US farm bill sows seeds of discontent

NEW DELHI: The Proposed US farm bill 2007, has not gone down well with the G-20 group of developing countries in agriculture which includes India, Brazil, China, Argentina and Egypt. In a representation to the General Council of the World Trade Organisation (WTO), the group pointed out that the proposed bill doesn’t adequately reduce applied levels of domestic support or introduce product-specific disciplines needed for the success of the on-going Doha round.

Speaking to ET, sources said India would apply pressure on the US to undertake greater subsidy reduction commitments in the US farm bill as part of the G-20. “We have been successfully negotiating with all developed countries, including the EU and the US, on all agriculture issues as part of the G-20 group. We will continue to do so,” an official said.

The on-going Doha round of multilateral negotiations had come to a halt last July due to inability of major countries such as the EU, the US, Australia, India and Brazil to agree on modalities for liberalising trade in agriculture and industrial goods. The main reason for the stand-off was the US refusal to take on commitments for real cuts in its trade-distorting farm subsidies which stood at $ 19 billion. While the US wants the flexibility to increase its subsidies to $ 22 billion, the G-20 wants it to reduce it to about $ 12 billion.

Developing countries are apprehensive that lowering of agriculture tariffs in the absence of adequate reduction in subsidies could lead to cheap import of commodities such as cotton, wheat, soya and rice resulting in loss of livelihood of poor farmers.

In the US, only five crops —wheat, rice, corn, cotton and soya— corner more than 90% of total subsidies while 60% farmers do not get any subsidy benefit. If the US doesn’t bring down subsidies given to these crops, the entire agriculture negotiations could fail.

India is particularly unhappy with the US attempt to validate $5 billion of farm subsidies given to its corn farmers by transferring them from the trade-distorting blue box category to the green-box category which is considered to be minimal or non-trade distorting.