US President Barak Obama’s new federal budget proposals take a tough stance on subsidies to US farmers. They call for a US0 000 (over R2 million) cap on subsidy payments, as well as an end to direct payments to large agribusinesses with more than a US0 000 (over R5 million) annual revenue.
The move addresses an issue that stalled World Trade Organisation (WTO) talks. While emerging economies challenge US and European Union farm spending, current WTO rules permit countries to increase agricultural tariffs and subsidies to protect farmers from falling prices resulting from the global economic downturn.
Agricultural Business Chamber CEO Dr John Purchase said he’d be pleased if the US took the lead in cutting subsidies. “It would certainly help, given South Africa’s lack of support to its farmers,” he said. “We’d like to see a freer trade environment where everyone can compete on a level playing field.”
But Obama’s administration warned in its first annual trade agenda report it wouldn’t be cutting farm subsidies until other countries made better offers to open their markets to US goods. The report said there was an “imbalance in the current Doha negotiations in which the value of what the US would be expected to give was well-known and easily calculable, whereas the broad flexibilities available to others leave unclear the value of new opportunities for our workers, farmers, ranchers and businesses”.
The new report does note the importance of trade to the US economy and said Obama would use “all available tools” to expand exports. This could include fast-tracking negotiations on trade agreements, which could be submitted to Congress for a vote without amendments. Meanwhile, WTO director general Pascal Lamy told an Australian agricultural conference that global trade talks could remain stalled if the US back-pedalled on liberalisation.
Dr Purchase said if subsidies aren’t cut, South Africa will have to develop trade and tariff strategies so agriculture can be competitive. – Staff reporter
US backtracks on Obama’s subsidy plan
US President Barak Obama’s new federal budget proposals take a tough stance on subsidies to US farmers. They call for a US0 000 (over R2 million) cap on subsidy payments, as well as an end to direct payments to large agribusinesses with more than a US0 000 (over R5 million) annual revenue. But Obama’s administration warned in its first annual trade agenda report it wouldn’t be cutting farm subsidies until other countries made better offers to open their markets to US goods.
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