WASHINGTON - The Bush administration July 1 signed in Geneva a World Trade Organization framework agreement on agriculture that would require a 20 percent reduction in U.S. trade-distorting domestic subsidies the first year it would go into effect, but does not require as specific a reduction in the tariffs of other countries that American farm leaders have said are vital for the United States to increase agricultural exports.

The signing of the agreement immediately set off a debate in Washington and around the world over its strengths and weaknesses, even though the negotiations are unlikely to be completed before 2006.

U.S. Trade Representative Bob Zoellick put out a "fact sheet" that heralded the agreement for "elimination of all agricultural export subsidies," "substantial improvements in market access" and "substantial reductions in trade-distorting agricultural support programs." The agreement, he said, amounts to "charting a course to prosperity" and "a historic reform of global agricultural trade."

Winners and losers

But Senate Minority Leader Tom Daschle, D-S.D., said "the Bush administration's trade representatives negotiated a drastic cut to the safety net enacted as part of the 2002 farm bill." Daschle, who is a tight race for re-election against former Rep. John Thune, R-S.D., added, "The additional resources provided in the 2002 farm bill benefited no state more than South Dakota. The proposed cuts seriously jeopardize the increased loan rates, the updated bases and yields and the countercyclical payments that I fought for as majority leader during the 2002 farm bill. In every deal, there are winner and losers. In this deal, big agribusiness has won and family farmers in South Dakota and across the country have lost. It appears the Bush administration is selling out our farmers at the negotiating table. That's simply unacceptable."

Allen Johnson, the chief U.S. agricultural negotiator, told reporters in reaction to Daschle's statement, "We are confident we can manage those levels," and that the United States expects to see bigger cuts from the Europeans.

But Zoellick and Johnson did not get much immediate praise from Republican agricultural leaders on Capitol Hill. A spokesman for Senate Agriculture Committee Chairman Thad Cochran, R-Miss., said Cochran would be traveling until Aug. 13 and would not issue a statement. A spokeswoman for House Agriculture Committee Chairman Bob Goodlatte, R-Va., said he was traveling in Africa and would not make a formal statement. She added, "The chairman would view this as a positive development in that the round did not fall apart as it did in Cancun. We are studying the details and obviously the devil can be in the details. It appears that there is a long way to go in terms of negotiations before we arrive at a a definitive agreement that would affect U.S. trade."

Senate Finance Committee Chairman Charles Grassley, R-Iowa, noted that the agreement kept alive the Doha Development Round of negotiations that fell started in 2001 in Doha, Qatar, and fell apart at a meeting of trade ministers in Cancun, Mexico, in September 2003. The United States "was able to lock in some of its major trade negotiating objectives for agriculture in this framework," Grassley said, but he added, "there still is a long way to go before the Doha Round is deemed a success for U.S. agriculture."

Rep. Calvin Dooley, D-Calif., one of the most active Democrats on trade issues, said, "While this framework agreement may not be as aggressive as we may have hoped, it avoids a stalemate and establishes some basic principles for the talks to follow as they move forward."

Industry reaction

Farm groups had varying reactions to the agreement.

The National Farmers Union agreed with Daschle, saying the United States had "unilaterally" given up farm benefits with "no guarantee of anything in return." NFU President Dave Frederickson said in a news release, "This seems to be the administration's way of accomplishing through the WTO what they could not achieve in Congress - the elimination of U.S. farm programs. Once again, U.S. farmers are being asked to sacrifice on the altar of free trade without getting anything in return. The administration has traded away the interests of farmers and ranchers for agribusiness and nonagricultural sectors. Although the agreement allows the multilateral trade negotiations to enter the next phase, the implications for U.S. agricultural producers are troubling."

Farmers Union Washington lobbyist Tom Buis told Agweek, "We are very concerned about this agreement. We have unilaterally agreed to give up domestic protection for farmers and ranchers that we fought so hard for in the 2002 farm bill to ensure an adequate safety net to protect circumstances beyond our control with a promise of nothing in return except for further discussion and talks. It does nothing to stop the race to the bottom in the commodity prices. It potentially increases global concentration by the multinational agriculture companies and it leaves us farmers and ranchers in the same situation as the 1998 to 2002 period when we had an inadequate low prices and an inadequate safety net, which was the impetus for drafting a new farm bill."

