Thursday, September 28, 2006
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What could be done on farm subsidies?
If the Doha round is ever to be resuscitated, it will require the United States to rethink its agricultural subsidies. The Financial Times' Doug Cameron reports on one possible rethink:
The US should offer to end distorting farm subsidies within five years in a bid to revive global trade talks and avoid a clampdown by the World Trade Organisation, according to a report released on Wednesday by an influential group of economists and agriculture officials.Here's a link to the report from the Institute for International Economics and
We propose that the entire grouping of product-specific, tradedistorting income and support programs, including countercyclical and loan deficiency payments, price supports, and federal crop insurance and disaster payments, be replaced with a new portfolio of approaches that are nondistorting and compliant with WTO greenIf it was up to me, I'd transfer more money away from agricultural progams, but that's a political nonstarter. The Chicago Council ask force has a lot of pragmatic ideas. Unfortunately, given the American Farm Bureau's happiness with the status quo and opposition to any change in subsidies prior to Doha's completion, I fear this approach is a nonstarter as well. posted by Dan on 09.28.06 at 10:34 PM
Regarding: "If it was up to me, I'd transfer more money away from agricultural progams, but that's a political nonstarter."
Why so? Farm subsidy spending fluctuates from one year to the next, and is not fixed at a high value. Policy determinants change over time -- especially, agriculture's share of the national economy falls, within agriculture the market share of non-supported commodities grows at the expense of supported commodities, the trade consequence of domestic support increases, and new advocacy coalitions such as the "porkbuster" crowd appear. Are things really so static as the word "nonstarter" implies?posted by: Parke on 09.28.06 at 10:34 PM [permalink]
Apparently the American Farm Bureau diesn't seem to be considering this possibility that Gus Schumacher noted:
“If we don’t take the lead in reducing and eventually ending trade-distorting subsidies, the WTO legal system will do it for us,” said Gus Schumacher, a task force co-chair and former USDA under-secretary who managed the farm subsidy programmes. “We’ll lose control of key farm policy tools and miss the export expansion opportunities in emerging markets that a successful Doha round could bring.”
In addition to the cotton subsidies victory, Brazil has also won in the WTO on sugar subsidies in the EU and will probably win on sugar subsidies against as well as well as rice and soybeans. Maybe then we'll actually have free trade.posted by: Randy Paul on 09.28.06 at 10:34 PM [permalink]
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