Cairns Group tones down criticism of US farm bill

by Gustavo Capdevila

GENEVA: The nations that will feel the greatest impact from the latest protectionist barriers in agriculture adopted by the United States have chosen to keep their criticism mild and to express optimism regarding the multilateral talks in the World Trade Organization.

The Cairns Group, comprised of 18 agricultural exporting countries opposed to farm subsidies, declared their “deep regret” over the farm bill signed on 13 May by US President George W. Bush, which increases agriculture subsidies by nearly 80%.

Although the original draft of the statement that was released on 15 May in Geneva “condemned” the farm bill, the final version expressed a milder “deep regret,” on the urging of New Zealand, said a source close to the Cairns Group, who preferred to remain anonymous.

As a result, the press release of the text of the statement faxed by the Australian Mission to the WTO to media representatives carried the title “Cairns Group Condemns United States Farm Bill,” though the  condemnation phrase in the actual text had been eliminated.

Australian Trade Minister Mark Vaile expressed “disappointment” with the US farm bill on 13 May in Geneva. Australia is the permanent chair of the Cairns Group, which was founded in the mid-1980s in the Australian city of Cairns.

Vaile said his government would “critically analyze” the bill, and added that “we reserve the right to ensure it is compliant with US obligations under the WTO.”

By contrast, the Cairns Group communique made no reference to possible legal action in the multilateral trade body.

Nevertheless, several of the group’s members are studying the possibility of challenging the farm bill at the WTO.

Brazil may call for consultations with the US, the step prior to filing a complaint, regarding the effects that the new US law will have on its soybean and sugar exports. At the same time, Uruguay is analyzing the effects of the farm bill on its rice exports, while Argentina is considering legal action in the WTO because of the harm that the increased US subsidies will cause its grain exports.

The Cairns Group is made up of Australia, Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Fiji, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South Africa, Thailand and Uruguay.

The criticism voiced by the statement was intentionally muted in order to avoid giving the impression that “the game has been lost,” and to prevent the Cairns Group’s words from being used by “the other side” (countries that protect their agricultural production), said the anonymous source.

The Cairns Group pins high expectations on the results of the new round of multilateral trade talks launched at the WTO’s fourth Ministerial Conference in Doha, Qatar last November. With its sights set on the negotiations, the Cairns Group preferred to keep the wording of its statement on the US farm bill mild, in order “to avoid giving the enemy ammunition,” said the source.

The Cairns Group is involved in a more frontal dispute with the European Union and its allies, Japan, South Korea, Norway and Switzerland, than with the US.

The members of the Cairns Group believe Washington played a key role in getting the final declaration in Doha to put priority on negotiations on agriculture in the new round of talks.

Hence, the 15 May communique put a greater emphasis on expressing the group’s commitment to the Doha Round and on “the attainment of a comprehensive programme of agricultural liberalization and reform in the current WTO negotiations” than on slamming the new US protectionist measures.

The angle that the Cairns Group was most keen on emphasizing was the “relief” that the farm bill represented for WTO members that are determined to “oppose justified reforms” in trade in agriculture.

However, according to the statistics of the Organization for Economic Cooperation and Development (OECD), there is no great difference between the level of agricultural protectionism in the US and that of the European Union and its allies.

The 30 OECD member countries, which include the world’s industrialized nations, shell out around $1 billion a day to subsidize their inefficient agricultural production.

But the Cairns Group points out that the US uses internal price supports and export credits, while the European Union employs export subsidies, seen as more damaging in economic terms and more unfair in terms of trade.

This view about export ‘subsidies’ versus ‘credits’ is not, however, shared by all the members of the Cairns Group, nor by many other developing countries or, for that matter, by many trade economists and observers.

Although the Cairns Group communique did not refer to the US Senate decision to weaken President Bush’s authority to negotiate free trade accords, the source said the legislative amendment that was introduced on 16 May to the bill on trade promotion authority (or “fast track”), namely that the fast-track authority would not cover any agreements in the new round that would involve changes to the US laws on anti-dumping, subsidies or safeguards etc (the so-called laws to protect US enterprises against unfair trade and competition), could lead to “the end of the Doha Round negotiations.” Fast-track authority enables the US administration to negotiate trade agreements that cannot be amended by Congress, which must limit itself to a straight up or down vote.

[The amendment in question was incorporated in the fast-track bill passed by the Senate on 23 May. However, before fast-track authority is enshrined in US law, the Senate bill must still be reconciled with the version approved earlier by the House of Representatives, a difficult process that will pit many competing interests against each other.] (IPS)

From TWE No. 280 (1-15 May 2002)