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New Agricultural Trade Deal Draws Mostly Enthusiastic Response - 2004-08-06


A total of 147 nations reached an agreement on cutting agricultural subsidies at a World Trade Organization meeting in Geneva. The deal puts trade liberalization negotiations back on track after talks had stalled.

The negotiators agreed on a framework that will eliminate most trade distorting export subsidies, roll back domestic price supports, cut tariffs and pry open closed export markets. Brazil's foreign minister calls the accord a breakthrough that will slash farm subsidies in rich countries.

Jeffrey Schott, a trade analyst at Washington's Institute for International Economics, agrees that the deal is significant. But, he says, a lot of work remains to be done.

"It means the Doha Round is back in business," said Mr. Schott. "But a lot of the hard work is ahead of us. I suspect it will take several more years of hard negotiations before we can have a successful result."

Agriculture subsidies in Europe and the United States had been a stumbling block to completing the trade negotiations that were launched in Doha, Qatar in late 2001. The round nearly collapsed when rich and poor nations clashed over agriculture at a midterm review in Cancun, Mexico 11 months ago.

Even though the agreement, according to most analysts, calls for reduced subsidies for American farmers, it is being praised by most U.S. farm organizations. The corn growers call it a positive step that will increase global demand for U.S. corn. The Farm Bureau says American farmers can absorb the reduction in subsidies. U.S. cotton growers, however, are opposed to the agreement, saying it treats them unfairly.

The subsidies were targeted because African cotton producers: Chad, Burkina Faso, Mali, Benin, had complained that generous U.S. production subsidies encourage overproduction and drive down market prices, making it difficult for them to compete.

Singapore's trade minister is similarly cautious. He says the Doha Round could still collapse and that it will take several years to complete the round. Trade analyst Jeff Schott, however, remains optimistic. He says people should consider what would have happened if a framework agreement had not been reached in Geneva.

"Of course, there would have been lost trading opportunities, whose cost would have been substantial," he added. "I think the drift towards regionalism would have been furthered, and certainly concerns would have arisen over whether the W.T.O. as it now stands is the best forum for trade negotiations."

At Doha ministers had specified that the Round must be completed by 2005. That deadline has slid back to the end of 2005 at which time a trade ministers meeting has been scheduled for Hong Kong.

Trade specialists say the increased trade that will result from further market opening and reduced subsidies will save consumers worldwide several billion dollars a year. The Doha Round is specifically intended to boost the trade of developing countries.

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