By  on July 23, 2008

GENEVA — The U.S. presented a new conditional offer on Tuesday to cap its farm subsidies at $15 billion, down from an earlier offer of $17 billion, setting the stage for serious haggling in an attempt to reach a breakthrough deal in the Doha Round of global trade talks.

“This is a major move, taken in good faith with an expectation that others will reciprocate and step forward with improved offers in market access,” U.S. Trade Representative Susan Schwab said on the second day of high-level meetings here.

Schwab said the reductions “are not offered in isolation and must be accompanied by significant market openings in agriculture and NAMA [nonagricultural market access].”

Major trading partners such as Brazil, India and the European Union welcomed the U.S. agriculture offer as a first step, but said it was still inadequate. Some diplomats and interest groups also had doubts whether the administration can politically deliver on the offer.

“If we make an agreement here, will the American Congress approve it?” asked Celio Porto, Brazil’s secretary of agriculture, adding the recent U.S. farm bill, which raised farm subsidies, casts doubts on the offer.

The U.S. also signaled it was committed to putting forward an offer that would encompass faster and deeper cuts for cotton subsidies, but clarified the quality of the offer would depend on what market access openings it can secure from key export markets that still have high tariffs, such as China.

“The levels we’re looking at will be dependent on market access, quite frankly, that we will see for American cotton,” said Mark Keenum, U.S. undersecretary of agriculture.

However, some top envoys from some major farm exporting nations were upset the U.S. was linking the cotton cuts, which are meant to help the poorest African nations, to market access commitments.

“Our export markets for cotton are in Asian nations, primarily,” Keenum said, adding that about half of that goes to China. “China has very high tariffs on cotton imports. So, it’s important to obtain very significant access to our markets for American cotton.”

The draft on the table calls for the U.S. to slash cotton subsidies by 82 percent, which Washington has said is unacceptable, but has yet to counteroffer. In 2007, the U.S. was the world’s biggest cotton exporter with shipments valued at $4.7 billion. Other major exporters included Brazil, with shipments worth $512 million; Australia, with $462 million, and Greece, with $245 million.

Meanwhile, the talks on industrial goods, or NAMA, remained deadlocked between key emerging countries and the U.S. and European Union.

India, Brazil, South Africa and Argentina, backed by their industries, especially textiles and apparel, are opposed to demands pushed by the EU and the U.S. that would water down flexibilities for the timing of tariff cuts in the current draft to shelter certain sectors from competition.

“No, we want to keep this right off the table,” Rod Davies, South Africa’s deputy trade minister, said in an interview.

Brazil Foreign Minister Celso Amorim said it was “a bad idea” and T.S. Vishwanath, senior director of international trade policy at the Confederation of Indian Industry, called it “a deal-breaker.”

But the U.S. and EU are under similar pressure from manufacturers to make sure that certain sectors are not carved out from any market openings.

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