American subsidies and tariffs amount to much more money than its foreign aid to the developing world. According to Oxfam, "in crop year 2002, the U.S. government provided $3.4 billion in total subsidies to the cotton sector," including about 25,000 growers. "To put this figure into perspective," Oxfam says, "it is nearly twice the total amount of U.S. foreign aid given to sub-Saharan Africa. It is also more than the GDP of Benin, Burkina Faso, or Chad, the main cotton-producing countries in the region." The subsidies drive down world cotton prices, costing developing countries billions of dollars in lost export earnings.
Poor countries don't want our pity; they want our respect. To the extent that American security depends on the expansion of liberal democratic institutions and free market economics, Washington must be particularly sensitive to policies that exacerbate poverty in the developing world.
An Opportunity for Real Reform
For the sake of our broader national interest, Congress and the president should reduce, with the ultimate goal of eliminating, all agricultural trade barriers and production subsides. The long-term interests of Americans as consumers, producers, taxpayers, and citizens of the world should not be sacrificed for the short-term interests of a small minority of farmers.
Reform is a real possibility. The WTO's Doha Round will hit a hard deadline in 2007. That's also when Bush's authority to negotiate trade agreements and present them to Congress for an up-or-down vote will expire under the terms of the Bipartisan Trade Promotion Authority Act of 2002. Without such authority, it will be virtually impossible for the White House to conclude a complex multilateral agreement with the other 147 members of the WTO. Aggressive proposals by the U.S. government to slash its farm subsidies and trade barriers, and the willingness of Congress to make those proposals a reality, will be necessary for the successful conclusion of Doha by the 2007 deadline.
Meanwhile, the U.S. cotton program and the European Union's sugar subsidies have been found in separate WTO cases to be in violation of the body's trade rules. Both cases cast doubt on the legality of similar farm programs in the rich countries.
On the domestic front, the farm bill will be coming up for reauthorization at about the same time that the Doha Round negotiations enter their final stages. A new farm bill offers Congress an obvious opportunity to fundamentally reshape agricultural policy.
A farm bill with deep cuts in subsidies and trade barriers would save U.S. taxpayers and consumers tens of billions of dollars during the next decade while potentially opening markets abroad for tens of billions more in American exports across the economy. Congress and the president should seize the opportunity to bring America's farm sector into the nurturing sunlight of an open global market.
Table 1: Government Support for Farm Production in 2004
| Total Producer Support of Farm Income | Support as a Share | |
| European Union | $133.4 | 33% |
| Japan | 48.7 | 56 |
| United States | 46.5 | 18 |
| South Korea | 19.8 | 63 |
| Turkey | 11.6 | 27 |
| Switzerland | 5.8 | 68 |
| Canada | 5.7 | 21 |
| Mexico | 5.4 | 17 |
| Australia | 1.1 | 4 |
| New Zealand | .3 | 3 |
| Total | $279.5 | 30% |
| *Producer support estimate, in billions U.S. $ | ||
| Source: Organization for Economic Cooperation and Development | ||
Table 2: Aggregate Measure of Protection Against Developing Countries (tariff equivalent)
|
United States
|
European Union
|
Japan
|
|
| Agriculture | 19.9% | 46.6% | 82.0% |
| Textiles, Apparel | 10.9 | 11.6 | 9.2 |
| Other Manufacturers | 2.1 | 3.2 | 1.5 |
| Oil and Other* | .9 | .6 | .3 |
| All | 4.0% | 9.5% | 16.6% |
| *Other = "non agricultural raw materials" | |||
| Source: William R. Cline, “Effective Economic Growth for People: The Role of the United States,” Center for Global Development, December 2004, p.4; and Cline, Trade Policy and Global Poverty | |||
Figure� 1: Direct U.S. Government Payment to Farmers, 1990�2004 (in billions of dollars)
(graph not available online)
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