US risks backward step for market liberalisation

20 July 2001

US risks backward step for market liberalisation

By Philip Clarke

US policy makers are in danger of taking a backward step in terms of market liberalisation as they prepare to rush through a Bill to replace the 1996 Freedom to Farm Act.

A concept paper, presented to the House of Representatives agriculture committee by its chairman, Larry Combest, calls for a return to the old deficiency payment type system of the early 1990s.

Under this, crop-specific target prices would be chosen each season by the US congress and any difference between those and actual market prices made good by direct payments to farmers. The cost is likely to exceed the $30bn plus paid out in emergency aid over the last four years.

According to wire service reports, the scheme would also guarantee a minimum annual subsidy, but would not require any production-limiting measures such as set-aside. Mr Cobest, a Republican, wants to see the Freedom To Farm Acts replacement up and running by the end of the year.

US farm secretary, Ann Veneman, described the concept paper as "an important beginning and a serious response to the needs of our nation".

But senior European Commission executive Maeve Doran-Schiratti said it was a "worrying development", coming ahead of the crucial meeting of the World Trade Organisation in Qatar in November.

"If it goes through, it makes it impossible to see how the US can negotiate in the next trade round." The kind of policies being developed in the US would increase total aid for agriculture, encourage more production and are among the most trade distorting possible, she said.

But at WTO headquarters in Geneva, the US still attacked the EU for not going far enough in dismantling its own farm supports. Yet the EU was in an almost unique position, said Mrs Doran-Schiratti. It had already offered to increase market access through tariff reductions, especially for the worlds poorest countries.

And it was prepared to negotiate further reductions in export subsidies.

But she was adamant the EU would go no further than the price cuts and export subsidy reductions already incorporated in Agenda 2000. A new trade round should also consider the wider aspects of globalisation, to meet the demands of society, a view supported by other WTO members.

But on animal welfare, the EU was on its own in trying to get special recognition for its farmers who have to meet higher standards. "Some people say we are looking for a better deal for our battery hens than many countries have for their children," she said. &#42

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