Farm Bill Draws Fire
19 May 2008 The passage of the US Farm Bill could draw more fire from international circles, as subsidy policies have remained largely intact at a time that many observers believed would be ideal to introduce reforms.
The bill has passed the US Congress by much larger margin than needed to override a presidential veto, meaning that the US president’s opposition to the bill at this point is meaningless.
While certain reforms have been made in an effort to prevent overpayments to wealthy landowners and “non-farmers” (Americans which own and collect subsidies on farmland, but owe the majority of their income to other sources), there remain enough support programs in the bill to trouble international observers.
Three-quarters of the near US $300 billion plan comes in the forms of nutrition, energy, and conservation programs. However, there remains a “safety net” for US farmers that has begun to draw fire from developing countries which are arguing that the current high-price/high-export demand scenario is the perfect time for the US to take the lead on subsidy reform and to make a sincere display that it is serious about not only its involvement in the Doha Round, but also its WTO obligations.
Already, several countries are rumored to be considering taking the new US bill to court under WTO trade policies. Some critics of the bill have stated that the real effects of the bill will be hidden for the near future, as farm support programs that are tied to crop prices will not be triggered thanks to the market boom. However, if that were to change – by price declines, poor weather or disease limiting a crop, or similar factors – those programs could kick into gear and have the same trade-distorting effect for which the current bill has been criticized.
Making the subject more tenuous is the fact that the shaky progress currently being made by Doha Round negotiators could change everything – or could crumble apart again. The US government has pledged to change the Farm Bill as required by a Doha agreement, if one is struck. But by backing a Farm Bill that appears to many foreign observers to fly in the face of Doha’s goals, the likelihood of such an agreement materializing is greatly diminished.
At the same time, many US farm groups have applauded the bill for providing protection while limiting the potential for abuse, and for seeing the reality of crop input cost increases as a long-term trend, while the price boom may recede. Those outside of agriculture are lauding the bill for its efforts to fight poverty and hunger and to support environmental programs – although this is proving another sticking point internationally, as foreign aid programs have been slashed as domestic aid programs have been strengthened.
With more Doha talks and deadlines approaching, it appears likely that the new US Farm Bill will act as a tinderbox, and the US will be targeted again by developing nations as one of the major distorters of fair world trade.
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