US farm subsidies weigh down efforts to defrost Doha talks

Original Publication Date: 
30 January, 2007

Enough with the grandstanding: let's get down to the numbers. That was the attitude struck by trade ministers who last weekend pulled the so-called "Doha round" of trade talks out of semi-retirement for one last shot at the world title.

Unblocking the farm negotiations, the biggest single obstacle to success, will require a web of intense bilateral negotiations between World Trade Organisation member countries about precisely how much of each other's agricultural exports they are prepared to admit. Overhanging the debate are America's farm subsidies, which are cited by many WTO members as the biggest obstacle.

Tomorrow the US Department of Agriculture will release the "farm bill", its proposal for subsidies over the next five years. The current bill is due to expire this year. The administration wants to control subsidy spending and make programmes less vulnerable to litigation at the WTO. This remains a difficult task, as does fulfilling this week's call by the White House for Congress to extend its "trade promotion authority" that lets the administration negotiate entire trade deals at once.

Unlike other big WTO members such as the European Union and Japan, the US cannot sign a Doha deal where it loses benefits for farmers but gains export markets for its manufacturers and service companies. The power of the farm lobby means the US needs new export markets for agriculture to make up for any cuts in subsidies. This puts it on collision course with the "Group of 33" developing countries that want to protect their small-scale farmers.

Rice is an excellent example of the sensitivities involved. It is a staple in the diets of half the world and, particularly in Asia, an important symbol of rural self-sufficiency and national identity. It is also one of the biggest recipients of US farm subsidies. The US domestic rice market was saturated long ago, and US rice farmers export about half their output. Countries from the G33 such as Indonesia and India say unfairly subsidised US rice will flood their markets and destroy small-scale farmers' livelihoods if defensive trade barriers are dismantled.

In an interview last week in Davos, Kamal Nath, the Indian trade minister, said that the export of subsidised crops such as rice and cotton was a particular concern. "This is not a matter of commerce but of livelihood," he said.

Susan Schwab, US trade representative, said such concerns were an excuse. US domestic subsidies affected only a few large agricultural exporters such as Brazil. "There are a handful of countries that can claim some legitimate commercial interest . . . in our domestic support structure," she said. "The US is a competitive exporter in rice and it is not by virtue of subsidies."

Research suggests otherwise. A paper presented to a UN conference in 2004 showed that American rice cost $331 (