TWN Info Service on WTO and Trade Issues (Aug 07/04)
24 August 2007
The United States' 2007 Farm Bill, which has been passed by the House of Representatives and will next be considered by the Senate, is likely to be a stumbling block in the negotiations to finalise the "modalities" in agriculture, when the World Trade Organisation resumes its work in early September.
said: "The proposals currently in the Congress entrench subsidies
at very high levels and that sends the wrong sort of signals to the
rest of the world about the
Dr. Rahul Khullar, senior official of India's Commerce Ministry, said that the US Farm Bill 2007 would erode the position of the US negotiators in the WTO because the legislation does not provide any scope for reducing its agricultural subsidies.
In the US itself, the Bush administration itself has attacked the House bill for inviting retaliation from other WTO members, it has for example pointed out how the provisions on sugar would be protective and distortive, and it has threatend to veto the House version of the Bill.
Below is an article which was published in the SUNS on 16 August. We hope you find it useful.
Martin Khor (TWN),
to the Reuters report, Australian Minister Truss said that the
He said that it was not enough for the US and European countries to sign up to big cuts in farm subsidies and tariffs if they created "a second wall of defense" by rewriting rules on farm support and by exempting sensitive goods from a deal.
few days earlier, a senior Indian trade official in
Dr. Rahul Khullar, Additional Secretary of India's Commerce Ministry, said that the US Farm Bill 2007 would erode the position of the United States' trade negotiators in the Doha Round negotiations, because the legislation does not provide any scope for reducing its agricultural subsidies.
Khullar added that the US Farm Bill in its current form does not give
WTO member countries the confidence that the
He was speaking at a forum organized on 3 August by the Confederation of Indian Industry (CII), and his remarks were published on the CII's website.
On the other two factors, Dr. Khullar said that there is need for a "fast track authority" for the US President in order for the Doha Round to conclude, but there was reluctance in the Congress to give him this authority; and the contents of the draft NAMA text (issued by the chair of the NAMA negotiating group Don Stephenson) had to be changed, keeping in mind the development aspect of the Round and the aspiration of developing countries.
US Farm Bill was approved by the House of Representatives on 27 July,
a few hours after the WTO General Council in
when the WTO negotiations resume on 3 September, starting with agriculture,
the implications of the bill on what the
The bill was adopted by a 231-191 vote by the House of Representatives. The Senate will discuss its own version of the Farm Bill, after the present vacation break. The House and Senate versions will have to be "reconciled" before sending a Bill to President George W Bush, who has already threatened to veto the House version.
The debate in the Senate will most likely take place at the same time as the most intense stage of the WTO negotiations on modalities in agriculture and NAMA, scheduled for the whole month of September.
The present farm bill expires at the end of September, and the new bill is to cover a new five-year period. The budget for the House 2007 farm bill totals $284 billion, or $56.8 billion a year on average. This is higher than the allocation of $49.5 billion annually in the current farm bill.
The new farm bill (as in the present one) covers subsidies to farms, as well as conservation and nutrition-assistance programmes (including food-stamp subsidies).
In order to properly analyze the implications of the new Farm Bill for the WTO negotiations, the categories in the farm bill budget (and the amounts in dollars in each category) will have to be "translated" into the WTO categories of domestic support, such as amber box, blue box, de minimis (these three forming the crucial overall trade-distorting support or OTDS), and the Green Box (which is supposedly non or minimally trade distorting).
delegations are planning to work in August to undertake this "translation"
of farm bill categories and budget amounts into WTO agricultural categories
and subsidy amounts. The
there has been quite a heated public debate on the farm bill in the
Secretary of Agriculture, Mike Johanns, said that the House bill would
invite retaliation by the
According to the Wall Street Journal (29 July), the Bush administration has complained "that the House measure would raise marketing-assistance loans for some crops, which could have the effect of artificially raising commodity prices. And in preserving a 'safety net' for US producers, the bill shows little retreat from the current subsidy level that has been criticized as excessive by pro-trade advocates."
The House's Agriculture Committee Chairman, Democrat Congressman Collin Peterson, has indicated that the framers of the farm bill cared little for the impact that the bill may have on the WTO negotiations.
about a recent preliminary report of a WTO dispute panel that upheld
Referring to the US Trade Representative's office, which negotiates at the WTO, Peterson added: "We just seem to be willing to give up subsidies before anyone else. The committee is going to do what they think is right, and a lot of times that is not in sync with the trade representative's office."
senior Bush administration official last week strongly criticized the
sugar provisions of the House farm bill, saying that it would open the
for Farm and Foreign Agricultural Services Mark Keenum said that the
provisions would greatly limit the Administration's ability to effectively
According to a report in Inside US Trade, a Washington-based weekly, Keenum criticized the provisions for requiring the Administration to sell excess sugar only to ethanol producers even if other buyers were willing to pay more for the sugar.
He argued that this requirement would also be very costly, as the administration may have to buy the excess sugar at prices as high as 23 cents per pound, while the ethanol producers were willing to pay only 4 cents a pound for sugar in 2001.
to the report, the House farm bill would establish that US producers
supply 85% of
[According to an AP Dow Jones report, the US Department of Agriculture on 9 August set for the US fiscal year 2008 (year beginning 1 October 2007), a tariff rate quota for raw sugar imports at 1,231,497 short tons raw value (STRV), the absolute minimum that the US has to allow under its WTO agriculture schedule.
[Last year, anticipating stronger demand for imports and a domestic production shortfall, the USDA had set for fiscal 2007 raw sugar tariff rate quota of 1,481,497 STRV - 250,000 STRV more than the WTO minimum level.
[The USDA can always increase the tariff rate quota level to address shortfalls at a later date, something it has done in previous years. The USDA, however, has set its separate tariff rate quota for refined and specialty sugar at 94,251 STRV, higher than the WTO set minimum of 24,251 STRV.
[The level of the domestic food market (OAQ or overall allotment quantity) that the USDA will guarantee to US sugar producers for fiscal 2008 has been set at 8.45 million STRV: it is set at 4,592,575 STRV for beet sugar and 3,857,425 STRV for cane sugar.]
of 1 January 2008,
The subsidy would be the difference between the price that sugar producers demand and the price that ethanol producers would be willing to pay.
also criticized the farm bill for raising loan rates for sugar and other
commodities, reiterating the Administration position that they increase
trade-distorting subsidies and put the
Keenum said that the increases in loan rates for beet and cane sugar of approximately 0.5 cents can pose problems for the sugar industry, as it implies an elevation in the price floor for sugar in the US, which can result in widening the gap between US and world sugar prices and thus aggravate the trend of US manufacturers moving offshore.
report also quoted the Sweetener Users Association (which represents
The Bush administration has already threatened to veto the bill. +