DC showdown for Fischer Boel?
European Union Agriculture Commissioner Mariann Fischer Boel will be in Washington DC on Thursday and Friday this week for meetings with all the key farm policy players in the Administration and in Congress. A deal between the EU and the US on cutting farm tariffs and subsidies holds the key to the stalled WTO ‘Doha Development Agenda’ trade negotiations. While EU Trade Commissioner Peter Mandelson is responsible for Europe’s trade policy as a whole, it is important to remember that agricultural trade remains the exclusive domain of Mrs Fischer Boel. Last week the US Administration published its draft Farm Bill, will this week’s talks help break the logjam? For the past twelve months or more, it’s been a case of ‘after you, no, after you’, with the EU calling on the US to reduce the amount of trade-distorting aid it pays out to farmers, and the US calling on the EU to cut the tariffs it applies to imports of food into Europe. However, in recent weeks there have been stirrings of movement. Last month, President Bush urged his own top trade negotiator Susan Schwab and the EU’s Peter Mandelson to ‘go to it…just get it done’. Two weeks later, representatives of the United States, the European Union, India, Brazil and almost two dozen other countries met at Davos, Switzerland for the first time since talks were suspended. And last week the Administration published its draft farm bill. The complex package of proposals was carefully spun by Agriculture Secretary Mike Johanns depending upon which audience he was speaking.
Secretary Johanns is keen to tell US farmers that his proposals mean more money for them. With commodity prices currently high, the counter-cyclical payments that form the basis of several key US farm handout programs are less and less likely to kick in, thereby reducing the amount of US tax dollars going to farmers. So Johanns has been able to claim that replacing some counter-cyclical payments with a new concept of ‘revenue insurance’ will mean US farmers will stand to receive $5 billion more in support (over five years) than they would do under the current system of support. When presenting the proposals to international audiences, Johanns said that they would allow the US to reduce significantly the upper limit on its trade distorting farm support payments.
Squaring the two logically contradictory propositions (that farm subsidies will go up and that they will go down) requires that the US transform some of its existing trade distorting subsidies into non-trade distorting subsidies and put them into the ‘green box’ of payments that are made independent of any farm production. This is what was achieved by the EU’s ‘Fischler reforms’ which from 2005 decoupled most EU farm payments from production. But decoupling is unlikely to impress Brazilian and African cotton producers, who believe that it could mean more help for US cotton producers, not less. International reaction to the Administration’s farm bill proposals has been mixed, reflecting both the fact that federal farm supports are hideously complex and the fact that the proposals have been spun in different ways to different audiences. It has left some sharp-witted commentators to ask “Will the real Administration farm bill please stand up?”. WTO-watchers around the world are coming to a consensus that if the US agrees to reduce its ceiling on trade-distorting farm support to $15 billion and the EU agrees to an average agricultural tariff cut of 54%, with strict limits on the product lines subject to lower reductions, this could unlock a wider Doha Round deal.
Both the EU and the US could certainly live with this, if they felt it would clinch a wider deal with the developing country bloc led by Brazil, India and China. This week Commissioner Fischer Boel should stress two things to Congressional leaders and those in the Administration. First, that the EU remains strongly committed to the WTO’s multilateral rules-based system for managing international trade and that this deal is needed to prevent the WTO from withering on the vine. Second, that she has the political muscle to secure agreement from EU member states on the 54% tariff cuts necessary to deliver on the EU’s side of the deal. In short, at this final hour, the EU is ready to make a Doha deal. The US must not allow itself to snatch defeat from the jaws of victory.
February 8th, 2007 at 7:22 am
[...] German Marshall Fund Transatlantic Fellow Jack Thurston noted yesterday at the GMF Blog (“DC showdown for Fischer Boel?”) that, “European Union Agriculture Commissioner Mariann Fischer Boel will be in Washington DC on Thursday and Friday this week for meetings with all the key farm policy players in the Administration and in Congress. A deal between the EU and the US on cutting farm tariffs and subsidies holds the key to the stalled WTO ‘Doha Development Agenda’ trade negotiations. While EU Trade Commissioner Peter Mandelson is responsible for Europe’s trade policy as a whole, it is important to remember that agricultural trade remains the exclusive domain of Mrs Fischer Boel. Last week the US Administration published its draft Farm Bill, will this week’s talks help break the logjam? For the past twelve months or more, it’s been a case of ‘after you, no, after you’, with the EU calling on the US to reduce the amount of trade-distorting aid it pays out to farmers, and the US calling on the EU to cut the tariffs it applies to imports of food into Europe. However, in recent weeks there have been stirrings of movement. Last month, President Bush urged his own top trade negotiator Susan Schwab and the EU’s Peter Mandelson to ‘go to it…just get it done’. Two weeks later, representatives of the United States, the European Union, India, Brazil and almost two dozen other countries met at Davos, Switzerland for the first time since talks were suspended. And last week the Administration published its draft farm bill. The complex package of proposals was carefully spun by Agriculture Secretary Mike Johanns depending upon which audience he was speaking.” [...]