The American Farm Bureau Federation was more positive, but reacted with caution. Farm Bureau Federation trade lobbyist Rosemarie Watkins said, "We are generally positive that it moves the talks forward. Unfortunately, it leaves a great deal of the hard work ahead of us."

Farm Bureau President Bob Stallman said in a news release, "The commitments by both developed and developing nations to substantial tariff reductions and deeper cuts from higher tariffs will lead to expanded market access for U.S. farmers and ranchers. It is an important direction for the future negotiations that the goal of 'substantial improvement in market access' will apply to all agricultural products. The domestic support provisions in the text continue the direction of reducing trade-distorting domestic supports in international markets. The export competition measures in the text will benefit American farmers and ranchers by eliminating export subsidies and bringing rules to bear on the market-distorting operations of state-trading enterprises." Stallman also noted that the agreement would allow the United States to maintain food aid programs.

The call for changes in state trading enterprises could help U.S. wheat exports.

The National Cattlemen's Beef Association, the National Pork Producers Council and the National Corn Growers Association all praised the Bush administration for achieving the agreement.

NCBA President Jan Lyons said the agreement "represents a victory for U.S. negotiators and U.S. producers" and would provide "structure" to the talks.

NPPC President Keith Berry said the agreement "puts within reach one of the most important U.S. trade policy objectives of the past 30 years, the elimination of export subsidies." And "In the area of domestic support, it also sets up a negotiation that should lead to a substantial leveling of the international playing field and a reduction in trade distortions."

Corn Growers President Dee Vaughn said the agreement for the elimination of export subsidies would "provide new market opportunities for U.S. grain and value-added products." Vaughn also said, "The framework moves us in the right direction while ensuring the preservation of a strong farm safety net."

The American Sugar Alliance, which represents cane and beet sugar growers, praised the agreement for re-establishing the WTO as the center of agricultural trade negotiations and expressed the hope that the administration would heed the sugar industry's advice and reserve sugar negotiations exclusively for the WTO. ASA Chairman Carolyn Cheney said, "A piecemeal approach to sugar trade issues, such as the administration pursued in the free trade agreement reached with the Central American countries, is ineffective and dangerous. It would force American farmers to unilaterally open their markets to the grossly distorted world market for sugar, while doing nothing to curb the policies that have caused this 'dump' market."

Countries claim victory

After the press releases had been issued, a lot of the serious discussion in Washington centered on how strong the agreement was and whose statements should be believed. Trade negotiators and ag lobbyists in places as different as Brazil, India, Africa and the European Union throughout the world also claimed victory for their ag products and programs, even though it would be impossible for all of them to be winners when the negotiations are finished.

The United States has major conflicts with Brazil over whether Brazil, which has a very modern agriculture sector but is poor in other ways, should be subject to the same restrictions on subsidies as the developed countries such as the United States and the European Union. In the agreement, the United States won the right to make changes in a category of subsidies called the "blue box" so that U.S. countercylical payments can be included in it. But Brazil insisted that the blue box be capped at 5 percent of the value of agricultural production and the United States agreed. At his press conference, Zoellick praised the Brazilian foreign minister as a "particularly good partner" in the negotiations.

Zoellick emphasized the importance of cutting export subsidies, which the Europeans have used to lower the prices for a range of European products including wheat and cheese. But European officials and farm lobbyists told reporters that they had made all their hard choices in recent reforms in the European Common Agricultural Policy and their offer to give up ag export subsidies - and that the hard work now would be up to the Americans who have to give up U.S. agricultural export credit guarantees that are longer than 18 months and end subsidies in those that are for shorter periods. The credit guarantees are used to sell U.S. products such as soybeans and wheat.

Even COPA, the European umbrella farm group that often has resisted trade negotiations, said the agreement appeared to be a "solid basis for the continuation of the WTO negotiations."

France had tried earlier to stop the agreement but French Agriculture Minister Herve Gaymard said France had accepted the agreement because "the United States accepted controls on its agricultural policy, which it had not accepted before. When the efforts were evenly balanced there was no longer any reason to hold out against" (the deal).

Gaymard noted to reporters that the European Union already has changed its subsidy programs, reducing the export programs from 30 percent to 5 percent of the EU agriculture budget.

And when will the European Union give up its export subsidies whose elimination some American ag lobbyists think will make U.S exports easier?

"I think the deadline will be sometime around 2015 or 2017, which will give us time to react," Gaymard said.

Time indeed. The road to free trade appears very long.

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