US hardens stance on farm tariff
Progress in the stalled World Trade Organisation (WTO) talks seem to have become more difficult with the US hardening its stand on agriculture subsidies.
By Amiti Sen, TNN |
NEW DELHI: Progress in the stalled World Trade Organisation (WTO) talks seem to have become more difficult with the US hardening its stand on agriculture subsidies.
In an economic review brought out by the US department of agriculture (USDA), it has pointed out that the economic gains from tariff cuts in agriculture would far outweigh the benefits of subsidy cuts.
The US was primarily blamed for suspension of the WTO talks in July because of its reluctance to commit to farm subsidy cuts, has gone on the defensive. The talks had broken following the inability of the G-6 (India, Brazil, the EU, the US, Australia and Japan) to arrive at an agreement on the modalities for liberalising agriculture.
While the EU had agreed to improve its offer of reducing farm tariffs, the US had refused to undertake real cuts in its subsidies. Instead, it asked the EU to make sharper cuts in its tariffs. According to the research report of the USDA, tariff reductions that improve market access are key to achieving the benefits of liberalisation.
It said that tariffs are more trade distorting than domestic support or export subsidies accounting for more than have of price distortions. It is largely because they are more widely spread. Tariffs directly affect market prices having an impact on producer and consumer decision, the USDA report argued.
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Building a case for applying tariff cuts, the report further stated that reduced tariffs would provide significant benefits by forcing reductions in domestic price supports, used primarily by developed countries. Significant gains would also be achieved through improved market access among developing countries, it said. Their elimination of tariffs would account for more than a third (38%) of the estimated increase in world prices.The forthcoming engagement of key WTO members in a meeting organised by the G-20 in Brasilia next week would yet again bring to the fore the fight on tariff and subsidy cuts. The EU had agreed to a 51% cut in its tariffs against 54% demanded by the G-20 and 64% demanded by the US.
The US, however, did not budge from its offer of keeping subsidies at $23bn. This is unacceptable to the G-20 as it would give the US the opportunity to increase its subsidy by $4bn from the current $19bn.
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