- President Bush will veto the bill when it lands on his desk;
- Bush's veto will have been for nought as votes in both houses comfortably meet override (2/3s) margins;
- The Doha round, already stalling in large part because of developed country recalcitrance over agricultural subsidies and tariffs, will be further negatively affected;
- Accordingly, it doesn't matter one whit if Obama, Clinton, or McCain (who is opposed to the farm bill) becomes the next US President as Congress will not likely become less pro-pork [snort, snort] anytime soon;
- Implementation of this bill will make the US even more vulnerable in the WTO dispute settlement mechanism (DSM) to trade complaints by various countries;
- Doha will become the longest-running trade round / running gag in GATT/WTO history.
I am not a supporter of the passage of Doha by any means. If it means a raw deal for LDCs, then they would be better off without it. Nevertheless, the comeuppance of the US will not be long in coming if it continues with these shenanigans. The "KICK ME" sign Uncle Sam has placed on his back is not something LDCs will pass up in various trade fora. In what follows, the Economic Times of India explains why Uncle Sam is just begging to be whupped:
The $285-billion farm bill unveiled by Congressional leaders last week after months of negotiations may set the
up for a hornet’s nest of problems at the World Trade Organization. If the plan for a massive new United States agriculture law is passed this week as expected, lawmakers face a promised veto from President George W Bush. US
The White House says the bill does not sufficiently cut subsidies to wealthy farmers and ignores other reforms proposed by the administration. If Congress can override a veto, administration officials and other critics warn the farm law will inflame relations with trading partners and spark challenges at the world trade court.
“This farm bill heads in the wrong direction in terms of our international obligations,” deputy agriculture secretary Chuck Conner said in a briefing on the bill. The administration’s problems with the bill go beyond crop subsidies to wealthy farmers. Agriculture officials say measures that could bring problems at the World Trade Organization include: rules benefiting
sugar producers, a $4-billion standby disaster fund and a new cotton incentive similar to one the world trade court already has ruled illegal. US
“It’s no secret our current farm programmes under current law have come under enormous fire,” Conner said. “How does this bill respond? This bill responds by increasing trade-distorting supports on 17 out of 25 of the commodities that we provide.”
Trade partners “are going to be incensed, and we would expect them to protest in every way they can,” he added. The
United Statesalready has lost one major agriculture case at the WTO, filed by over cotton supports. Brazil Washingtonnow faces new challenges from Braziland Canada, who believe the has roared past WTO subsidy limits in recent years and violated other trade rules. United States
Gary Blumenthal, a trade analyst at World Perspectives, believes the bill “fails to fix previously adjudicated problems — let alone new areas such as the crop revenue programme.” “One can anticipate future trade cases related to this legislation,” he said.
Congress takes up the bill at a time of sky-high
crop prices and roaring export demand. High prices mean some US subsidies linked to prices are going unpaid, a convenient plus for lawmakers averse to large cuts in the programmes. US farmers get about $5.2 billion a year in direct subsidies, which some countries contend the US government improperly classifies as minimally trade distorting. US
Some trade experts believe high crop prices ensure that subsidy payments, even with proposed farm bill changes, will stay safely within WTO spending limits for the time being. “But of course, if the prices don’t stay up, we’re going to run into some problems again,” said David Blandford, an agricultural economist at
. Penn State University
“What I am concerned about is the signal this sends,” said Sallie James, an agriculture and trade expert at libertarian think tank the CATO Institute, “that the
is not serious about really reforming its agriculture programmes.” That may or may not be a problem in the Doha round of world trade talks, now in a critical stage as negotiators seek to iron out stubborn agriculture issues and lay the groundwork for a deal before Bush leaves office. US
Both the administration and diplomats in
Genevaacknowledge that Congress would have to alter farm policy if a deal is to be had, especially since lower subsidy limits are a priority for developing countries. Farm leaders in Congress paid little attention to the WTO negotiations while writing the farm bill, saying they will revise it if the US round succeeds. Doha
But the bill also could fan trade partners’ fears that a Congress so protective of farm programmes might try to obstruct or dismantle a deal if sent to Capitol Hill for approval. Earlier this year, House Democrats derailed a bilateral trade deal with
, a key Latin American ally. Colombia
The move, which set the traditional procedure for voting trade agreements on its head, infuriated free-traders and raised fears about growing iciness to trade deals in the Democratic-controlled Congress. Blandford believes a Doha deal would require some painful concessions for certain sectors such as cotton, but says it should garner support because it will open new markets.