News: U.S. looking for EU, India leadership at WTO

(RTR 18/07/2006) Washington - The success of world trade talks is in the hands of the European Union, India and other "protectionists" who are trying to divert attention from themselves by demanding Washington make deeper farm subsidy cuts, a U.S. trade official said on Monday.

"The frustration on our side is that others are trying to distract from the main issues," Deputy Assistant U.S. Trade Representative Jason Hafemeister said shortly after President George W. Bush and other leaders directed trade negotiators to make a renewed push for a world trade deal.

Hafemeister, lead U.S. agriculture negotiator in the WTO talks, said Washington can not offer more cuts in domestic farm subsidies until the EU and other countries drop their "stone wall of protectionism" and agree to more substantial farm tariff cuts.

"The reason they have not offered to open their markets is not because they want us to cut our de minimis" payments, Hafemeister said, referring to an obscure farm program that has taken center stage in the talks. "The reason is because they're protectionist. We've got to come to terms with that."

Washington has not received a serious response to a proposal last year to cut its most trade-distorting category of farm payments by 60 percent, or about $7.6 billion, from the current allowed level of $19.1 billion, Hafemeister said.

The U.S. proposal would allow it to spend another $15 billion in three other farm programs for a total of about $22.6 billion. Washington argues it's unlikely to reach that amount.

Nonetheless, trading partners are pressing Washington to give up the $5 billion it is allowed to spend in the "product specific" de minimis category or cap its overall spending on trade-distorting farm programs to around $15 billion.

"You don't just keep giving and not getting," Hafemeister said. "It's hard to get the right dynamic" under those circumstances, he said.

As countries make what is likely to be their last stab at reaching a deal in the talks, the onus is on the EU and India to show leadership by cutting tariffs deep enough to generate new trade flows, Hafemeister said.

Whatever the EU does will set the standard for all developed countries to reach and "India holds a similar relationship on the developing country front," he said.

India Commerce Minister Kamal Nath has been particularly vocal about the need to shield his country's 600 million subsistence farmers from foreign competition.

Washington believes most of India's subsistence farmers are so far removed from the market they are unlikely to be hurt by trade liberalization, Hafemeister said.

At the same time, Washington is prepared to exempt certain staple crops from full-fledged market openings and give India leeway to temporarily close its markets in response to import surges, he said.

India's "very conservative tact" is discouraging other developing countries from offering to open their markets and making it much harder to reach a deal, Hafemeister said.