By
Christine Morris
Assistant Editor
A World Trade
Organization (WTO) panel issued a mixed verdict Sept. 8 in a dispute
brought by Brazil challenging several types of U.S. agricultural support
measures, including support for cotton farmers, which could potentially
impact the fruit and vegetable industry.
In the panel proceedings, the United States successfully defended
U.S. decoupled income support payments – such as direct payments
under the 2002 farm legislation – as not causing "serious
prejudice" to Brazil’s interests, according to a press
release from the United States Trade Representative (USTR). Specifically,
the panel agreed with the United States that income support provided
to U.S. cotton farmers and others that is fully decoupled from production
and prices has not suppressed or depressed world cotton prices. That
is, a recipient does not have to produce cotton to get the payment
and can choose to produce nothing at all, according to the USTR press
release.
Some domestic fruit and vegetable critics are worried that if the
WTO decision becomes final, there will be some negative effects felt
in the United States.
Charles Hall, the executive director of the Georgia Fruit and Vegetable
Growers Association, supports the legislation as it currently stands,
which prohibits growing fruits and vegetables if cotton growers are
already receiving financial support from the government.
“In our opinion, that’s somewhat double dipping,”
he said. “They are getting support but are also competing in
open market within another industry. If program crops are receiving
support, we’re concerned about opening up that acreage because
it could drastically affect market prices due to over-production.”
Hall said he expects this topic to be a big issue at the next farm
bill debate.
“The bottom line is whether or not all U.S. commodities will
go on open market,” he said.
Congressman Mike Pence from the 6th district of Indiana recently tried
to pass an amendment that would have granted program crop producers
in Indiana the ability plant fruits and vegetables in off years. The
amendment was withdrawn at a hearing of the House Agriculture Committee
on Sept. 30 because the topic will be addressed at the next farm bill
meeting, said Matt Lloyd, spokesman for Pence.
Local farmers approached Pence to create the amendment, Lloyd said.
“If farmers have flexibility, they have greater ability to make
a profit,” he said. “We just wanted to make sure the farmers
weren’t tied down.”
Pence added that “This bill not only corrects the problem, but
it saves the taxpayers money in the long run.”
On a worldwide scale, U.S. Trade Rep. Robert B. Zoellick said: "We
welcome the panel’s findings that U.S. decoupled income support
payments have not caused ‘serious prejudice’ under WTO
rules. This report confirms that reforms in our 1996 farm legislation
and continued in 2002 have worked and that fully decoupled payments
do not cause WTO-inconsistent effects by distorting production or
trade.”
Many critics have claimed that even decoupled payments spur agricultural
production and drive down prices, according to the USTR press release.
However, the panel rejected Brazil’s arguments, essentially
siding with the overwhelming body of agricultural economics literature
showing these payments have no more than minimal effects. The report
should dispel concerns that all U.S. support payments distort production
and trade.
However, the panel did side with Brazil on its claims that some U.S.
farm payments cause adverse effects to Brazil and other U.S. measures
are prohibited, including export credit guarantees for some agricultural
commodities, according to the USTR press release.
"We strongly disagree with some aspects of the panel report,
which we will be appealing. The facts do not show that U.S. farm programs
have distorted trade and caused low cotton prices. Moreover, some
aspects of the panel report belong in negotiation and not litigation,
namely in the Doha Development Agenda negotiations. We believe the
Appellate Body will agree," Zoellick said.
The United States believes the best way to address any distortions
in world agricultural markets is through the WTO agriculture negotiations.
Multilateral commitments to reduce tariffs and subsidies will increase
the role of market forces globally and is the only way to address
core issues, Zoellick said.
The United States has been a leader in the Doha Round of trade negotiations,
including playing a key role in July on a framework agreement for
the agriculture negotiations. This framework builds on the U.S. comprehensive
proposal in 2002 to reform all trade-distorting measures in agriculture.
The U.S. objective is to create new market access opportunities for
all countries by achieving specific reform commitments in each of
the areas of export subsidies, trade-distorting domestic support and
market access in all countries, Zoellick said.
"U.S. farm programs were designed to be fully compliant with
our WTO obligations,” said agriculture Secretary Ann M. Veneman.
“We will strongly defend the U.S. position and work to ensure
a level playing field for U.S. producers."
For more information, visit www.ustr.gov
