US subsidy confuses WTO message

24 October 2001



US subsidy confuses WTO message

By Robert Harris

US policymakers are sending out conflicting signals on agriculture before next months meeting of the World Trade Organisation in Qatar.

That meeting is intended to launch another major trade round.

The 142 WTO members will seek further cuts in import protection and trade-distorting farm subsidies.

But speaking at a recent conference in Austria, EU farm commissioner Franz Fischler said the US position was “ambiguous”.

“Both US agriculture secretary Ann Veneman and I want to go for a competitive farm policy, which takes environmental concerns into account,” he said.

“We also agree that counter-cyclical farm aid runs counter to sustainable farming.”

But the new draft Farm Bill, launched in the Senate last week, would push up such trade distorting support, encouraging US producers to increase output in the knowledge that government would make up any revenue shortfalls.

“This is the very opposite of the movement towards a more market-oriented policy that is the objective of the WTO negotiations,” said Dr Fischler.

He added that direct payments to US farmers had already grown from $4.6 billion (3.2bn) in 1996 to over $32.3bn (22.3bn) this year.

He also took a swipe at US export credits, which have climbed in recent years to $12.1bn (8.3bn).

“All experts agree that these distort trade, but so far they have not been subject to WTO discipline. This is untenable.”

In a WTO briefing in Brussels last week, the commission also attacked countries using food aid to drive out competitors rather than alleviating hunger.

“It is ironic that food aid tends to increase when prices are low, but is much less when prices are high and food aid is most needed.”

The EU has said it is prepared to negotiate further cuts in its use of export subsidies, so long as other countries cut their different export supports too.

But it has rejected a draft text drawn up by WTO chairman Stuart Harbinson, calling for the “phasing out” of exports subsidies.

The EU also insists on retaining the “blue” and “green” boxes introduced in the last GATT round, in order to protect its direct aids to farmers.

Dr Fischler also wants to see non-trade concerns such as environmental protection, food safety and animal welfare, included in the trade talks.

This would enable the EU to pay farmers for achieving higher standards without leaving them at a competitive disadvantage.

• Financial aid in US Farm Bill, FWi, 27 September, 2001
• More government billions for US farmers, FWi, 17 August, 2001
• Disbelief greets US subsidy cut pledge, FWi, 21 June, 2001