Reaction among farm organizations to the new framework agreement for restarting the Doha Round negotiations appears to be divided along the lines of whose ox seems to be getting gored first.
The agreement reached at the Geneva headquarters of the WTO on Aug. 1 calls for the United States and other developed countries to cut export credits and crop subsidies, specifically for U.S. cotton, in exchange for a vague promise that developing countries will increase access to their markets.
Leaders of the Memphis, Tenn.-based National Cotton Council were among the first to react to the new agreement, saying it unfairly singled out the U.S. cotton industry for special treatment based on poor economic analyses and an aggressive media campaign against U.S. cotton producers.
“The U.S. cotton industry is glad to see that cotton will be addressed as part of the overall agricultural negotiations,” said Woody Anderson, the NCC chairman and a cotton producer from Colorado City, Texas. “However, we are concerned about the specific references to cotton in the framework's text.”
Other groups — the American Farm Bureau Federation, American Soybean Association, National Corn Growers Association and U.S. Wheat Associates — were generally supportive of the agreement, which provides the basis for further negotiations under the Doha Development Round.
“We are disappointed to see cotton highlighted in numerous contexts,” the NCC's Anderson said. “We are encouraged to see that there are no specific commitments for an ‘early harvest’ of the cotton program, which would have required separate negotiations outside of the overall agriculture discussions.”
NCC President and CEO Mark Lange said that “singling out cotton as a separate issue is both unfair and inappropriate. Unfortunately, this initiative has been influenced by poor economic analysis. The world cotton market is much more than the United States. The United States has not increased cotton production, but we have seen a surge in foreign production, particularly in China and Brazil.”
“A number of independent studies conclude only modest impacts on world prices from the presence of the cotton program,” said Anderson. “Studies by FAO, Texas Tech University and the IMF all report that the U.S. cotton program affects world prices by only 1 to 3 percent.
“As the Doha negotiations move forward, it is imperative that there be a broader understanding of world fiber markets and the role played by U.S. cotton.”
Lange said he is not surprised that these studies would conclude such a modest impact.
“Let's just look at the numbers,” Lange said. “The U.S. represents less than one-fifth of world cotton production. Also, the cotton market does not operate in a vacuum. Cotton prices are directly impacted by what happens in substitutes such as manmade fiber.
“With the recent expansion in manmade fiber production, U.S. cotton represents less than 7 percent of world fiber markets.”
“Agricultural reforms must occur through a broad-based approach, and this text should not limit that approach,” Anderson said. “The U.S. cotton industry is committed to reforms, but they must be undertaken across all areas.”
Although U.S. cotton producers represent a small market, international charity groups such as OxFam International in the United Kingdom and the Environmental Working Group in this country have portrayed the U.S. cotton program as responsible for the impoverishment of farmers in Africa.
American Soybean Association leaders, meanwhile, applauded the agreement because it “provides an opportunity to achieve significant improvement in market access for soybean and livestock products.”
They said ASA supports the position of the U.S. negotiating team that reductions in domestic farm supports must be matched by gains in market access through tariff reduction and higher tariff rate quotas on import sensitive products.
“This is as balanced a framework as could be expected, and we look forward to working closely with our negotiators as this process enters the next critical phase,” said ASA President Neal Bredehoeft, a soybean grower from Alma, Mo.
“ASA is particularly pleased that language in the previous draft framework that could have restricted U.S. food aid donations as ‘surplus disposal’ has been deleted from the final text. That provision could have severely reduced non-emergency humanitarian food assistance programs that are vital in feeding millions of hungry people around the world.”
Bredehoeft added that ASA has asked that the negotiations address the need to require advanced developing countries like Brazil to comply with the same disciplines on domestic support that developed countries must observe under the new framework.
“The draft of the agricultural framework for world trade negotiations moves us further down the road to securing trade reform,” said Farm Bureau President Bob Stallman, a rice and cattle producer from Texas. “It is encouraging that the draft proposes deeper cuts in those tariff levels that are the highest.”
U.S. officials have made tariff reduction a priority objective because import duties in member countries of the European Union, Japan and so-called developing countries like Brazil average 60 percent while those in the United States are closer to 12 percent.
“Developed and developing nations alike will be required to improve market access,” said Stallman. “Additionally, the draft lays out a strong and positive position for eliminating export subsidies and the trade-distorting practices of state trading enterprises.”
Stallman's interpretation of the treatment of cotton in the agreement differed from the NCC's.
“It is also encouraging that all commodities, including cotton, will be handled as a single undertaking rather than being broken out for special treatment that could be less than fair to all parties,” he noted. “In the domestic support area, the counter-cyclical elements of U.S. farm programs would be judged to be less trade-distorting under this draft.”
The National Corn Growers Association applauded the framework agreement's call for the eventual elimination of export subsidies and a significant reduction in import tariffs.
“This has long been a priority for NCGA and will provide new market opportunities for U.S. grain and value-added products,” said Dee Vaughn, its president from Dumas, Texas. “NCGA has long sought harmonization of trade-distorting domestic support. The framework moves us in the right direction while insuring the preservation of a strong safety net.”
A spokesman for U.S. Wheat Associates, the export promotion arm of the wheat industry, had similar comments, saying wheat producers have long supported negotiations to open markets, eliminate trade-distorting domestic support and eliminate market-distorting state trading entities.
“Wheat producers, looking at our specific issues, see the agreement as a very important step, but there is still a way to go in future negotiations,” the organization said. “We are particularly pleased about the prospects of further negotiations on the state trading monopolies that we view as the primary distortion in the world wheat trade today.
“The agreement spells out that trade-distorting practices of export STEs, including the elimination of export subsidies to and by the STEs and the end of government financing and underwriting of losses are on the table.”
The USA Rice Federation was more reserved in its comments, noting that the framework provides for the elimination of export subsidies, increased discipline on export credit guarantee programs and movement away from previous language on food aid that was harmful to U.S. programs.
“It's important to note that the framework is a template for future negotiations,” a spokesman said. “As such, certain provisions lack detail which indicates that tough negotiations lay ahead. USA Rice remains concerned that any commitment by the United States to cut our domestic supports must be matched by clear improvements in market access along with enforcement of current trade agreements.”
The most negative comments came from the National Farmers Union, which accused the Bush administration of selling out farmers to achieve a face-saving agreement for the World Trade Organization.
“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,” NFU President Dave Frederickson said. “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 non-agricultural sectors. Although the agreement allows the multilateral trade negotiations to enter the next phase, the implications for U.S. agricultural producers are troubling.”
He said U.S. negotiators agreed to cut domestic economic safety net programs substantially, “without identifying a plan to improve economic returns to producers or even achieve the same level of specificity concerning export subsidies or market access. It also fails to address specific trade-distorting competitiveness issues such as exchange rates, labor and environmental standards and the effects of concentration.
“National Farmers Union is disappointed that the WTO framework will perpetuate a never-ending race to the bottom in producer commodity prices, pitting farmer against farmer and country against country for the one commodity all humans must have — food.”