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Mon, Mar 08, 2004 - Page 12 News List

Farming still frustrating free-trade talks

SENSITIVE SECTORS As the US and Japan seek deeper trade ties with Asian partners, their heavily protected farm sectors will likely be the biggest sticking points


Overcoming thorny farm issues will be a key challenge as the US and Japan take on their developing Southeast Asian allies in free-trade negotiations, analysts said.

Criticisms of the US-Australia free-trade agreement underscore the potential minefields awaiting negotiators as they attempt to weave a web of free-trade pacts across a region where agriculture is the mainstay in several economies.

The US-Australia accord came under fire in Australia because it excludes sugar, largely maintains US protection on dairy and beef produce, and gives US pharmaceutical firms the right to appeal measures designed to keep the cost of medicines down.

The US is due to start trade negotiations with Thailand this month, with Malaysia seen as next in line, possibly next year.

Japan has begun FTA talks with Thailand and the Philippines in among the many upcoming or current FTA negotiations in the region.

In the US' free-trade accord with Singapore, Washington's first with an Asian country, agriculture was not an issue because the city-state does not have a farm sector.

Kathie Krumm, a World Bank expert on trade and regional integration, said one danger of the web of bilateral and regional FTAs is that they may have "extensive provisions" for excluding sensitive sectors like agriculture.

This would "substantially reduce the potential for welfare gains from such arrangements," said Krumm, who co-edited East Asia Integrates, a recently published World Bank book.

But should regional negotiators succeed in resolving farm issues, it would result in opening up the sector on a wider scale, Krumm said.

"Regional agricultural markets are already large. If agriculture can be liberalized in a regional setting, then a favorable political dynamic can be set in place that will lead to more open agricultural sectors overall," she said.

But some analysts said political lobbies could result in watered down agreements.

Others fear protectionist moves in the US to stem the flight of hundreds of thousands of jobs to Asia would not sit well with America's regional trading partners.

"I think the political lobby and how strong they are will determine the outcome of the negotiations," said Jose Tongzon, an economics professor at the National University of Singapore who does consultancy work with the ASEAN.

The US-ASEAN Business Council, an influential business lobby group, said despite protectionist rhetoric, it would push Washington to deepen its trade engagement with ASEAN.

"Despite the furore over outsourcing and the kind of negative signals against trade, we believe that the trade agenda will move forward past the US-Singapore FTA," council president Ernest Bower told reporters here recently.

The council said Washington should aim to pass the US-Thailand FTA by 2005, prepare for free-trade talks with Malaysia, normalize trade ties with Laos and help Vietnam enter the WTO.

Bower acknowledged that reaching agreement on farm issues will be a key challenge in the US-Thailand negotiations, which could serve as a "template" for future accords if successful.

"The stakes are very high and we will be lobbying for the US to give a very comprehensive offer to the Thais on agriculture. We will also be asking the Thais to give a lot," Bower said.

He criticized recent moves by the US accusing Vietnam and Thailand of dumping shrimp exports on the US market, calling them "absolutely protectionism in its worst form."

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