The United States says it is ready to cut its trade-distorting farm subsidies to US$ 15 billion a year in a bid to reach a global trade deal that could help boost the world economy.
The offer was made on the second day of a ministerial meeting taking place at the World Trade Organization headquarters in Geneva and aimed at wrapping up the seven-year-old negotiation to ease trade restrictions. Brazil and other developing countries have been blaming the US and the EU for the stalled negotiations.
US Trade Representative Susan Schwab says the proposal reflects a promise made by Washington to play a leading role in getting a trade deal done.
The US currently has a ceiling of just over US$ 48 billion on agricultural subsidies. But, actual support payments to farmers came to about 7 billion last year because soaring food prices meant they needed less help.
Schwab says the proposed 15 billion ceiling is 2 billion below what the United States promised a year ago. She says this offer is being made to move the negotiations forward and to conclude the talks.
"This is a major move taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access." she said. "These cuts will deliver effective and significant reductions in trade distorting domestic farm support."
The WTO Doha Round talks aim to make trade fairer for poor countries. But the US and the European Union have been under pressure to reduce their agricultural subsidies and to cut tariffs.
Developing countries say trade-distorting subsidies give the wealthy countries an unfair advantage, making it difficult for them to compete in the open market.
Wealthy countries say they are willing to cut their farm supports, but in return the poorer countries have to provide greater market access to their manufactured goods and services.
Schwab says the new cuts proposed by Washington would require adjustments to domestic farm programs, but "the US is prepared to make those changes."
"But, we also need assurances that if our programs are going to meet these disciplines, they are then not going to be subject to legal challenges that reduce them further," said Schwab. "Now, let me say again. These reductions are not offered in isolation. They must be accompanied by significant market access, market opening in agriculture and in NAMA".
NAMA or Non-Agricultural Market Access Negotiation deals with a wide-range of manufactured and industrial goods.
The G-20, a group of developing nations, has issued a joint statement declaring that a "substantial result" is expected from the Doha Round negotiations on Domestic Support, Market Access and Export Subsidies.
The group also stated the need of developed nations to take on their responsibility in the reduction of domestic agricultural subsidies and in the improvement of market access.
The G-20 and other groups of developing nations that are part of the WTO also issued a joint statement. In the document, they said that for developing nations to participate in a multilateral trade system, it is necessary for the WTO to answer to the concerns and needs of these nations.
"This is the main reason for the Doha office to have put the interests of developing nations in the center of the work program," they said.
The countries also emphasized the central part played by agricultural negotiations in the Doha Rounds. They stated that most of the world's farmers are in developing nations and that it is they who suffer most due to the "gigantic subsidies that distort trade and the barriers that block access to markets in developed nations."
The group has decided to work constructively so that it may be possible to reach an agreement in the agricultural area up to the end of the week. They have said it is necessary to have "a truly multilateral and transparent process, conducted from the bottom up."
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