Dow Jones writer Grace Fan reported yesterday that, “Brazil is planning to join Canada in a complaint lodged at the World Trade Organization against unfair U.S. agricultural subsidies, a Brazilian Foreign Ministry spokesman told Dow Jones Newswires on Tuesday…The Foreign Ministry will release a statement tomorrow, but I can confirm that Brazil will ask for more information from the U.S. on these subsidies as a co-author with Canada,’ said the spokesman in a telephone interview…A few weeks ago, Canada formally asked the WTO to establish a dispute settlement panel, charging that the U.S. had breached WTO commitments by surpassing a $19.1 billion WTO spending limit in six out of the past eight years.”
I. Farm Bill
II. Doha / Trade
I. Farm Bill
Chris Clayton, writing yesterday at DTN (link requires subscription), reported that, “There are growing rumblings as members of Congress who don’t want to risk seeing a farm bill full of reform argue there isn’t enough time to debate a farm bill on the floor of the U.S. Senate this year, Sen. Richard Lugar, R-Ind., said Monday.
“The Senate is piling up critical issues to debate, most of which tie back to the Iraq war. Such a full plate of issues would spark at least some lawmakers to avoid an arduous debate on farm policy by pushing an extension of the current programs, Lugar said in an interview Monday.
“‘I see some inklings that this is where we are headed,’ he said.”
Mr. Clayton pointed out that, “Lugar, a member of the Senate Agriculture Committee, is chief sponsor in the Senate of reform legislation — the Farm21 Bill — that would phase out commodity title payments by creating risk-management accounts and improving the crop insurance program. The bill would increase spending for nutrition, conservation and rural development.”
Concluding, the DTN item explained that, “Lugar noted that House Speaker Nancy Pelosi, D-Calif., backed farm-bill reformer Ron Kind, D-Wis., in 2002. Kind has pushed the Farm21 plan in the House and drawn attacks from House Agriculture Committee members because of it. Lugar wants to see what may happen if Farm21 makes it to the House floor.”
Also yesterday, the Associated Press reported that, “Iowa Senator Tom Harkin says he will have to be pushed aside before he accepts a farm bill without proper funding for conservation and nutrition efforts.
“Progress on the farm bill, which includes a number of federal programs, has been slow amid competing priorities and pressure to keep spending in check.”
The AP article added that, “He says the country has an obligation in conservation, specifically programs that pay farmers for leaving land idle. Farmers have been reluctant to do so this year because of soaring prices prompted by the surging production of corn-based ethanol.
“If farmers leave land idle, they could miss out on big profits. Harkin contends that the only way to persuade farmers not to plant is to increase payments to them.”
DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “A firm date on bringing a farm bill to the Senate floor cannot be guaranteed, Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said Tuesday. But when the bill is taken up, Harkin said he plans on writing a 6- to 7-year farm bill rather than the 5-year farm bill that has been discussed in the House and Senate.
“In a telephone conference call with reporters, Harkin said he was firm about writing a longer bill because he needs budget savings from the 2013 to 2017 period to write the kind of bill he wants.”
In other Senate Farm Bill developments, Philip Brasher reported yesterday at The Des Moines Register’s Cash Crops Blog that, “North Dakota Sen. Kent Conrad has some ideas for funding the farm bill. But he isn’t saying what they are, not publicly at least.
“In an interview Tuesday, the Democrat said he [k]nows where about $6 billion to $7 billion can be found outside the farm bill. The only source of that money he would identify was an energy tax bill that’s pending in the Senate.
“Conrad said he didn’t want to talk about his ideas publicly, because ‘if others think about them they will probably use them on legislation that moves before the farm bill.’”
With respect to 2007 Farm Bill activity in the House, Reuters news reported yesterday that, “The U.S. farm bill proposed by the House Agriculture Committee chairman offers the ‘largest measure of fairness’ for crop supports, land stewardship and public nutrition, a 6-million-member farm group said on Tuesday.
“In a letter to Chairman Collin Peterson, the American Farm Bureau Federation, the largest U.S. farm group, said it ‘supports your proposal as one that provides a strong safety net for producers while providing funding for critical conservation, rural development, nutrition and energy programs.’”
The Reuters article added that, “Tom Buis, president of the 300,000 member National Farmers Union, also said the bill offered a strong farm safety net. He pointed to efforts to create an ever-ready disaster relief program.”
