The United States is slow to inform the World Trade Organization of changes in domestic farm policy that run counter to its pledges to reduce trade distorting rules and subsidies, says the WTO.
“Members pointed out that the 2002 Farm Act was yet to be notified (reported and explained),” the WTO said Jan. 16 as it released the 2004 trade policy review of the U.S.
“They were concerned about different aspects of the act, including its potential for increased market-distorting support. Members also questioned the act’s compatibility with the aims of the Doha Development Agenda (the current WTO negotiation) as well as the effect of export credit guarantee schemes.”
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The critical WTO report on American policy came the same week that U.S. trade representative Robert Zoellick called for renewed vigour in negotiations to change trade-distorting policies.
It also came during a week in which several countries, including Canada, announced they will seek compensation from the U.S. over its refusal to abide by a WTO ruling that it is illegal to reward Americans who challenge imports and win imposition of duties by giving them a share of the duty revenue.
The last year the U.S. officially notified the WTO of the costs of its farm support programs was 1999.
Still, WTO analysts noted that direct payments to farmers are reported to have fallen by half to $11 billion US in 2001 and then rose in 2003 to an estimated $19.6 billion. And the farm bill will increase that spending.
“The six-year farm act increases reliance on price-dependent support, thus departing from the objectives of gradually reducing production-distorting support in favour of income supplements established in the (1996 farm bill).”
The WTO notes that in 2002, the total value of U.S. support to the food industry was estimated at $90 billion, including so-called “green” spending on the food stamps program, school lunch programs and higher consumer prices because of regulations that raise prices of dairy, sugar and peanut products.
“In terms of the share of producer support in the value of gross receipts, the most heavily supported commodities were sugar, rice, milk and to a lesser extent, wheat.”
The international organization calculated that in 2002, 46 percent of American dairy farmer receipts came from regulations and transfers from taxpayers or consumers. In wheat, it was 30 percent, in rice it was 52 percent and in sugar it was 55 percent.
The WTO said the delay in American notification of domestic support policies “reduce transparency and hinder a timely discussion of trends in U.S. support to agriculture.”
