[July 22, 2008]

4TH LD: U.S. ready to cut farm aid to push WTO free trade deal+

(Japan Economic Newswire Via Acquire Media NewsEdge) GENEVA, July 22_(Kyodo) _ (EDS: UPDATING WITH END OF 2ND DAY MEETING)

The United States said Tuesday it is ready to limit its farm subsidies to $15 billion a year in an attempt to strike a deal at the long-delayed Doha Round of talks on global trade, but many developing countries responded coolly.

"We are prepared to reduce our overall trade-distorting domestic support to $15 billion" a year, U.S. Trade Representative Susan Schwab said at a news conference at the World Trade Organization headquarters in Geneva.

"This is a major move, taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access," she said as trading powers engaged in their second day of key talks here.

"Now here is a catch, we are making this offer without actually knowing what others will do," Schwab said. "But for this round to succeed as a development round, all the main developed and emerging market players will be faced with hard decisions. We know that."

She said this is "a very forward-leaning offer and a strong sign of our commitment," adding the materialization of this proposal necessitates greater market access in agriculture and industrial goods.

The latest WTO text serving as the basis for farm negotiations requires the United States to slash its trade-distorting farm subsidies to a range of $13 billion to $16.4 billion a year from the current limit of $48.2 billion.

However, the current amount of U.S. farm subsidies is believed to be much lower than $10 billion a year, as U.S. farmers now require less assistance on the back of increased revenues helped by rising food prices.

Developing countries argue that sharp cuts in domestic agricultural subsidies by the United States and other rich countries hold the key to the successful conclusion of the ongoing free trade talks.

Shortly after Schwab's news conference, Brazilian Foreign Minister Celso Amorim, one of the central negotiators, told reporters that the proposal "is still disappointing."

"We are still in the process of negotiations," Amorim said. "Water level" should be lowered to where "he can breathe," he added when asked about what numerical target he wants to see from Washington on its farm subsidy cuts.

Indian delegates and some others from developing countries also said they were not happy about the fact that the announcement was made in a press room at the WTO before the start of the second round of a selective ministers meeting dubbed the "Green Room."

Masatoshi Wakabayashi, Japan's agriculture, forestry and fisheries minister, told reporters, "I am not surprised at the number. But I think this is progress."

Schwab defended the proposed figure as ambitious "Anyone who is suggesting a number outside the range in the text is not engaged in a serious effort to conclude the Doha Round."

After the minister meeting of about 30 countries, European Union trade chief Peter Mandelson told reporters, "I don't think that everyone is yet satisfied."

Mandelson, however, said, "It's very clear now that side of negotiation ... is getting behind us," referring to the farm talks.

"Now we have got to concentrate on industrial goods trade where a lot of disagreement and a lot of heat...where we have to find an outcome in order to get a deal," he said.

Akira Amari, Japan's economy, trade and industry minister, revealed that Wednesday's afternoon meeting will mainly be linked to industrial goods, inviting a smaller number of countries than Tuesday.

Copyright ? 2008 Kyodo News International, Inc.

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