US Subsidies Offer “Smoke and Mirrors�

October 10, 2005

The United States will have to make only negligible cuts to the subsidies it pays to farmers, despite a supposed breakthrough offer on agricultural reform at the World Trade Organisation (WTO), international agency Oxfam said today. Under its proposal made today, the USA would have to cut its spending on agriculture by only 2 per cent - from $74.7bn to $73.1bn at the end of the Doha round implementation period.

The USA said it would reduce the ceiling on trade distorting support to its farmers by 60 per cent, but Oxfam said that this would leave overall spending almost untouched and poor farmers in developing countries would not benefit. The USA is also demanding that developing countries cut their tariffs more than rich countries at the WTO, in direct violation of the principle of special and differential treatment.

"It's a case of smoke and mirrors. If this offer goes ahead, trade distorting domestic subsidies will remain almost completely unchanged and dumping will continue. Meanwhile harsh concessions on market access will be wrung from developing country members in exchange for illusory progress," said Celine Charveriat, Head of Oxfam International's Make Trade Fair Campaign.

"If this were a game of limbo the USA would be agreeing to have the bar lowered to eyebrow level. It is simply shifting payments around from one place to another rather than cutting them significantly. This will make hardly any difference for the millions of poor farmers suffering from unfair US competition in sectors such as corn, rice, or cotton," she added.

The US proposal was put forward today in an article by the US Trade Representative, Rob Portman in the Financial Times. The proposal will be discussed in Zurich this afternoon at a meeting with other key countries including the EU, India, and Brazil. The USA proposes an end date of 2010 for export subsidies, but hardly any of its payments are classified in this way. It says it will discipline food aid, which acts as a hidden export subsidy, but gives no detail of how it will do this. Charveriat said, "On export subsidies the USA is essentially shooting with somebody else's bullet: committing to eliminate payments it doesn't have and failing to make meaningful commitments on the instruments it does use: export credits and food aid."

"What looks on the surface like a genuine attempt to move the talks forward is in fact a very clever piece of manoeuvring by the USA. This proposal would allow them to get away with doing next to nothing in return for some very painful concessions from developing countries. The devil is in the detail, and these details are very devilish indeed."

More Information on Social and Economic Policy
More Information on Agricultural Subsidies
More Information on The World Trade Organization

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.