- The Washington Times - Thursday, May 2, 2002

The United States stands a good chance of violating international trade rules as a result of a new bill that hands farmers billions of dollars in additional subsidies when prices for commodities such as wheat, corn and soybeans decline sharply.
Critics of the bill say its passage will also hamper Bush administration efforts to persuade other countries to curb their subsidies in future trade negotiations.
"We've taken one or two steps backward," said Dan Amstutz, a top agricultural trade official in the Reagan administration. "This bill will not help our trade negotiations."
The legislation, which House and Senate negotiators hammered out this week, marks a shift from the last major farm bill in 1996, when Republican leaders forced through major cuts in subsidies. Now, farmers will receive existing payments as well as additional money if prices dip.
The bill, likely to win final approval and President Bush's signature this month, would result in an additional $71 billion in new spending over the next 10 years, according to a preliminary estimate by the Congressional Budget Office.
The bill prompted criticism from both sides of the aisle, with Reps. Cal Dooley, California Democrat, and John A. Boehner, Ohio Republican, saying the bill would exceed spending limits that the United States has promised to follow in existing trade agreements.
The bill's backers said they expect the Bush administration will be able to defend the new programs from other countries' criticism.
"We will prevail in any questions our trading partners have," said Keith William, a spokesman for Rep. Larry Combest, the Texas Republican who heads the House Agriculture Committee.
Secretary of Agriculture Ann M. Veneman last summer took a strong stand against a farm bill proposed by Mr. Combest that seemed to put the United States in breach of World Trade Organization strictures. But Mr. Combest ultimately prevailed, in part by threatening to oppose the White House's push for congressional authorization to negotiate new trade agreements.
"This bill has only gotten worse," Mr. Dooley said.
With the strong support of the United States, trade negotiations over the past decade, including the current round of WTO talks, have aimed to reduce subsidies that encourage overproduction. The resulting gluts on world markets have depressed prices and hurt farmers in poorer countries that cannot afford subsidies.
"This proposed legislation marks a blow for the credibility of U.S. policy in the WTO, " said Franz Fischler, commissioner of agriculture for the 15-nation European Union.
Most observers expected a harsh European reaction. Europe, which subsidizes its farmers more heavily than the United States, has always sought to draw attention away from its own policies, Mr. Amstutz said. But other countries like Australia, normally an ally of the United States in the WTO, piled on as well.
"The farm bill shields American farmers from market signals and will contribute to unnecessary increases in production by farmers in order to qualify for their government subsidies," said Australian Trade Minister Mark Vaile in a statement.
Whether the bill creates a breach of existing WTO rules remains to be seen.
The United States agreed in 1994 to a $19.1 billion limit on agricultural subsidies that boost domestic production and interfere with international trade.
If prices remain low, as they have for the past few years, the new legislation would trigger big payments that would push American subsidies above that ceiling, said Craig Thorn, a Clinton administration agricultural trade official.
"There is as much as a 50 percent chance that we shoot above our WTO limit in the next few years," he said.


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