26 July 2002

New Zealand Welcomes US Proposal For International Agriculture Trade

Proposals for international agriculture trade reform by the United States were bold and to be applauded, Trade Negotiations Minister Jim Sutton said today.

The level of ambition in new United States proposals released ahead of next week's informal negotiating session on agricultural market access at the World Trade Organisation in Geneva was welcome, he said.

"If these reforms could be achieved, they would go a long way to addressing the huge distortions our farmers face every day. Major players such as the United States have an important role to play to ensure that meaningful reform will be achieved. We look to all members to take a similarly bold stance.

"In spite of the good start we made in the Uruguay Round, the global trading system is still blighted by limited access opportunities and staggering levels of farmer subsidies by wealthy industrialized economies."

Mr Sutton noted that the great majority of WTO members is committed to achieving ambitious results, but said that some members, including the United States, European Union and Japan, currently retain high levels of support and protection for their own farmers.

"These proposals, if adopted, would radically liberalise trade restricted by high tariffs. They would have a relatively limited effect on trade constrained by quotas."

Mr Sutton said that for the Doha negotiations to achieve a good outcome on agriculture would require commitment and leadership.

"The United States has demonstrated that with these proposals. The proposals indicate the United States's determination to move ahead with trade liberalisation.

"But a good outcome also requires the political will to make real changes to domestic agricultural policies in those countries that maintain high levels of support and protection."

Mr Sutton said that New Zealand would be looking at the details of the proposals carefully.

He said that WTO members must ensure that all countries, including the United States, would be required to make significant improvements in market access and reductions in trade-distorting support in the first phase. The domestic support proposal would need to be assessed to be sure that countries are not able to slip current trade-distorting measures into the 'green box' of non-distorting support.

Mr Sutton said that New Zealand will continue to work with its Cairns Group partners, as well as the United States, European Union, Japan and other developed and developing countries to ensure the best possible result in the agriculture negotiations for the New Zealand agricultural sector.

Background: Summary of US proposals

The proposal outlines a two-phase process. In the first phase the proposal calls for a reduction of all tariffs, with the highest tariffs to be reduced the most, to a maximum permissible tariff of 25 percent, and the expansion of tariff quotas by 20 percent, with a zero in-quota tariff. In the domestic support area the proposal would cap all trade-distorting government payments to farmers at five percent of the value of a country's agricultural production. The proposal also calls for the elimination of export subsidies and stronger disciplines on export credits and the like.

In the second phase the proposal calls for agreement on a date by when all tariffs and trade-distorting support would be eliminated.

The full proposal can be accessed at http://www.ustr.gov/

Office of Hon Jim Sutton

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