AWPA Wireline - August 2004

An agricultural agreement kept alive hopes for a draft world trade pact that includes cuts in industrial tariffs and expanded trade in services, but also opened fissures among US farm interests. Marking the first real advance in global talks since the Doha Round of negotiations was launched in the Qatar capital in 2001, the World Trade Organization's (WTO) 147 member nations agreed to a negotiating framework to reduce global farm subsidies and to cut tariffs on everything from corn to cars.

A big factor in the framework agreement was that the US and EU stated that they were prepared to be more forthcoming if other countries were willing to deal as well. The EU offered some major concessions in advance, in particular a signal that if the Doha Round is completed, it will phase out all its export subsidies for farm goods. Export subsidies are the most widely reviled type of aid to agriculture because they go directly for crops that are shipped into other countries' markets. The EU also gave up demands to expand WTO rules into new areas such as international investment, a proposal that developing countries viewed as pushing the organization too far.

For his part, USTR Ambassador Robert Zoellick sent a letter to all WTO members in January and visited numerous foreign capitals to convey the message that despite the political pressures of the US election campaign, Washington genuinely wanted to try this year to restart the Doha Round, which had an original deadline of Dec. 31, 2004 - a deadline that will never be met. At the same time, Zoellick was warning that if the Doha Round remained stalled, the US would devote its trade energies to smaller pacts - with Australia, Morocco, Thailand, Colombia, and other nations interested in dealing bilaterally.

President Bush signed the US-Australia Trade Agreement. The Act will immediately eliminate duties on 99% of all US-manufactured exports to Australia once it takes effect in 2005. America's manufacturers estimate that eliminating these tariffs will increase the export of manufactured goods by nearly $2 billion per year.