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Abstract

Senator Chambliss asked FAPRI to analyze the latest U.S. proposal for WTO agriculture negotiations. This proposal includes changes in export competition, market access, and domestic support. The analysis covers the first seven years of policy changes implied by the proposal, during which the most significant reductions in tariffs and trade-distorting domestic support and elimination of export subsidies would be phased in starting in 2007/08. The proposal reduces the permitted current U.S. aggregate measures of support to $7.64 billion and limits blue box support to $4.77 billion. These limits imply lower loan rates and support prices and reduced counter-cyclical payments. The proposal lowers EU domestic support to €11.4 billion, implying large reductions in actual domestic support for sugar, dairy, cereals, fruits, and vegetables. The proposal includes significant tariff reductions or tariff rate quota (TRQ) expansions. These market access reforms would open the protected rice, sugar, and dairy markets.

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