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- United States will Cut Subsidies if Other Countries Cut Theirs
- Although Congress approved an increase in farm programs with the 2002 Farm Bill, it would reduce those subsidies to comply with any agreement reached in the World Trade Organization if other countries will do the same, said Rep. Charles Stenholm (D-Texas), ranking Democratic member of the House Agriculture Committee.
Speaking this month at a seminar titled “Agriculture Trade Policy: Market Access vs. Domestic Agendas,” Stenholm said he supports the U.S. negotiating proposal for the WTO negotiations and would work to conform U.S. laws to any new agreement that gets rid of the disparities between member countries’ market access and subsidy levels. But, the United States “should not unilaterally disarm, just as we should not militarily,” he added.
He and another speaker, Jim Murphy, assistant U.S. Trade Representative for agricultural affairs, stressed that farmers and Congress fully support the U.S. negotiating proposal to reduce trade-distorting agricultural subsidies if other countries will make the same commitment.
“Yes, we have the Farm Bill, but we also have farms and congressional support for our proposal,” Murphy said.
Stenholm’s and Murphy’s comments appeared designed to address international criticism of the Farm Bill. Despite the United States’ proposal in the WTO to cut trade-distorting domestic support to 5% of total agricultural production, harmonize agricultural tariffs at 25% or less and eliminate export subsidies, other countries have criticized the U.S. Farm Bill’s $7 billion funding increase over the 1996 Farm Bill, not counting disaster payments, as a more accurate reflection of U.S. priorities.
Rather than contradicting the desire to reduce subsidies and open markets, Stenholm said the Farm Bill goes hand-in-hand with the U.S. proposal to do just that. One purpose of the 2002 Farm Bill was to put the United States in the best possible negotiating position, he said, and increase the stakes if other countries are not willing to reduce their farm supports and protective tariffs.
In contrast to the support that U.S. trade negotiators get from their farm constituency, Gerard Keily, European Union (EU) counselor for agriculture, said that the EU’s trade negotiators go to the negotiating table with the “full opposition” of the agriculture sector.
“The EU does want an agreement in the WTO,” Keily said. “Our farmers do not, but we do.”
Non-trade concerns, such as animal rights, are politically important in the EU and the extent to which they are taken into consideration in trade agreements will play a role in the EU’s ability to live up to those agreements, said Keily.
“If we can’t live with our agreement, it isn’t going to work for anyone,” Keily explained. “It isn’t because we don’t want an agreement or we want to protect our markets.”
However, Audrae Erickson, president of the Corn Refiners Association, questioned the EU’s commitment to trade reform. The EU wants to use animal welfare and other non-trade concerns, on top of continued highly trade-distorting subsidies, to protect its producers from global competition, she said. The EU would reduce its amber box subsidies simply by shifting those programs to the uncapped blue box rather than actually ending them. And, in case that isn’t enough, then the EU would also use non-trade concerns, Erickson explained.
Non-trade concerns at issue in the negotiations include the EU’s support for the precautionary principle and labeling requirements to restrict imports of biotech foods; geographic indications that restrict production of some foods to the regions that are historically known for producing them; and animal welfare standards that would restrict imports of animal products that are not certified to be produced according to certain animal welfare standards.
Speakers at the seminar, hosted by The Economist magazine and the Center for Strategic and International Studies, were asked to address the question of how to reconcile countries’ desire to support their farmers with the competing desire to support their farmers with the competing desire to improve market access worldwide. All the speakers agreed that agriculture is a critical part of the current WTO negotiations, which also include other sectors like services, the environment and market access for non-agricultural goods.
“For many countries, agriculture is the only export, so it’s necessary for many countries to do something on agriculture,” said Jim Murphy, assistant U.S. trade representative for agricultural affairs.
“There are no proposals that would be a credible outcome without reform on agriculture,” said John Wood, New Zealand’s ambassador to the United States. “Agriculture is often left out of trade agreements because it’s a difficult issue,” Wood said. “Cairns and New Zealand will never agree to a trade agreement that omits agriculture.”
The March 31 deadline for establishing modalities, or numerical targets and strategies to achieve the objectives of the Doha Development Agenda adopted by WTO member countries, is not far away. Many of the speakers at the seminar expressed concern about how much work is left to do before then, and whether it is possible to meet the deadline.
Murphy sized up the status of the WTO agriculture negotiations. Several positions are on the table, he said, but clarification is needed. In particular, he said specifics are needed from the EU. He characterized the EU’s proposal as “incremental change to existing policy” rather that the “visions for the future” put forward by the United States and the 17-member Cairns Group of countries.
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