The American government’s hypocrisy has crippled its attempt to be seen as a free trade crusader in the next World Trade Organization round, says a senior United States economist.
“We’re not looking very strong,” said David Orden, an economics professor at Virginia Polytechnic College and State University, who just completed a book that examines the last 70 years of U.S. farm policy.
“We’re reintervening.”
In the last year, as commodity prices have fallen, the American government returned to most of the farm price supports it began moving away from in 1996, with the so-called freedom to farm bill.
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Crop insurance has been boosted so it subsidizes low prices. Foreign food aid is “creative” to the point of being seen as an export subsidy. The Export Enhancement Program, the heaviest artillery on the American side of the 1980s grain trade war, may even be reactivated, Orden said.
“We’re giving farmers additional payments when prices fall, and someone’s going to scratch their head and say ‘I don’t really believe these are (trade neutral.) These are production enhancing.’ “
Exporting countries such as the U.S., Canada and Australia need freer access to world markets, but have accomplished little since the WTO was formed, Orden said. The U.S. government’s decision to turn away from earlier moves to get out of the market distortion business leaves the free traders without a strong voice.
Orden’s book, Policy Reform in American Agriculture: Analysis and Prognosis, focuses on why U.S. government agricultural supports have changed little since the WTO was created, during a time when U.S. governments have claimed they want to remove trade distorting policies.
Orden argues the U.S. made preliminary steps toward reducing its subsidies and market distorting policies for farmers, but after 1996 it has substantially retreated from that position.
This leaves U.S. leaders talking out of both sides of their mouths.
“(Agriculture secretary Dan) Glickman and (vice-president Al) Gore will stand there and argue that the U.S. is arguing forcefully for greater trade liberalization, but at the same time they’re talking the reintroduction of higher loan rates,” said Orden.
With world grain prices low, the Europeans showing no interest in reducing subsidies, and the U.S. backing away from its own free trade domestic policies, the next WTO round looks no more promising than the last one, Orden said.
