October 9, 2005

US to make “ambitious” farm subsidy offer – source

By Doug Palmer and Sophie Walker

WASHINGTON (Reuters) - The United States will tell key
trading partners on Monday it is prepared to make "ambitious"
domestic farm subsidy cuts if other countries make similar
concessions on tough farm trade issues that stand in the way of
a new global trade deal, an industry official said.

The expected U.S. offer follows weeks of consultations
between U.S. Trade Representative Rob Portman and key
lawmakers, including the chairmen of the House of
Representatives and Senate agriculture committees who have
given the chief U.S. negotiator detailed instructions on what
must be in a deal to win congressional approval.

Portman is carrying the fruits of those discussions to a
U.S.-hosted meeting of top trade officials from the European
Union, Brazil, India and a dozen other key World Trade
Organization members in Zurich. He is expected to outline broad
details at a news conference on Monday in the Swiss city.

"I have heard that it will be an ambitious offer on
domestic supports," said one industry official who has been
following the internal U.S. deliberations and who spoke on
condition of anonymity because of the delicate nature of the

"Ambassador Portman will take steps to help forge a
consensus and to move the negotiations forward," Christin
Baker, a spokeswoman for Portman, said.

Washington has been under pressure for weeks to come
forward with a plan for cutting domestic farm subsidies -- one
of the three main areas of the farm trade talks. However, U.S.
negotiators have been loathe to move without more progress on
how much other countries would cut their farm tariffs.

"Our basic premise was that we needed to make more progress
on market access. The good news is we are getting into the
issues, people are talking about numbers. And that has been
heartening for us," a U.S. trade official told reporters on
Friday, speaking on condition he not be identified.

Asked if this meant the United States would now offer ideas
on cutting domestic supports, the official said: "We are going
to be getting specific. We want to see them getting specific
... We're going to work with (other countries) and try to do it
in the most constructive way."


The EU has proposed a 65 percent cut in spending on its own
"trade-distorting" farm subsidies and a 55 percent cut for the
United States. That would trim U.S. spending to $8.5 billion
from $19.1 billion and the EU to about $27.6 billion from
around $80 billion -- although in reality some money probably
would be shifted away from crop-specific farm programs to
others such as conservation that have less impact on trade.

The United States contends that any cut of more than 10
percent to 20 percent would significantly constrain its current
farm programs. It also argues that Brussels and Tokyo should be
required to make bigger cuts since they spend far more on
trade-distorting farm programs than Washington does.

U.S. trade officials were uncertain as late as last week
how far they could go in offering to cut farm subsidies.

American farmers, who played a big role in congressional
approval of a 1994 world trade pact, have signaled they will
only support a new trade deal that cuts farm subsidies if they
get significant new export opportunities in return.

"Whatever proposal (Portman) puts down, it better meet
those ideals or he's going to be negotiating outside his
ability to pass it," a House aide said.

Ultimately, "it's not about the U.S. proposal. It's about
the deal. That's what matters," the aide said.