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EU's Fischer Boel presses US Congress on subsidies

The US Congress must roll back the 2002 increase in farm subsidies this year if it is serious about getting a new agreement in the WTO, the European Union's top agriculture official said today.

„We would hope that the 2007 Farm Bill will correct the mistakes from 2002 and not reinforce those mistakes,” EU Agriculture Commissioner Mariann Fischer Boel said at the Carnegie Endowment for International Peace in Washington. Fischer Boel, who met with US lawmakers and Agriculture Secretary Mike Johanns yesterday, said trade negotiators have a narrow window to reach the outlines of an agreement if the US Congress is to be convinced to renew President George W. Bush's trade promotion authority, known as TPA, which expires by July. „I got the impression from the Congress that there would be a willingness to extend TPA if there is a deal,” Fischer Boel told reporters. TPA, also called „fast-track,” forces Congress to vote up or down on trade agreements, without amendment. Business groups are preparing to roll-out a lobbying campaign to persuade the new Democratic Congress to extend the measure at an event with US Trade Representative Susan Schwab on February 12. „The Democrats are not protectionists. They want to find something that will work for everybody,” said Frank Vargo, vice president for the National Association of Manufacturers, one of the groups participating in the lobbying campaign. „We know we have to have TPA.” Even with that authority, the US and the other 149 members of the WTO will need to make new concessions to reach an agreement in the WTO. Trade officials in Geneva have been holding „fireside chats” to try to work out the tariff or subsidy cuts they will promise for specific products as they try to build a broader agreement, said John Weekes, a trade adviser for Sidley Austin LLP in Geneva. Veteran negotiators say there are just a few months to pull together talks that have moved in fits and starts since November 2001. „As a practical matter, you have to see the negotiations unblocked by the middle of May,” said Weekes, a former Canadian ambassador to the WTO. „There is the sense that we are approaching the moment of truth.”

The EU says that US farm subsidies drive down global prices, undercutting producers in the EU and developing nations. The EU, Brazil and India want the US to slash its subsidy budget by about $8 billion a year from current ceilings of $23 billion to help wrap up WTO talks in the next few months. The Bush administration last month proposed cutting payments for US farm programs by 12% to $87.3 billion over five years starting in October. The plan shifts some money from subsidies based on commodity prices toward conservation. The European Commission, the 27-nation EU's executive arm, is disappointed that the administration's plan didn't impose more discipline on farm payments, Fischer Boel said. In the US, the plan is likely to run into opposition from farm-state lawmakers who say agriculture producers need a safety net against falling prices. Collin Peterson of Minnesota, chairman of the House Agriculture Committee, said last month that he opposes reducing aid to bolster trade negotiations. As the EU calls on the US to make further cuts, Fischer Boel signaled that it is unwilling to make the cuts in farm tariffs being demanded by the US and American farm groups. „We need a dash of realism about what is politically possible,” she said. (Bloomberg)