"The model leaves food production to be driven by import and export
commercial interests rather than by public interest priorities, such as
food security, jobs and the need to protect an already stretched natural
resource base," IATP’s analysis concludes.

According to IATP’s analysis, the U.S. proposal is severely compromised
by the absence of timely notifications of domestic support to the WTO.
The U.S. has not notified its spending since the reintroduction of
various domestic support programs under the 2002 Farm Bill. The EU is
similarly behind in its notifications of domestic support.

"It is impossible to have a high functioning system of trade rules when
countries refuse to notify their domestic support," said the report’s
author Sophia Murphy. "There is no accountability and no basis for
evaluation without notifications. The U.S. promises a 60 percent cut to
its most trade-distorting support. IATP estimates the cut is closer to
five percent. But without knowing how the U.S. plans to classify its
support, a precise appraisal is impossible."

Other key findings:

– The U.S. proposal ignores the most trade-distorting aspect of
agricultural trade: unmanaged production sold at less than cost of
production prices into world markets, resulting in dumping, the
impoverishment of commodity growers and the rapid consolidation of food
processing and retailing.

– The timing proposed by the U.S. envisages a total elimination of
tariffs and domestic support by 2022. The proposal includes flexibility
to change course midway but such flexibility leaves developing countries
negotiating in uncertainty.

– While WTO ceilings on elements of U.S. program spending would be
lowered, actual spending on U.S. domestic support would hardly be
affected. The trick lies in the expanded Blue Box, which would allow the
U.S. to include countercyclical payments.

– Current levels of countercyclical payments are below the proposed Blue
Box spending limit. But the proposed cap on the Blue Box could affect
future spending.

– The inclusion of a renewed Peace Clause at the behest of powerful
agriculture chairs in Congress is a deal breaker for some countries.
Effectively, a Peace Clause would grant agricultural subsidies a
privileged place at the WTO, even if the subsidies are found to nullify
and impair another member’s expected benefits from signing a round of
agreements. Such an exemption from WTO disciplines dramatically
undermines U.S. credibility as a country that seeks fair rules for
agriculture that treat all countries alike.

– The U.S. proposal for market access would be disastrous for family
farmers, food workers and small-scale producers worldwide. The proposal
shows no interest in accommodating developing country concerns (nor
those of the G-10 developed countries, whose agricultural sectors are
generally small, highly protected, and for the most part not especially
trade-distorting as exporters)). The proposal insists that even special
products (crops that play a significant role in food security and rural
employment) for all non-least developed countries should be subject to
significant tariff cuts.

– The U.S. proposal on food aid ignores the key problems - the
concessional sale of some food aid rather than grant-based donations;
and, insisting on the costly and time-consuming transport of food rather
than allowing the flexibility to buy from regional producers when
circumstances warrant it. The disciplining of poorly designed food aid
with a prohibition on all food aid not made in grant form is an obvious
goal for the new Agreement on Agriculture. WTO members should firmly
reject the U.S. proposal and continue to push for meaningful disciplines
on U.S. food aid.

Carin Smaller
Project Officer, Trade Information Project Institute for Agriculture and Trade Policy, Geneva Office
15 rue des Savoises, Geneva 1205
ph: +41 22 789 0734
fax:
+41 22 789 0733
csmaller iatp.org
www.iatp.org
www.tradeobservatory.org