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Senate Needs to Consider WTO Obligations in Farm Bill Debate A World Trade Organization (WTO) compliance panel last week ruled against the United States in its argument with Brazil over U.S. cotton subsidies. Although the United States has made changes to its cotton program, the panel found that some subsidy measures still do not comply with WTO rules.The panel's action comes at a critical time for U.S. agriculture, as the Senate considers its version of the 2007 Farm Bill. WTO member countries are watching closely to see whether U.S. subsidy programs for cotton and other farm programs will be reformed in the Farm Bill. Some U.S. subsidies, including those for dairy, are considered trade distorting by WTO rules. The organization places strict overall limits on these programs just as it limits farm subsidies and tariffs in other countries. In fact, the U.S. Department of Agriculture recently reported to the WTO that the Milk Income Loss Contract program and Dairy Price Support Program under the 2002 Farm Bill make up the majority of U.S. trade-distorting subsidies allowed by WTO in its amber box provision. The amber box contains domestic subsidies that WTO member countries have agreed to reduce but not eliminate. "We have to play by the rules and be very careful about creating new problems, like the Dairy Import Assessment included in the House-passed Farm Bill, with our trading partners," said Clay Hough, IDFA senior vice president. Billions of U.S. taxpayer dollars continue to be spent on dairy subsidies at a time when world prices are high and demand is strong. In fact, the value of U.S. dairy product exports has doubled over the past five years, reaching a record high of $1.8 billion in 2006. "Exports are becoming increasingly important to our industry," said Hough. "We should ensure that our farm programs remain compliant with WTO rules so that our access to export markets abroad continues to grow." For information on why international trade matters to the U.S. dairy industry, click here.
Posted October 22, 2007
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