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Although many countries must share responsibility for the negotiating stalemate in the Doha Round of trade negotiations, the proximate cause of the talks’ collapse last summer was the U.S. refusal to offer additional reductions in agricultural subsidies. Specifically, American negotiators were criticized for proposing a ceiling for trade-distorting domestic support that is above levels actually provided to U.S. farmers in recent years. Overcoming the impasse is crucial for developing countries: failure would deny them opportunities for job creation and growth that increased trade would provide, and would contribute to erosion of the multilateral, rules-based system that protects small, weak countries from discrimination by the powerful. In this CGD Note, senior fellow Kimberly Elliott discusses concessions the U.S. must make to revive the Round. Chief among them:
Lower the overall ceiling for U.S. support by another $5 billion to $17 billion, below actual levels in most years since 2001.
To close the deal, accept additional cuts of roughly $5 billion in order to ensure that real spending is reduced and that subsidies are not simply shifted among categories that will remain trade-distorting.