July 23, 2008 - The United States offered Tuesday to reduce the limit for farm subsidies and demanded that large emerging economies like Brazil, India and China respond by opening their markets to imports of industrial products.

The proposal to cap payments to American farmers at $15 billion a year is "not offered in isolation," the U.S. trade representative, Susan Schwab, told journalists in Geneva. "This is a major move, taken in good faith with an expectation that others will reciprocate and step forward with improved offers in market access."

The ceiling is $2 billion lower than the one the U.S. proposed in June 2007. Schwab made the offer to trade ministers from about 30 governments who are trying to lock up a deal on cutting tariffs and subsidies in agriculture and manufactured goods before the U.S. presidential election.

The move came on the second day of a meeting aimed at reaching a long-awaited breakthrough on farm and manufacturing trade issues that are at the center of nearly seven years of the Doha round of world trade talks.

U.S. trade-distorting farm support exceeded $15 billion in seven of the last 10 years, Schwab said. The payments reached $18.9 billion in 2005 but fell to about $8 billion last year because of high international food prices.

Some countries quickly dismissed the U.S. offer as inadequate. Foreign Minister Jorge Taiana of Argentina said he was "disappointed" by the proposal.

Carin Smaller, an analyst for the Institute for Agriculture and Trade Policy, called the offer "weak" and "hollow" because so many conditions were attached to it. Schwab's proviso that the U.S. cut is contingent on its farm-payment programs being immune from future legal challenges is "absurd," Smaller said.

While Schwab's proposal is "reasonable," it's "not the furthest the U.S. could go," said Peter Power, a spokesman for the European Union trade commissioner, Peter Mandelson. On Monday, Mandelson said the 27-nation EU was willing to slash its farm tariffs by an average of 60 percent to encourage emerging economies to make bigger concessions. The offer was a clarification of the EU's position and depended on whether tropical products were included in the tariff-cut calculations.

Schwab said the offer would require Congress to rewrite recently passed farm legislation. President George W. Bush vetoed the 2008 farm law, which increased subsidies, but was overridden by Congress.

Originally published by Bloomberg, Reuters.