From: Michael Byrnes, Reuters
Published November 4, 2004 12:00 AM

Brazil and Australia Want Detail on Farm Subsidy Cuts

SYDNEY, Australia — Australia and Brazil will push World Trade Organization member nations to agree on specific cuts to farm subsidies ahead of a WTO meeting in Hong Kong next year, Brazil's chief trade negotiator said on Wednesday.

Australia, the leader of the 17-member Cairns Group of agricultural free traders, and Brazil, the leader of the G-20 group of developing countries, have a common interest in seeing developed nations abandon farm subsidies. They say subsidies reduce world commodity prices and distort trade.

But farm subsidies remain politically supercharged and their partial retention is fought for by many nations, such as the United States, Japan, and the European Union.

The current Doha round of WTO trade reform talks nearly collapsed in Cancun, Mexico, in September 2003 over resistance by many nations to pressure for the abolition of farm subsidies.

But the talks were revived in July, when WTO members in Geneva reached agreement in principle to reduce farm export subsidies.

WTO member countries now have more than a year to negotiate how quickly and by how much tariffs and subsidies would be cut before the next full meeting of the 148 member nations in Hong Kong in December 2005.

Meanwhile, Australia and Brazil will continue to push WTO members to agree on specifics before the end of 2005.

"It is clearly possible. Although the July framework is only a step, it respects the Doha mandate and gives clear guidelines," said Clodoaldo Hugueney, undersecretary general in Brazil's Ministry of Foreign Relations during a visit to Australia. But he warned that the entire process risked failure if WTO members did not press on quickly for a full agreement.

Sweet Victory

Hugueney's optimism follows a recent statement by the chief U.S. agriculture negotiator Allen Johnson that agreement could be reached on farm subsidies and tariff cuts by the end of 2005.

The WTO's July agreement was another win for Brazil and Australia after a successful WTO challenge, with Thailand, to sugar subsidies in the European Union. This year, Brazil also successfully challenged U.S. cotton subsidies.

The E.U. and the United States are both appealing the WTO panel decisions, but Hugueney is confident they will stick.

Hugueney said that cooperation between Australia and the G-20 countries, which include China and India, had been instrumental in bringing about the July agreement and he said that alliance would hold.

"Australia and Brazil are two countries that have the most to gain from reform in the WTO. We don't need subsidies. We don't need domestic support. We are able to compete on fair terms. That's what we're trying to get in the WTO," he said.

Brazil and Australia are major competitors in global commodity exports, with Australia narrowly the world's top exporter, ahead of Brazil, of beef and iron ore. Brazil is the world's top exporter of sugar, ahead of Thailand and Australia.

Analysts say that, as part of any deal on agricultural subsidies, middle-income countries such as Brazil might have to cut or reduce their own tariffs to allow in more industrial goods produced by developed countries.

Source: Reuters

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