Duty exceptions a Doha linchpin for U.S. agriculture

By Missy Ryan - Analysis

WASHINGTON (Reuters) - As global trade talks inch closer to a make-or-break moment, support from the influential U.S. agriculture sector may hinge on highly technical rules for protecting their goods from tariff cuts.

Cutting tariffs is a priority in the World Trade Organization's Doha round, but a proposal on the table would allow developed countries to shelter between 4 and 6 percent initially of their tariff lines as "sensitive" products.

Sugar, dairy, and possibly meat may wind up on the United States' list of protected sensitive products, although trade officials are mum for now about which of the roughly 700 agricultural tariff lines at stake they will seek to include.

The issue emerges as pivotal in the round, which began in 2001, as negotiators try to hash out tariff rules and reach a breakthrough in coming months.

If the impasse persists much longer, even Doha's biggest supporters believe a new world trade deal will be delayed for years by political turnover in the United States and Europe.

Shawna Morris, a trade expert at the National Milk Producers Federation, said the sensitive product exceptions are part of a careful calculus that will determine if the U.S. dairy industry will support a newly brokered trade deal.

"At the end of the day, we'll be looking at the net gain" in exports abroad compared to increased competition at home, Morris said, along with reforms in government supports. The stance is echoed across U.S. agribusiness.

Products designated as sensitive receive smaller tariff cuts than other goods, but countries are required to compensate by expanding quotas for imports at a lower tariff.