Des Moines Register
07-25-06
Global trade talks break down
Deal on farm subsidies, meat exports unlikely
By PHILIP BRASHER
REGISTER WASHINGTON BUREAU
Washington, D.C. - Negotiations to liberalize trade worldwide were declared at an
impasse Monday, dimming chances for a deal to overhaul farm subsidies and
boost trade in meat and other commodities.
Iowa hog and cattle producers were counting on a global trade agreement to
increase exports of pork and beef to Europe, Asia and elsewhere.
"If we don't have market access to multitudes of markets it will be a huge
financial problem for the pork industry," said Inwood hog farmer Eugene Ver
Steeg, president of the Iowa Pork Producers Association.
Iowa ranked second in total agricultural exports in 2004 with $3.7 billion,
according to the U.S. Department of Agriculture.
Pascal Lamy, director-general of the World Trade Organization, said the talks
should be suspended indefinitely.
The impasse makes it impossible for the talks to be completed before President
Bush's negotiating authority expires a year from now, U.S. officials said.
American farm groups and agribusinesses hoped to gain from the negotiations
by trading cuts in U.S. farm subsidies for reductions in tariffs and other trade
barriers worldwide.
Cotton growers would be hurt the most by a reduction in subsidies, economists
say.
Iowa's corn and soybean growers would have relatively little money to lose
because the booming biofuels industry is boosting commodity prices above
levels that trigger federal payments, said Bruce Babcock, director of Iowa
State University's Center for Agricultural and Rural Development.
The Bush administration blamed the impasse on the reluctance of the European
Union, China, India and other countries to ease import restrictions and reduce
tariffs.
"It was very clear that no one had budged from the positions that they took four
weeks ago, quite frankly, four months ago," said Susan Schwab, the chief U.S.
trade negotiator.
But the European Union accused the United States of not offering to cut farm
subsidies sufficiently.
"The United States was unwilling to accept, or indeed to acknowledge, the
flexibility being shown by others in the room and, as a result, felt unable to show
any flexibility on the issue of farm subsidies," said Peter Mandelson, the
European Union's trade commissioner.
Last fall, the Bush administration jump-started the talks by offering to reduce the
limits on U.S. subsidies for grain and cotton while demanding reductions in global
tariffs. Critics of the U.S. proposal said the cut in subsidy limits would have little
impact on actual spending.
U.S. officials said it became clear during a meeting in Geneva, Switzerland, on
Sunday that the European Union and developing countries were not going to
allow significant new access to their markets.
The European Union, for example, was insisting on a quota for high-quality beef
of 160,000 metric tons per year, a limit that would provide "virtually no market
access" to U.S. producers, said Agriculture Secretary Mike Johanns.
Lawmakers have said it would be difficult to extend the president's negotiating
authority at a time when support for trade expansion is waning.
Sen. Charles Grassley, R-Ia., singled out the EU and India for criticism.
They are "two of the biggest advocates of maintaining protectionist policies in the
WTO negotiations," said Grassley, who is chairman of the Senate Finance
Committee, which reviews all trade agreements.
The collapse in the world trade talks sparks several effects.
SUBSIDIES:
- Some pressure will be off Congress to cut subsidies for grain, oilseeds and
cotton.
- Subsidies for corn and soybeans are expected to be small over the next several
years anyway because of the booming biofuels industry. Iowa farmers and
landowners received $1.3 billion in federal subsidies during 2004.
- Other countries could go to the World Trade Organization to challenge the
legality of U.S. subsidy programs. However, economists say cotton and rice
payments are seen as more likely targets than corn and soybean programs.
HOG AND CATTLE EXPORTS: Pork and beef producers had hoped to boost
sales to the European Union, Asia and other markets. But the impasse means
those countries won't be forced to reduce their tariffs and other barriers.