Trade officials meeting in Geneva, Switzerland, recently announced a breakthrough in talks to reduce agricultural subsidies and other trade-distorting policies around the globe.
The preliminary agreement is being hailed as a major step toward liberating consumers around the globe from government restrictions on commerce. Unfortunately, there is little or nothing in the agreement to stop Washington politicians from flogging American taxpayers.
The key “breakthrough” is a pledge by the United States and other nations to reduce trade-distorting farm subsidies by roughly 20 percent. Admittedly, this is better than a 20 percent increase in farm subsidies. However, given the wiles of ag policy, it is unlikely the cuts will ever materialize in the bottom line of the federal budget.
And even if there is a 20 percent subsidy cut, it will be from the sky high current levels. In the 2002 farm bill, President Bush and Congress boosted farm subsidies as much as 70 percent above the previous law. And no one in the Bush administration is even talking about rolling back farm subsidies to the levels of the second Clinton administration.
The international negotiations have been propelled by the $300 billion advanced countries spend annually on farm subsidies. Western nations dump their crop surpluses on poor countries, bankrupting foreign farmers and making it far more difficult for those nations to earn their way out of poverty. The damage from such subsidies have long been obvious but protests by Third World governments and nonprofit groups recently reached a crescendo.
One positive aspect of the preliminary agreement (which could easily produce nothing) last week is a pledge by the U.S. government to reform the cotton program, which has already been condemned as illegal under World Trade Organization rules. Since 1990, the cotton program has cost taxpayers more than $20 billion — the equivalent of $6 million for each full-time cotton farmer. The 2002 farm bill authorized jacking up cotton subsidies by roughly 16 percent.
U.S. cotton dumping helped drive world cotton prices down 50 percent between 1996 and 2002. Amadou Toumani Toure and Blaise Compaore, the presidents of Mali and Burkina Faso, respectively, complained in July 2003 that “the payments to about 2,500 relatively well-off [American cotton] farmers has the unintended but nevertheless real effect of impoverishing some 10 million rural poor people in West and Central Africa.” Many cotton farmers in Africa have lower production costs than their American counterparts, but U.S. subsidies trump comparative advantage every time.
But Congress may find ways to perpetuate cotton largess despite any trade agreement, in part because of its long history of fraudulent farm policy reforms. Eight years ago, Congress passed the Freedom to Farm Act, supposedly promising to phase out farm subsidies within six years. At the time, Congress sharply raised subsidies to compensate farmers for the possibility of their eventual elimination. And Congress provided new harvester loads of tax dollars for farmers on any and every pretext in the following years.
Besides, the premise of international negotiations over farm subsidies is bogus. Bargaining with foreign countries over lowering farm subsidies makes as much sense as bargaining with foreign health authorities before agreeing to clean up mosquito-infested swamps in Louisiana. Foreign subsidies cannot sanctify Congress’ abuse of American taxpayers.
For decades, lawmakers have justified U.S. subsidies as “bargaining chips” to persuade foreign governments to reduce their farm subsidies. These chips are far more expensive than anything Las Vegas ever put on a table. Since 1985, federal farm policy has cost taxpayers and consumers more than enough to buy outright all the farms in the vast majority of states in this country.
The rationality or justice of American farm policy does not depend on trade treaty votes taken in the European Parliament or the Japanese Diet, or on the proclamations of African dictators. The European Union’s decision to give money to a French farmer cannot vindicate American politicians seizing and sending a Detroit dishwasher’s wages to a Mississippi cotton baron.
The only sure way to reduce farm subsidies is to abolish farm programs. Anything else is merely a ticking time bomb under American taxpayers. Until farm subsidies are abolished, farm-state congressmen will be lurking, waiting to add a legislative rider (such as the $10 billion handout for tobacco farmers in the current tax bill) or seize upon the next drought (always a novel occurrence) to rain billions of dollars upon farmers.
James Bovard is the author of “The Bush Betrayal” (Palgrave MacMillan, August), “Feeling Your Pain” (2000) and six other books.