Update on WTO Talks by KFB President Steve Baccus
December '07

While the Doha negotiations on agriculture continue in Geneva, much more work has to be done before an agreement can be reached.  This is especially true from the perspective of America’s farmers and ranchers.  Balancing the costs and benefits of an agreement to U.S. agriculture continues to elude negotiators. 

American agriculture benefits from an agreement only if the farm income gains from expanded exports are greater than the potential farm income losses resulting from reduced domestic supports.  This trade-off is the big difference between a bilateral agreement (such as the Peru Agreement) and a Doha Agreement.  Bilateral agreements balance access to one nation's market versus access to the other nation's market. The multilateral Doha talks include the 151 WTO member nations and have a broader focus, not only on trade but also on reducing trade-distorting domestic farm support programs.   

The text currently under negotiation would put the U.S. domestic support cap within a range from $13 to $16.4 billion annually.  In the market access area, the text provides for tiered tariff cuts that would reduce higher tariffs more than lower tariffs.  The text would also have the developing countries cutting tariffs by two-thirds of the rate for developed countries.

U.S. negotiators recognize that some provision has to be made for exempting products -- designated as “sensitive” for developed countries and “special” for developing countries -- from full tariff cuts if any agreement is to be reached.  The U.S. argues for the smallest possible list for those exempt products, as well as a transparent as possible rationale for their inclusion. This would minimize erosion in trade gains won through tariff reductions.   

 The WTO negotiating text also addresses an alternative for increasing market access -- expanding tariff rate quotas.  TRQ’s essentially open a small piece of the most protected markets by setting a minimum quota with a low tariff, while maintaining high tariffs on any volume of trade over the quota.  

What’s the bottom line?  There is considerable negotiating work left to be done before the U.S. has an agreement that American agriculture can support.  Given the cuts that the rest of the world wants the U.S. to make in domestic supports, the other WTO members will have to come up with a much more attractive market access package. Reaching that kind of agreement in the WTO negotiations will enable U.S. agriculture to turn export opportunities into export sales.