GENEVA, Switzerland – During a chance hotel lobby encounter June 30 between Canadian farm leader Bob Friesen and American Farm Bureau president Bob Stallman, Friesen wondered about the chances of overnight compromise to get a World Trade Organization deal.
The United States was under pressure to deepen its promise to cut domestic farm subsidies to American farmers.
“Less than 50-50,” Stallman said in an accurate prediction. “We want this to succeed but if it doesn’t, we’ll continue to pursue bilaterals.”
That, in a nutshell, is why the U.S. felt last weekend it had the option to resist pressure that it substantially increase its offer of a 53 percent cut to domestic production and trade-distorting subsidies from allowable levels.
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The Americans have been negotiating dozens of bilateral agreements with other countries that give them guaranteed market access without requiring them to deal with domestic subsidies.
“They’ve got 50 or 55 or 60 bilateral agreements around the world and market access is not such a big deal here,” Canadian agriculture minister Chuck Strahl said in a July 2 interview, trying to analyze American intransigence. “As long as they can keep their subsidy program, they still have market access for a lot of their products in key markets and they get it because they are the big boys on the block.”
He said the U.S. needs a WTO deal “the least of anyone and it is a caution for the rest of the world.”
Strahl said Canada loses because of the U.S. campaign to negotiate bilateral trade deals on good terms for American exporters.
“Korea is a good example,” he said. “Korea will take American beef even though the American system in many ways isn’t as careful as our own in (specified risk material) removal and traceability. They clearly have the market clout one-on-one.”
Critics say the other political dynamic insulating the American negotiators from the need to compromise is domestic U.S. politics.
During the weekend, other countries including Canada insisted the U.S. commitment to cut distorting subsidies by 53 percent be increased to 60 percent or more. The U.S. does not now fill its allowable subsidy level so its offer to cut from allowable levels still would enable it to spend $22.4 billion US annually in future, more than it currently spends.
The weekend demands were that the U.S. commit to a percentage cut that would drive real spending down to no more than $15 billion US.
The Americans refused to budge without a substantial commitment to more tariff cuts by the European Union. The talks collapsed.
Canadian observers said the American negotiators have little room to offer a compromise on subsidies because the domestic debate about farm bill spending is under way during a congressional election year.
“I think more than anyone wants to believe, Congress is now dictating the U.S. administration’s position,” said Liberal MP and agriculture critic Wayne Easter, an observer at the WTO talks. “They are going to stick with the farm bill and it is an election year.”
When asked about congressional opposition to further farm subsidy cut offers, an American negotiator snapped that it was “a cynical question” but many in the Canadian entourage said that is exactly what is at play.
In a briefing with reporters July 1, U.S. agriculture secretary Mike Johanns said Congress supports the U.S. proposal for cuts and deeper cuts are possible, but the deal with Congress is that there must be a reciprocal commitment by the EU to deepen its proposed average agricultural tariffs cuts of 39 percent.
“With what we have on the table now from the EU, we cannot go home and say to Congress we have delivered on market access,” said Johanns.
