The 2002 US Farm Bill is an “act of economic aggression” against the world’s developing countries and may drive them from the next round of WTO talks, says a new report from the George Morris Centre, Canada’s independent agri-food think tank.
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The Bill reduces the gains from trade to developing countries and will further distort global prices, says report co-author Al Mussell, senior research associate.
“The US is back to coupling support to production on a commodity-specific basis,” says Mussell. “This means that US farmers must produce more to get more support, which will lower international prices on commodities on which developing countries’ incomes tend to depend.”
The report, entitled The 2002 US Farm Bill and International Agri-Food Trade: Dusting Off the Prebisch Thesis, discusses the agricultural support and domestic market protection in the Farm Bill, along with recent US trade policy actions in other products.
“On top of the rich subsidies that encourage production, the Farm Bill will restrict imports through country of origin labelling on livestock, meats and fresh produce,” says research associate Holly Mayer, co-author of the report.
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By GlobalDataThe Farm Bill and other actions such as steel tariffs and the duties on Canadian softwood lumber place US trade policy at odds with the agenda in the Doha round of the WTO. The objectives of the WTO agriculture negotiations are to increase domestic market access, decrease market distorting domestic subsidies, reduce export subsidies, and assist in alleviating poverty and food insecurity in developing countries.
“The US played a significant role in setting these objectives,” says Mayer. “Now, it’s passed a Farm Bill that contradicts virtually all of them”.
Developing countries stand to gain significantly from freer agricultural trade. However, the danger is that rather than make trade concessions in hopes of future gains, developing countries will adopt protectionist policies of their own.
“Why would developing country trade negotiators give up market access or subsidies, when the biggest player is doing the opposite?” asks George Morris Centre CEO Larry Martin. “If developing countries choose to follow the US lead, it is possible the entire Doha round could collapse.”
To view the report, visit the George Morris Centre website by clicking here. www.georgemorris.org
