In his speech before the United Nations earlier this year, President George W. Bush laid out a bold vision for a world free of trade barriers and trade-distorting subsidies and declared that "the surest path to greater wealth is greater trade".
The US is committed to that path, and believes the way to achieve it starts with the successful completion of trade talks under the World Trade Organisation's Doha Development Agenda. The leaders of the Group of Eight industrialised countries have described Doha as a unique opportunity to "broaden, deepen and extend the current economic expansion".
They are right. No other initiative has more potential to generate global economic growth and significantly help the poorest countries. But time is short and our task substantial. If we are to wrap up the Doha negotiations by the end of 2006 as agreed, the talks urgently need energy, momentum and leadership by all WTO members, especially as we approach a critical ministerial meeting in Hong Kong.
To unleash the potential of Doha we must first break the deadlock in the agriculture negotiations. In July 2004, WTO members agreed to a framework for agricultural reform. Now is the time to build on this framework and drive the negotiations to a conclusion.
To achieve the tariff and subsidy-free world envisioned by President Bush, I propose a practical, two-stage reform - initially by making deep cuts and then over time eliminating all trade-distorting measures.
First, by improving market access for agriculture, the greatest benefits can be realised. I urge WTO members to adopt an ambitious tariff reduction consistent with the framework and using the formula developed by Brazil, India and others in the Group of 20 developing countries. This should involve steep tariff cuts over the next five years, starting from 55 per cent up to 90 per cent in the highest tariffs in rich countries. In a second stage, tariffs should be brought down to zero. There would need to be a very limited scope for alternative treatment of sensitive products, and the creation of this list cannot be used to undermine market access. Developing countries must also offer contributions commensurate with their role in agricultural trade.
The second pillar of the agriculture negotiation is trade-distorting domestic support. To jump-start our stalled negotiations, the US is prepared to move, and move aggressively, by supporting a 60 per cent cut in "amber box" support - the most distorting type of subsidies - over the next five years. This will require significant reforms to US farm programmes. WTO members agreed in the framework to establish a new cap in the less trade-distorting support programmes under the "blue box" and further define this type of domestic support. Getting control of "blue box" payments has been a top priority of many WTO members. Recognising its importance, the US is prepared to move here too and go beyond the framework. Over the next five years we suggest reducing the agreed cap by half - a step that also requires changes in US farm programmes. In the second stage, alltrade-distorting support could be eliminated. The US will do its part and more, but consistent with the framework's harmonisation commitment, greater cuts must be required by the European Union and Japan, which have much larger subsidies. All countries must also simultaneously deliver real market access.
Export subsidies - the third pillar in agriculture - are already slated for elimination under the framework. The date for elimination must be set and it should be 2010, as suggested by Tony Blair, the prime minister. The US is also prepared to tighten rules on the donation of food aid to guard against possible commercial displacement but not at the risk of further reducing already inadequate food aid for those who need it most.
A ground-breaking result in agriculture is not in and of itself a sufficient outcome. There must also be complementary advances in trade in manufactured goods and services. Development, which we believe is at the heart of Doha, can be best realised if we are ambitious in all three areas. The US is ready to make tough decisions on agriculture, but we cannot do it alone. It will take serious contributions and intensive participation by all members. The US offer to make difficult domestic support decisions is conditional on other countries reciprocating with meaningful market access commitments and subsidy cuts of their own. The clock is ticking. Together, we can break the agriculture deadlock and unleash Doha's potential for greater global prosperity.