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by Constance Cullman Jackson

United States interest in trade is easily understood considering that 25 percent of all agricultural production is exported and that the positive relationship between exports and net farm income is clearly in evidence. Many of the rules of international farm trade are administered by the World Trade Organization (WTO), which was established in 1995 as a multilateral institution. There are currently 146 member countries.

The United States believes there are three core issues that must be addressed in WTO negotiations: 1) agricultural tariffs in the rest of the world average 62 percent while the average U.S. tariff is 12 percent; 2) the European Union (EU) spends $2 billion to $5 billion annually on export subsidies or 87 percent of world spending while the United States accounts for 1 percent of export subsidy spending; and 3) disparities in domestic support – the EU is allowed to spend $60 billion a year on trade distorting domestic support while the United States is limited to $19.1 billion. Domestic support on a per acre basis in Japan is $4,606; in Korea it is $4,002; in the EU it is $309; in the U.S. it is $49; in Canada it is $23 and in Australia it is $1. It is imperative that these disparities be reduced through coordination of tariffs and domestic support and the elimination of export subsidies.

The U.S. proposal to reform world trade focuses on market access, domestic support and export subsidies and advocates a harmonization approach. To improve market access, it seeks proportional reductions resulting in more equalized tariffs across countries and products. Under this proposal the average U.S. tariff would be 8 percent, and the average world tariff would be reduced to 18 percent.

The United States also advocates elimination of all export subsidies over five-years. It proposes that trade-distorting support to producers be limited to a percentage of value of total agricultural production in each country and sets the same standard for all countries’ allowed levels. Under the U.S. proposal, the EU would reduce domestic supports from $61 billion to $12 billion, Japan would drop from $30 billion to $4.5 billion, and the United States would reduce their $19.1 billion in spending to $10 billion.

In addition to the WTO multi-lateral approach, other negotiations are proceeding using a bi-lateral or regional approach called free trade agreements (FTAs). The administration has proposed an ambitious trade agenda by moving forward with several countries on FTAs. Currently under negotiation are the Central American Free Trade Agreement, Free Trade Agreement of the Americas, Australia, Morocco and the Southern African Customs Union Free Trade Agreements. The administration recently concluded FTA negotiations with Singapore and Chile, and has in place FTA’s with Mexico and Canada, Israel and Jordan.

The Ohio Farm Bureau Federation will be participating in the WTO 5^th Ministerial Conference in Cancun, Mexico, to express Ohio members’ positions on these trade negotiations. Our position reflects AFBF’s support of the U.S. proposal including the elimination of export subsidies, more commercially meaningful tariff reductions, greater harmonization of domestic supports, greater reduction of nontariff trade barriers and elimination of the monopoly practices of Export State Trading enterprises.

Farm Bureau’s negotiating principles for FTAs focus on achieving meaningful market access reform. We believe domestic support should not be discussed in FTAs. Domestic support should only be negotiated in the WTO due to continued subsidization by non-FTA countries.

Agriculture must also be assured that the United States will aggressively enforce trade agreements, hold trading partners accountable and taking retaliatory action when necessary for the industry.