World Trade Organization Agriculture Negotiations - Chairman Chambliss Statement
In September, the Senate Agriculture Committee held a hearing where the Administration testified regarding the status of the agriculture negotiations in the World Trade Organization (WTO). At the time I said the United States has much to gain and lose in the negotiations. In some ways, the negotiations will establish the parameters for future U.S. agriculture that will influence the balance sheet for millions of farmers and ranchers in the United States. I also stated that the Administration should not accept a deal in Hong Kong unless it provides tangible and real rewards for our agricultural sector. In short, no deal is better than a bad deal.
I have been monitoring the negotiations and will continue to do so from Washington, D.C., since I will be unable to attend next week's Ministerial in person. While I appreciate the close working relationship I have with Ambassador Portman and Secretary Johanns, I am not encouraged by the draft text issued last week and the intransigence of the European Union (EU). The recent speech by Trade Minister Mandelson is particularly discouraging calling upon the least developed countries of the world to further his protectionist aims. Moreover, the continued focus on cotton without an underlying agreement on agriculture and substantial and meaningful market access commitments will not find support within the United States Congress. I find it rather shameless for French President Jacque Chirac to lecture the United States on farm subsidies while hiding behind the cloak of African poverty to shield European farmers from true reform, especially when Europe has four times the allowable level of support as the United States.
Throughout the process I have articulated several criteria by which I will judge any agreement and those have not changed. I believe an agreement must provide substantial improvement in real market access, provide greater harmonization in trade-distorting domestic support, eliminate export subsidies and provide greater certainty and predictability regarding potential litigation.
While it appears that the Hong Kong Ministerial will not agree to a set of modalities, it is my hope that discussions can continue in order to break the current impasse which is impossible without bolder moves by the Europeans on agriculture. We have waited more than two months for the EU to come forward with a more ambitious proposal. Hong Kong could have achieved more, but the EU has stood in the way.
With expectations lowered for the meeting next week, attention is now focusing on various developing country issues. It is here where I have significant concern.
While the Doha Round places a priority on development, the output should not be rooted in politics at the expense of sound economic principles. We need comprehensive, across-the-board reform. Cherry picking specific commodities like the calls for an early harvest on cotton are unwise and threaten the larger objective. I will oppose any resolution of the cotton issue without first the conclusion of an underlying agriculture agreement.
The United States has already illustrated its good faith efforts to address the cotton issue. Our action to repeal the Step 2 program, cuts in direct support to cotton producers as a result of our budget reconciliation process, and the launch of the West Africa Cotton Improvement Program stand above anything the European Union has offered. In addition, private sector efforts are worthy contributions and should not be overlooked.
It is clear to me that any favorable outcome should focus on reducing barriers to trade and increasing demand for cotton worldwide. Outside the United States, per-capita consumption of cotton fell from 7 pounds in 1990 down to 6 pounds in 2003. If consumers in Japan and Western Europe consumed at the same level as in the United States, it would mean an additional demand of 20 million bales. If China had maintained its per-capita cotton consumption at the 1990 level, the 1.2 billion consumers in China would be purchasing an additional 4.4 million bales of cotton per year. In contrast, peer-reviewed analysis by researchers at Texas Tech University found that removal of domestic programs would increase world cotton prices by only 2 percent.
In fact, the nonpartisan and independent Congressional Budget Office (CBO) released in a paper a summary of the economic effects of trade liberalization:
"Developing countries as a group would benefit more from liberalization of their own policies, which directly affect both their exports and their imports, than they would from liberalization of developed countries' policies, which directly affect only their exports. To the extent that developing countries are harmed by developed countries' policies that distort trade, the evidence points to the European Union and high-income Asian countries as much larger sources of harm than the United States."
While I continue to reserve judgment, I must reiterate that the Administration should not accept a deal in Hong Kong or in the future unless it provides tangible and real rewards for our agricultural sector. I believe it is possible to promote development, provide substantial trade liberalization and reform domestic programs for agriculture in the Doha Round that has the support of both developed and developing countries alike. However, this is not a free round of negotiations for developing countries and U.S. agriculture will not sacrifice while Europe continues to protect its farmers and places the future of the WTO and the Doha Round in jeopardy.