The World Trade Organization’s most recent
review of United States agricultural policies, published in March, offered a mixed view of how much support American farmers receive from their government and what effect it has on world trade.
Comparing 2004 to 2000, the WTO said American farm support fell sharply and was well below average support in other developed countries within the Organization for Economic Co-operation and Development.
The Geneva-based trade organization said “U.S. government payments to agricultural producers as a share of net farm income fell from 48 percent in 2000 to 16 percent in 2004.”
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However, U.S. support in 2005 headed back to 2000 levels because of the U.S. counter-cyclical payment program.
And American support, concentrated in a few key crop areas, continues to distort world markets.
“While support is lower than in the 1986-88 average, the last base period measured by the OECD, it is above the levels of the mid-’90s and the most production and trade-distorting forms of support are still significant, contributing to depressing world prices,” the WTO report said.
Besides, most U.S. government support for farmers operates under the WTO radar and is not reported as trade distorting.
The WTO limit on trade-affecting support for the U.S. is $19.1 billion per year and the Americans consistently report that relevant spending is billions of dollars below the limit.
However, “around U.S. $50 billion of domestic support provided in each of these two years (2000 and 2001) was classified as ‘green box’ and was not subject to reduction commitments in the WTO,” the report noted.
The WTO said an open and transparent American trade policy has fuelled growth in the world’s largest economy but “market access barriers and other distorting measures, notably subsidies, persist in a few but important areas and addressing these distortions would benefit U.S. consumers and taxpayers and help strengthen the global economy.”
It also warns about protectionist sentiment in the U.S. that should be resisted.
