Union, facing demands to open up its farm market, must improve its offer on lower import tariffs, another politically highly sensitive issue, New Zealand’s ambassador Crawford Falconer said.

Falconer, chairman of the WTO’s agricultural negotiations, issued a 28-page report highlighting where divisions lay in the farm talks and suggesting some ways to close the gaps.

The aim is to stimulate bargaining amongst the WTO’s 150 member states because attempts by the so-called G4 trade powers—Brazil, the European Union, India and the United States—have so far failed to provide the needed breakthrough.

Major WTO states have set themselves an end-year deadline for wrapping up the long-stalled Doha free trade round, but such a timetable requires an accord on a blueprint before the Geneva-based trade body takes a summer break at the end of July.

“Now is the time for honest talk, for telling it how one sees it in the hope ... (to) facilitate the decision-making we so desperately need,” Falconer said.

WTO chief Pascal Lamy has long argued that any new trade pact requires both the United States and the EU, the world’s top economic powers, to give ground. Falconer went further by providing some numbers.

The US offer to limit farm subsidies to some $22 billion a year could let it increase actual spending, something that was “inconceivable”, Falconer said.


While it was unlikely that Washington would be willing to drop the ceiling to the “low teens” demanded by some of its trading partners, who say subsidies distort world trade, it would have to go below $19 billion.

“The centre of gravity for what is in play here for the US is certainly below 19 and somewhere above the low teens…My guess is that if we end up with an agreement at all this year, the number will have to be in the teens,” he said.

There was no immediate reaction from Washington which has made any further offer of subsidy cuts contingent on its gaining more access to foreign markets for its farmers.

The EU, the world’s largest user of subsidies, would also have to cut handouts by more than 70%, with 75-80% possible, from the very high levels permitted under the last world trade deal, the Uruguay Round, which concluded in 1994.

On tariffs, the key lay in deciding how far the highest duties are slashed, because others would then fall into place.

It would have to be somewhere between the 60% offered by the EU and the 85 sought by Washington. At the same time, the average cut must be above the 50% the EU has indicated it might be prepared to make.

The number of so-called “sensitive products”—farm goods that the EU and other major importers want to shield from the deepest tariff cuts—would be set at 1-5% of tariff lines, below the eight officially sought by Brussels, Falconer said.

He rejected an argument put forward by some developing countries that farm products they are allowed to designate as “special”, because of their importance to subsistence farmers, could be excluded from tariff cuts altogether. (Reuters)