10/13/05 The big proposal, Part one

By all accounts from news reports, whether from domestic sources or foreign, U.S. Trade Representative Rob Portman's proposal to jump start the World Trade Organization ag trade reform talks is indeed bold. It goes farther than any previous offer from any nation during the Doha Round. And it got the attention of just about anyone and everyone involved in ag trade policy. So what is this big deal? In its simple terms, Portman's deal is that the U.S. would cut so-called Amber box domestic farm programs by sixty per cent, and agree to support fifty per cent cuts on blue box programs, if certain conditions are met. First, Portman explains how the W.T.O. defines trade subsidy programs through use of a color coding system ¬ quite red, yellow and green light, more like amber, blue, and green box. And Portman says you can add one more color to that & grey & as in grey area on where some of the U.S. trade subsidy programs fit in. PORTMAN: The Amber box is the highly trade distorting subsidy programs & something that would encourage production or depress prices. Our commodity loan program, marketing loan program, would be an example of that. Second is the Blue box, right now there's no limits on that. The set-aside programs would be an example there. We think our counter cyclical programs could well into the Blue box although at this point it's defined in a way that may make that difficult. And then third is the Green box. And the Green box is unlimited at this point, and these would be minimal or non trade distorting payments, for instance, our food stamp program or research or direct payments, environmental programs. Now Portman's offer is not just a stand alone deal. It is designed to create some significant give and take among member nations. For example, developing nations would have to dramatically reduce their tariffs on agricultural imports. And even more important, the deal challenges developed nations & the European Union and Japan specifically & to cut their trade subsidy program levels at greater amounts than what the U.S. is offering. The reason, according to Portman, is that both trading blocs already spend three times the amount of trade subsidies, and that for the U.S. Congress to accept any trade deal, both the E.U. and Japan would have to reduce such spending at least at twice current amounts. If all parties agree to Portman's deal, the highest tariffs in developed nations could reach a ninety per cent cut within five years, and then after a five year pause, be reduced again, down to zero by the year 2023. So what has been specific reactions to Portman's proposal? A mixed bag both at home and abroad. A sample of that reaction will be discussed in our next program.