US: Farm Groups Nix US Bid for Deeper WTO Cuts: Sources

The Bush administration sought agreement from U.S. farm groups for a 70 percent cut in their most trade-distorting subsidies as a way to save world trade talks but was rejected, industry sources said on Tuesday.

However, discussions between the two sides on how Washington might offer trading partners more concessions on less trade-distorting ``blue box'' supports -- such as spending caps on specific product payments -- were better received, said the sources, who spoke on condition of anonymity after talks with U.S. trade officials.

Member countries of the World Trade Organization are running out of time to reach agreement on the so-called Doha Development Round, launched in 2001 with the aim of lifting millions out of poverty by slashing global trade barriers.

Talks have stalled repeatedly on the subject of farm trade, where poor nations insist progress must be made first for their primary exports before they will agree to open fledgling services and industry markets.

A senior U.S. trade official told Reuters: ``In the last couple of weeks we've been talking to the various groups about ... what other countries are asking us to do, and that does include some who are asking for deeper cuts in the amber box, 70 percent or more. We have explained to them the requests ... and we didn't have any sympathetic hearing on the deeper cuts.''

On the subject of agreeing product caps in blue box spending, the official said: ``It's been tough. What other countries are looking for is quite aggressive and I don't think we've solved that one yet.''

FINAL PUSH

WTO chief Pascal Lamy on Tuesday said a deal to cut tariffs and subsidies in farm and industrial goods must be reached by the end of June. Ministers are due to meet in Geneva starting June 26 for a final push.

The United States has offered to cut its ``amber box'' payments -- its WTO allowance for most trade-distorting subsidies to its farmers -- by 60 percent but is under pressure to offer more in order to get the European Union and developing countries to open their markets.

``They wanted to increase the domestic support offer ... to 70 ... and we told them 'no','' said one industry source. ``We told them we weren't willing to put more on the table when we hadn't gotten anything in return.''

Another source said farm groups had been more open to discussions about the blue box.

``The U.S. was talking about various ways of sweetening the pot on domestic support, trying to do things like product specific caps for blue box. I don't think people have been screaming about that,'' the second industry source said.

``The expectation among the commodity groups in the U.S. is that if the agreement comes together and the domestic support package is of the magnitude that the U.S. has proposed, there will be serious changes. These kind of details don't change things too much ... it is in effect window-dressing for Geneva.''

The European Union said last week it could move further toward demands of the G20 group of developing nations who want the bloc to cut its farm import tariffs by 54 percent, on condition other key WTO members make concessions, too.

The United States dismissed that proposal, saying it fell far short of what was needed to unlock a deal at this late stage.

Countries must wrap up an agreement by the end of the year if the round is not to be torpedoed by the expiration in mid-2007 of U.S. President George W. Bush's power to put trade deals to a straight 'yes' or 'no' vote in Congress.

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