Milling & Baking News - August 10, 2004 - 17

I N T E R N A T I O N A L

as France. The U.S. has been much less
active in directly subsidizing agricultural exports in recent years. The Export
Enhancement Program, created by the
1985 farm bill to counter E.U. subsidies
of critical commodities such as wheat
and ﬂour, has been moribund for several
years, though the legislation authorizing
it remains on the books.
But the framework agreement would
force the U.S. over time to revamp, downsize or even eliminate its export credit programs, including G.S.M.-102 and G.S.M.103. G.S.M.-102 is the larger program and
guarantees credit issued by approved lenders to foreign buyers of U.S. food products
for up to three years. G.S.M.-103 provides
credit guarantees for up to 10 years.
The framework agreement called for
the elimination of export credits, export
credit guarantees or insurance programs
with repayment periods that extend beyond 180 days.
The agreement also slated for elimination terms and conditions relating to
export credits, export credit guarantees
or insurance programs with repayment
periods of 180 days and less that are
not in compliance with disciplines to
be agreed. "These disciplines will cover,
inter alia, payment of interest, minimum
interest rates, minimum premium requirements, and other elements which
can constitute subsidies or otherwise
distort trade," the agreement stated.
At the same time, the agreement said
members should ensure that disciplines
on export credits, export credit guaran-

tees or insurance programs would make
appropriate provision for differential
treatment of least-developed and net
food-importing countries.
Amplifying on the need for some ﬂexibility to meet dire circumstances, the agreement stated, "In exceptional circumstances,
which cannot be adequately covered by
food aid, commercial export credits or preferential international ﬁnancing facilities,
ad hoc temporary ﬁnancing arrangements
relating to exports to developing countries
may be agreed by members."
The framework agreement called for
disciplining practices of state trading enterprises (S.T.E.s) such as the Canadian
Wheat Board. The framework speciﬁcally aimed at subsidies provided to or
by S.T.E.s, government ﬁnancing and the
underwriting of losses.
The agreement afﬁrmed the intent to
establish disciplines with regard to provision of food aid with the primary aim that
such aid not displace commercial sales. At
the same time, the framework sought to
ensure that disciplines on food aid not disadvantage the least-developed nations.
"The question of providing food aid
exclusively in fully grant form will also be
addressed in the negotiations," the agreement further stated. The E.U. would seem
to opt to provide aid in the form of cash
grants. Those cash grants then could be
used by the principal distributing agencies, such as the World Food Programme,
to purchase food anywhere on the world
market, including in the region where
emergency needs were evident. The U.S.

Grain, food associations praise W.T.O. deal,
but they say more work remains necessary
WASHINGTON - Most grain and food
industry associations called the latest
agreement reached by the World Trade
Organization a positive step forward,
while noting that much work remained
when negotiations resume next year.
"As the organization that brought the
ﬁrst dispute settlement case under the old
G.A.T.T. against the European ﬂour export
subsidies, we are gratiﬁed to ﬁnally see the
end to export subsidies within sight," said
John Gillcrist, chairman of the North American Millers' Association.
U.S. Wheat Associates
said it was pleased about
further negotiations on
state trading monopolies,
which it views as the "primary distortion"
in world wheat trade. For the ﬁrst time in
any W.T.O. or G.A.T.T. negotiations, the
future use of monopoly powers will be a
subject of the next stage of negotiations,
the group noted. U.S. Wheat said it was

18 / Milling & Baking News, August 10, 2004

pleased the negotiations took the threat
to U.S. humanitarian food aid programs
seriously but expressed concern that the
European Union would continue to push
for grant-only programs.
The W.T.O. agreement was a "critical
step forward on the road to a more open
and less distorted agricultural trading
system," International Food & Agricultural
Trade Policy Council chairman Robert
Thompson said in a written statement.
"Reducing distortions in global markets
is the single most important
thing that developed countries can do for developing
countries," he said. "While
this framework agreement
creates a strong foundation for a more
open and less distorted agricultural trade
system, it offers no guarantees."
Sarah Thorn, senior director of international trade for the Grocery Manufacturers
of America, said the group was pleased

historically has provided the bulk of its
food aid as agricultural commodities purchased by the Commodity Credit Corp. on
the U.S. market and distributed primarily through the W.F.P. and several private
voluntary organizations. At the same time,
in emergency situations, the U.S. government, too, has provided cash grants.

Market access commitments
The framework afﬁrmed the goal of
"substantial improvements to market
access" as called for by the Doha Ministerial Declaration. To meet this goal,
the framework called for deeper cuts in
higher tariffs, with ﬂexibility in this approach allowed for "sensitive products."
But even in the case of sensitive products, the framework called for improved
access through a combination of tariff
quota commitments and tariff reductions applying to each product.
The framework also provided for negotiation of reduction or elimination of
in-quota tariff rates.
The framework agreement provided for
special or differential treatment for developing nations. Those nations would have
longer periods to implement any required
tariff reduction commitments and would
maintain safeguards enabling them to protect their most vulnerable farmers. Developing nations would be required to expand
market access but to a lesser degree than
developed member states. And developed
nation members were encouraged to provide duty and quota-free access to products
from the least developed nations. MBN

with the new focus of the W.T.O. trade
talks and looks forward to a successful conclusion in the shortest timeframe possible.
"The W.T.O.'s framework retains G.M.A.'s
core goal of signiﬁcantly lowering high tariffs that hamper global trade in processed
foods and consumer products," Ms. Thorn
said. The agreement also postponed decisions on new W.T.O. rules for "geographical indications," which, if expanded, would
undermine the integrity of trademarked
brand names, the G.M.A. said.
In a joint statement, the National Grain
and Feed Association and the North
American Export Grain Association said
the U.S. would beneﬁt from more open
world agricultural trade and that they
would work with grain-based trade
groups in other countries to advance agricultural trade liberalization.
The American Farm Bureau Federation,
National Cattlemen's Beef Association
and National Corn Growers Association
echoed similar praise.
But the National Farmers Union went on
record opposing the agreement. MBN

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Milling & Baking News - August 10, 2004

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