REDUCED FARM SUBSIDIES COULD BENEFIT AMERICAN FARMERS
Discussions at the World Trade Organization talks in Geneva last weekend are aimed at liberalizing trade and reducing domestic subsidies that help support farmers. While some U.S officials say they believe export gains will offset losses to American farmers, Keith Gray, director of National Affairs for the Alabama Farmers Federation, said the exact details of the agreement would be what determines the impact to farmers' wallets.
Exactly how trade negotiators plan to implement reduced subsidies that won't hurt farmers will be the subject of further trade talks that are due to begin in September. Under the proposed WTO agreement, WTO-allowed caps on domestic subsidies which the WTO counts as $49 billion for the United States, would be cut by 20 percent, and countries with higher subsidies such as the European Union, would have to make even deeper cuts.
Although the actual spending for farm subsidies only accounts for $19 billion in the United States, the U.S. is allowed to count other spending such as both crop specific and non-crop specific support for a total of $49 billion. Since the 20 percent "cap" would amount to approximately $39 billion and the U.S. only currently spends around $34 billion, this new agreement appears not to cause any new changes to farm programs.
Government-backed loans to exporters could not exceed 180 days and would be more closely monitored under the new plan. Other government loan programs such as those used by cotton for export would also probably have to be changed as well.
"If moves such as these were tempered with increased export markets for American-grown crops then it could be a positive move for U.S. farmers," Gray said. "But until we see exactly how the WTO plans to implement these changes, I think American farmers can't determine how the proposal will affect them."
Gray said the decision by Europe to reduce its export subsidies is a major improvement over the present agriculture agreement. Currently, the European Union subsidizes its farmers at nearly three times the rate that the United States supports American farmers, he said. Under the new agreement, rather than being outspent 3-1 the U.S. would only be outspent 2-1 and coupled with increased market access would be a significant improvement for U.S. producers.
According to the Associated Press, officials with the National Pork Producers Council and the American Sugar Alliance believe increased markets would give their commodities more access to world markets. However, a spokesman for the National Cotton Council said cotton was singled out for special negotiations. African nations have complained that U.S. support for cotton hurts their small growers. Negotiators pledged in the framework agreement to work with the smaller African nations to address their concerns, but U.S. negotiators also assured the cotton industry it was their intent to ensure that cotton program would not have to decrease its levels of support ahead of other program crops.