U.S. farmers would not see their farm program payments cut by 20 percent in the first year if the provisions of the latest Framework Agreement for the Doha Round are approved by the World Trade Organization and accepted by the U.S. government.
Several media outlets have reported that domestic support for farmers would be cut by 20 percent under the agreement. But Mark Lange, president and CEO of the National Cotton Council, says that requirement has been misconstrued and misreported by those media outlets.
“References to various boxes and de minimis allocations provide ample opportunity for misunderstanding,” Lange said. “However, statements from Ambassadors Robert Zoellick and Allen Johnson, together with a review by the NCC, suggest that there is sufficient structural flexibility in the way cuts can be made to maintain an effective farm program.”
Lange said the agreement calls for a 20 percent reduction, but it is not applicable to the $19.1 billion amber box ceiling that applies to U.S. farm programs.
“The relevant number for the 20 percent reduction is approximately $49 billion, comprised of amber box payments, plus product-specific and non-product-specific de minimis and blue box payments,” he noted.
Under the Framework Agreement, the United States would have, for the first time, access to blue box payments, which currently are available only to European Union member countries.
Lange said this reduction requirement is being characterized as a first-year installment, and it will be up to U.S. negotiators to insure that any cuts beyond the first year continue to move global subsidies toward harmony and are not unfair to U.S. agriculture.
“It is not the domestic subsidy provisions of the Framework Agreement that are the source of our concern,” he said. “We continue to be troubled by the specific references to cotton.”
Council leaders have found themselves spending more time trying to correct faulty impressions from media interpretation of the Doha Round negotiations in recent weeks.
In one case, Lange wrote the New York Times to complain about a July 26 article, “Trade Talks in Geneva Offer More Hope This Time,” that he said contained several errors and inappropriate word usage.
“The U.S. cotton industry has had many concerns with reporting by The New York Times when it comes to the subject of the U.S. cotton program,” Lange wrote. “This most recent article, however, goes beyond normal concern with the paper's point of view. It contains many statements that anyone seriously following the WTO negotiations would know to be inaccurate.”
The misstatements included the following:
“…Members of Congress unhappy over W.T.O. rulings against American trade laws on grounds that they violate global rules on protectionism.”
“The WTO decision in the steel safeguard case dealt with protectionism. Most other recent decisions have not dealt with “protectionism,” according to Lange. “Protectionism generally refers to restrictions on market access. The United States has one of the most open markets in the world.
“The entire characterization of Europe as the trade liberalizer and the United States as being on the defensive lacks depth or consistency and paints an inaccurate picture of the negotiations.
The article compares U.S. positions on cotton subsidies exclusively to EU proposals on exports subsidies (all goods), EU efforts to reduce support for sugar production, and the EU's retention of “other features” of its Common Agricultural Policy. The article also states “…the United States has not offered a reduction in subsidies….”
“First, the United States has offered to reduce agricultural subsidies, cotton included, and has been making such offers throughout the Doha Round (over three years). The statement in the article is clearly and completely wrong.
“Second, the African proposal on cotton is to eliminate all subsidies for cotton. EU proposals and modifications to its agricultural programs refer to shifting support to less trade distorting measures. They do not refer to elimination of all subsidies.
“Third, there is a difference in ‘trade-distorting subsidies,’ ‘export subsidies,’ and ‘all subsidies.’ The article seems to ignore the critical nuance between these terms understood by virtually all participants in the negotiation.
The article states that the United States “has made no public offer to reduce its cotton subsidies.”
“The United States has tabled many public proposals to reduce its agricultural subsidies,” says Lange. “The U.S. cotton program has been included in each and every one of those proposals. The report is clearly and surprisingly inaccurate.”
The article states that the EU “gave in to demands of poor nations this year, and, while retaining other features of its Common Agricultural Policy, has offered to eliminate all export subsidies for farm goods.”
“In an interesting twist, the report leaves out 15 years of negotiating history within the WTO and the U.S. insistence on an end to EU export subsidies. The U.S. demand for an end to EU export subsidies was one of the primary reasons the Seattle meeting in 1999 failed. It has been a consistent, long-standing demand, yet was ignored by this report.
The article shifts from U.S. cotton subsidies, to total agricultural subsidization, to references to the “domestic output of sub-Saharan Africa,” to a reference to $3 billion a year in subsidies for cotton in a three paragraph link that seems designed only to make the reader think U.S. cotton subsidies are greater than the domestic output of sub-Saharan Africa. That same portion of the article again erroneously states that the U.S. refuses to “reduce its … subsides for cotton.”
“The article's reference to cotton playing a big role in developing countries' efforts to connect with the garment industry is simplistic and naïve,” Lange said. “Historically, some countries used textile production (spinning yarn and weaving or knitting fabrics) as one of their first areas of industrialization. However, the lack of cotton production does not appear to have hampered South Korea, Japan or Taiwan. Nor does the availability of cotton ensure the location of textile production, as witnessed by most African cotton producers and Australia.”
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