Nov. 22 (Bloomberg) -- Unless there's a last-minute surprise, the sequence of events at the World Trade Organization meeting next month in Hong Kong appears easy enough to predict.

First, trade ministers will say they expect to reach an accord on farm subsidies; then the talks will get stuck; next they will say they might be able to break the impasse. Finally, they will throw up their hands and go home.

Through the ups and the downs, the gasps and the sighs, the spin doctors for U.S. Trade Representative Robert Portman will have their work cut out: deflect all blame toward the Europeans.

A meeting of the Asia-Pacific Economic Cooperation forum in Busan, South Korea, last week provided the U.S. with a chance to test its tactics ahead of the WTO meeting.

The results must satisfy Portman. Although the APEC joint statement stopped short of naming and shaming the European Union, individual leaders didn't.

``The U.S. has a new position, and the commitment given by President Bush is that he stands firmly committed, which means that the issue of agriculture is very much a ball in the court of the Europeans,'' Malaysian Prime Minister Abdullah Ahmad Badawi told reporters after the APEC meeting.

Such glowing endorsements may prompt the casual observer to conclude that George W. Bush has selflessly thrown his weight behind the world's poor farmers. Not only did the U.S. president commit himself to abolish export subsidies by 2010, he also got Japanese Prime Minister Junichiro Koizumi to agree to do the same at Busan.

Red Herring

The reality is disappointingly different.

Compared with the $21.5 billion the U.S. spent in 2001 to provide trade-distorting financial support to its farmers -- it hasn't provided audited data since then -- the U.S. allocated just a few million dollars to export subsidies.

Ditto for Japan.

Among developed countries, the EU relies most heavily on this crude tool for bolstering the competitiveness of its wheat, meat, sugar and dairy products. The EU wasn't even at Busan to lend legitimacy to APEC's call.

And even if it had been there and endorsed APEC's stance, that would still have been stale news. The EU, which was adamant about holding on to many of its export subsidies at the failed Cancun talks in Mexico in 2003, has since changed its position. The U.K., which currently holds the EU presidency, has said that European export subsidies must go by 2010.

Sops for exporters are a non-issue now. APEC's vow to get rid of them is just a red herring.

Out-of-Box Solution

Just because the U.S. has adopted, in Malaysian Prime Minister Abdullah's words, ``a new position,'' it doesn't necessarily mean it has adopted a better position.

The U.S. says it will shrink its ``amber box'' limits, WTO jargon for maximum trade-distorting subsidies, by 60 percent. It's using the apparent boldness of its offer to ask Japan and the EU to make even deeper cuts.

The U.S. proposal is unappealing considering that countercyclical payments that are paid to U.S. farmers to compensate them for unfavorable prices will be shifted to the ``blue box,'' which should be used only for handouts that don't encourage more of the supported commodity to be produced.

By moving countercyclical payments to the blue box, the U.S. will meet its amber-box commitment with a 23 percent cut in actual spending, according to a recent study by Minneapolis-based Institute for Agriculture and Trade Policy, or IATP.

Vicious `Peace Clause'

More alarming is the U.S. insistence on renewal of the Uruguay Round's lapsed ``peace clause.''

This clause will protect U.S. farm programs from being challenged through the WTO dispute-resolution mechanism even if other countries discover later that their expected benefits from the so-called Doha round of talks have been diluted -- even nullified -- by American subsidies, IATP researchers say.

Why should developing countries such as Brazil and India, which weren't at Busan, agree to a proposal that undercuts the authority of the multilateral trading system. And why would the Bush administration insist on such a retrograde clause if it genuinely believed it was offering the world a good deal?

The EU hasn't done much to help its cause. That doesn't mean the U.S. is being generous. If the best solution that can emerge in Hong Kong is an agreement centered on the U.S. proposal, then the talks might as well fail.

An agreement assembled in haste would be disastrous.

If rice farmers in Cambodia end up with a sub-optimal agreement on farm subsidies that comes into effect from 2007, their next chance for leveling the playing field will come only in 2018 -- after five years of implementation of the Doha round and another five years assessing its impact.

For all the support it got at APEC, a forum that has zero clout at the WTO, the U.S. farm subsidy plan has nothing in it for developing nations. It deserves a quiet burial.

To contact the writer of this column: Andy Mukherjee in Singapore amukherjee@bloomberg.net.

Last Updated: November 21, 2005 13:24 EST