Sutton praises US proposal on tariffs and subsidies

Acting trade and agriculture minister Jim Sutton today welcomed the United States' new proposal on agricultural tariffs and subsidies.

Top US trade official Rob Portman laid out the new proposal, saying the EU and Japan must now promise to do more to cut aid to their own farmers.

With two months remaining before a deadline for a framework global trade treaty, ministers from World Trade Organisation members are once more confronting the thorny issue of US and EU farm subsidies.

"The US is willing to take some pain," US trade representative Rob Portman said. "But those who subsidize more need to reduce more."

Mr Sutton said talks were at a critical stage.

"A breakthrough is desperately needed after a year of minimal progress," he told NZPA from Singapore, where he was about to board a flight to Zurich for talks on Wednesday.

"Key players have been watching the US closely to see if the US could make an offer on domestic farm subsidies.

"This offer from Portman goes well beyond the previous US position."

Mr Portman said that the United States is ready to make "steep tariff cuts" as ministers from the world's largest commercial powers gathered in Switzerland to revive global trade talks.

The EU "uses about three times more support than we do," he said. "The ratio needs to be about two to one to be rational, balanced and practical."

According to the offer, the United States would make cuts of 60 per cent in trade-distorting farm subsidies.

But Mr Portman said the EU and Japan would have to make cuts of 80 per cent, since their subsidy levels are higher.

Brussels has so far offered to cut its subsidies in products including wheat, dairy goods and rice by 65 per cent. The US proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.

A ministerial meeting in Paris last month failed to break the deadlock, although the EU took a step in that direction, presenting a detailed but tentative offer to cut import tariffs at talks with Mr Portman and ministers from India and Brazil.

Mr Sutton said New Zealand had to see the proposal as "very positive".

He agreed that other major players -- particularly the EU and Japan -- would have to match it.

"We especially need to get offers on the table in respect of market access.

"However we have to hope that the dramatic new offer is the key to unlocking progress in the trade negotiations."

Australia's Trade Minister Mark Vaile also said the EU had to match the US offer.

European Union Trade Commissioner Peter Mandelson said Brussels would be making its own proposals on cutting farm aid.

At a Hong Kong summit scheduled for the end of the year the WTO's 148 members are supposed to agree on an outline for a global trade deal.

EU farm reforms adopted in 2003 will convert the bulk of the bloc's production subsidies such as animal-welfare and environmental-management grants to farmers -- deemed far less trade-distorting under WTO rules.

Washington envisages no such change to its "countercyclical" subsidy program, which provides payouts to farmers when prices fall, allowing US producers to charge artificially low prices.

- NZPA