"What we are seeing here at the negotiations is a group of developing countries, led by Brazil, making one-sided demands of developed countries, but refusing to put their own policies on the table," said Ron Heck, ASA President and a soybean farmer from Perry, Iowa.
"If Brazil and these other countries continue to be uncompromising about opening their own markets and disciplining their subsidies, the WTO negotiations will go over the cliff and Brazil will be responsible for pushing them over."
ASA and other producer groups have stated that the degree to which they will support reductions in U.S. domestic support programs is dependent on the degree to which markets are opened and tariffs are harmonized in both developed and developing countries. Improved market access is key for U.S. producers since U.S. agriculture tariffs average only 12 percent, while agriculture tariffs in the rest of the world average 62 percent.
ASA and other producer groups have also stated that net agriculture exporting developing countries, such as Brazil and Argentina, must be subject to the same domestic support disciplines as developed countries.
Under current WTO rules, self-designated developing countries are able to exempt from discipline their own production and trade-distorting domestic support policies, even when the countries are world-class exporters.
"An interim report prepared by USDA’s Foreign Agricultural Service, at the request of Sen. Chuck Grassley, R-Iowa, identified several of the programs being used by Brazil to develop its agricultural production and exports, but which are not subject to disciplines under the current WTO loophole for developing countries," said Heck.
"FAS and other reports indicate that the Government of Brazil will provide the equivalent of $6.9 billion in production credits to Brazilian farmers in the 2003/04 season at sharply subsidized interest rates. Medium and large producers are eligible for loans at 8.75 percent, and small producers are eligible for loans at 5.75 percent, compared to the national index interest rate of 26.5 percent. This reflects an interest rate subsidy of 17.75 percent to 20.75 percent.
"The FAS report also identifies that Brazil imposes prohibitive taxes on farmland that is not brought into production, essentially forcing producers to clear and plant new acreage," Heck continued. "This policy is a powerful production incentive that is artificially driving the rapid increase in Brazilian production and exports of soybeans and other commodities.
"Time is running out at these negotiations," concluded Heck. "The United States already has an open market and is fueling the world economy, as evidenced by our $503 billion trade deficit. The United States is willing to further open our market and reduce trade-distorting domestic support, but this must be met with substantial market access gains in developing country markets.
“It must also be met with a commitment that net agriculture exporting developing countries, such as Brazil and Argentina, are willing to subject their own production distorting policies to the same disciplines as developed countries."