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US Offers to Cut Farm Subsidies

The United States says it is ready to cut its trade-distorting farm subsides to $15 billion a year in a bid to reach a global trade deal that could help boost the world economy. The offer was made on the second day of a ministerial meeting aimed at wrapping up the seven-year-old negotiation to ease trade restrictions. Lisa Schlein reports for VOA from World Trade Organization headquarters in Geneva.

U.S. Trade Representative Susan Schwab says the proposal reflects a promise made by Washington to play a leading role in getting a trade deal done.

The U.S currently has a ceiling of just over $48 billion on agricultural subsidies. But, actual support payments to farmers came to about $7 billion last year because soaring food prices meant they needed less help.

Schwab says the proposed $15 billion ceiling is $2 billion below what the United States promised a year ago. She says this offer is being made to move the negotiations forward and to conclude the talks.

"This is a major move taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access," she said. "These cuts will deliver effective and significant reductions in trade distorting domestic farm support."

The talks, called the Doha Development Round, aim to make trade fairer for poor countries. The United States and European Union have been under pressure to reduce their agricultural subsidies and to cut tariffs.

Developing countries say trade-distorting subsidies give the wealthy countries an unfair advantage, making it difficult for them to compete in the open market.

Wealthy countries say they are willing to cut their farm supports, but in return the poorer countries have to provide greater market access to their manufactured goods and services.

Schwab says the new cuts proposed by Washington would require adjustments to domestic farm programs. But, the U.S. is prepared to make those changes.

"But, we also need assurances that if our programs are going to meet these disciplines, they are then not going to be subject to legal challenges that reduce them further," said Schwab. "Now, let me say again. These reductions are not offered in isolation. They must be accompanied by significant market access, market opening in agriculture and in NAMA."

NAMA or Non-Agricultural Market Access Negotiation deals with a wide-range of manufactured and industrial goods.

Reaction to the U.S. proposal so far has been mixed. The European Union calls it a reasonable offer, but suggests it could go further. A Brazilian delegate says it is a nice try, but still too high.