Commentary: World trade talks--critical to California agriculture

Issue Date: December 21, 2005

 

By Paul Wenger

We need to ensure that consumers from around the world have the greatest possible access to California- grown farm products. Our presence in Hong Kong at the World Trade Organization talks this month gave us the opportunity to provide U.S. trade negotiators with information on specific proposals that would impact California farmers and ranchers.

Unfortunately, the WTO talks took a turn from focusing on market access and domestic supports to the U.S. food aid program and cotton subsidies. This was in part a tactic to get the world to focus on the U.S. and overlook the proposal by the United States asking the European Union to reduce its subsidies and to all member countries to lower their tariffs on agricultural products. The tactic worked and the text agreed to by the member countries reflects this new focus.

At the start of the talks some member countries were asking that the U.S. change its food aid program to give cash donations instead of food donations. Those countries asking for the change claim that food donations are a subsidy that is encouraging the over production of certain commodities in the program. The U.S. uses 2 percent of the total grain production for food aid. Others are arguing that food donations, in combination with cash donations, are there to assist countries with nutritional needs when domestic production cannot meet the need, and to help in building infrastructure for better agricultural development in those areas.

The other issue raised was the U.S. cotton subsidy program and how it impacts West African cotton producing countries (Mali, Burkina Faso, Benin, Chad and Senegal). These countries feel that the U.S. proposal to eventually eliminate trade-distorting domestic support is too long to wait and they want a finite date of when they will be eliminated. Is it subsidies that are negatively affecting these countries' production or the lack of technology and infrastructure?

The text that was agreed to by the WTO requires all forms of export subsidies to be eliminated by 2013. The U.S. cotton export subsidies are singled out in the text for elimination in 2006. Because of the recent Brazil cotton case, the U.S. has already begun eliminating export subsidies on cotton. The 2013 deadline will impact the EU and other countries that utilize export subsidies. The text accepts the U.S. proposal for duty and quota-free access for cotton imports from least-developed countries to all developed countries. In addition, the U.S. has offered to increase development assistance to the West African region with more technical and marketing assistance utilizing increased financial aid.

The text still leaves more to be defined in 2006. The negotiations unfortunately did not address market access and the lowering of tariffs. The U.S. deadline for Trade Promotion Authority renewal in July 2007 weighs on the talks to define more of the text in 2006. If market access rules cannot be established in the final text, there will be little gains for U.S. producers.

Trade is a complex subject and agreements are hard to reach. People want to resolve so many of the various challenges affecting a region. Unfortunately, aid and trade agreements cannot solve all political, social, cultural and educational issues that may be prevalent in some areas of the world.

(Paul Wenger is the first vice president of the California Farm Bureau Federation. He attended the recent WTO trade negotiations in Hong Kong. Wenger may be contacted at pwenger@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item. Top