July 28, 2008


WTO proposes US cut farm subsidies to US$14.5 billion


World Trade Organization (WTO) head Pascal Lamy proposed on Friday (July 25, 2008) that the US cut its annual farm subsidies to US$14.5 billion under new proposals put to trade powers here, a source told AFP.


On Tuesday, US Trade Representative Susan Schwab said Washington was ready to cut its annual payments to farmers to US$15 billion - a move rejected as insufficient by developing countries such as India and Brazil.


Lamy presented his proposals to seven key trading powers - the EU, the US, China, Japan, Brazil, India and Australia - who have been locked in intensive talks to try and break a deadlock at the WTO.


The WTO director-general also proposed developing countries can classify 12 percent of their products as "special" and thus shield them from tariff reductions.


Five percent of products would be excluded completely from any cuts.


Another key item for developing countries is the special safeguard mechanism, or SSM, that allows countries to impose protective tariffs in case of a surge in imports of a particular agricultural product.


Lamy's text proposes the SSM be activated if import volumes rise by 140 percent, the source said.


Developed economies like the EU would be able to designate 4 percent of products as "sensitive" to be shielded from tariff cuts.


On industrial products, another key sticking point in negotiations, developing countries will be able to set tariffs with a coefficient of 20 to 25 which will determine the scale of cuts according a complicated WTO formula.


The Doha Round began seven years ago with the aim of helping poor countries enjoy the fruits of freer global trade but the process has been delayed by disputes between the rich developed world and poorer developing nations.


The two sides have settled into a familiar pattern of demanding concessions from each other and refusing to budge until new offers have been put forward.


Such brinkmanship has led to the collapse of talks a several occasions since the Doha Round began in the Qatari capital in 2001.

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