U.S. rejects WTO proposal on slashing cotton subsidies

The United States' chief agriculture negotiator on July 24 rejected a WTO proposal to slash cotton subsidies, a highly sensitive issue for American farmers and for West African countries.

Joe Glauber said a new WTO agriculture proposal unveiled earlier this month would require Washington to make excessive cuts in cotton subsidies, while other countries were doing far less on commodities they support or protect.

The draft agreement, written by the WTO's farm trade mediator, Crawford Falconer, calls for an 82 percent cut in trade-distorting handouts to American cotton farmers. In real terms that would mean Congress would have to reduce the subsidies to around US$500 million annually from a current average above US$3 billion as part of a new global trade deal.

Critics of the subsidies say they drive down prices, making it impossible for small farms to compete in international markets, and more difficult for poorer countries to develop their economies by selling their agricultural produce abroad.

Under an agreement reached in Hong Kong in December 2005, rich countries pledged to eliminate export subsidies for cotton by the end of 2006 and to step up reductions in other types of support — a victory for the West African cotton growers. But that deal never went into effect because it was dependent on an overall trade treaty addressing global agriculture, industrial trade and services markets, which is still far from completion six years into negotiations.

Falconer said he included in his proposal the formula for cotton subsidy cuts originally designed by West African cotton-growing countries Benin, Burkina Faso, Chad and Mali because there weren't any other serious proposals — including from the United States.

Glauber sidestepped a journalist's question as to whether the U.S. would make a counter proposal.

Any demand for major cuts in U.S. subsidies to farmers will likely fall on deaf ears in the U.S. Congress, where no dramatic changes are expected in the current system of payments for major crops such as corn, cotton, rice, soybeans and wheat as part of the new Farm Bill it is negotiating.

IHT