However, a news release issued yesterday by the American Farmland Trust stated that, “‘The House Agriculture Committee recommendations for Title I commodity subsidies extend the outdated, broken system of the past—moving policy in the wrong direction and making bad policy worse.’ said Ralph Grossi, president of American Farmland Trust (AFT) and a third generation farmer. ‘We must create policies that provide producers with a safety net while also ensuring that farm and food policy keeps current with a changing world.’”
The AFT release also noted that, “Instead of following this disastrous path, the House should follow the lead of the U.S. Department of Agriculture, the National Corn Growers Association and American Farmland Trust—all of whom have called for new safety net programs based on revenue protection. These programs can be more market oriented, less trade distorting and more equitable.
“‘Three simple changes would dramatically improve our counter cyclical programs: 1) protect revenue not just price; 2) link support prices to market indicators; and 3) integrate counter cyclical programs with crop insurance. We know a better policy can be created and we will work with the Committee and other organizations to develop a better safety net for farmers,’ challenged Grossi.”
Meanwhile, Ken Cook, writing yesterday at The Mulch stated that, “For the second farm bill in a row, wheat producers look as if they’ll be treated as second-class members of the subsidy fraternity. And yet they’ll be expected to add their wagon to the circle ’round the status quo–the better to help cotton and rice come away with billions, it would seem.
“The National Association of Wheat Growers started off this farm bill cycle with an impassioned demand for ‘balance’ in 2007 and ambitious goals for reform.
“All that passion and ambition seem to have given way to acquiescence.”
Later, Mr. Cook cited a recent news article on this development and stated that, “But as Capital Press reporter Scott Yates pointed out a few weeks back:
“‘It hasn’t been a particularly auspicious farm bill debate for the National Association of Wheat Growers so far.
“‘First, they were told their $5.29-per-bushel target price idea coupled with a $1.19 direct payment (base acres/historic yield) was dead on arrival. They protested the numbers that were analyzed by the Food and Agriculture Policy Research Institute of the University of Missouri and Iowa State University. The lobbyists and congressional aides said it didn’t matter, and it didn’t.
“‘Now the one thing wheat growers have come to depend on in terms of government support – the one leg of the three-legged 2002 Farm Bill stool that actually worked – is under attack. The preliminary discussion draft for the commodity title of the 2007 Farm Bill puts direct payments squarely in the crosshairs for reduction. Under the 2002 Farm Bill wheat growers received a direct payment of 52 cents a bushel a year.”
The Mulch update concluded by saying, “So the wheat DP did stay the same in the Chairman’s mark, but the target price increase is minimal–and too far below the market to trigger countercyclicals anytime soon in all likelihood. Which is why that target price increase doesn’t cost much. It’s not worth much.
“The wonder is that this offer is enough to get the wheat growers behind a bill that brings home a multi-billion dollar subsidy harvest for everyone else.”
And, Tom Karst, writing yesterday at the Fresh Talk Blog, stated that, “The House Agriculture Committee has released a document geared to [fruit and vegetable] producers. It can be found at the Fresh Produce Industry Discussion Group and here published on Google.”
The update added that, “I [t]alked to a Farm Bureau lobbyist today who said that that the fruit and vegetable industry should be pleased that Collin’s Peterson’s version of the farm bill keeps the planting prohibition in place. ‘I’m surprised how little talk there is about removing the planting prohibition, and there is not a lot of rumbling about doing that,’ the lobbyist said.”
Also yesterday, a news release issued by Rep. Ron Kind (D-Wisconsin) announced that, “U.S. Rep. Ron Kind (D-WI) will join Rep. Earl Blumenauer (D-OR) to participate in a BlogTalk Radio show on Farm Bill reform on Thursday, July 12, 2007 at 2:30 p.m. EDT/1:30 p.m. CDT.
“The show will consist of the Representatives answering questions submitted by people across the country on the 2007 Farm Bill, as well as the reform proposal Rep. Kind has before the House of Representatives, FARM 21. The show will be broadcast through live, streaming audio from Washington, DC on the website www.blogtalkradio.com/earl. Constituents interested in submitting a question should do so in advance by emailing it to KindOnAir@mail.house.gov.”
II. Doha / Trade
Dow Jones writer Grace Fan reported yesterday (via the cattlenetwork.com) that, “Brazil is planning to join Canada in a complaint lodged at the World Trade Organization against unfair U.S. agricultural subsidies, a Brazilian Foreign Ministry spokesman told Dow Jones Newswires on Tuesday.
“‘The Foreign Ministry will release a statement tomorrow, but I can confirm that Brazil will ask for more information from the U.S. on these subsidies as a co-author with Canada,’ said the spokesman in a telephone interview.
“A few weeks ago, Canada formally asked the WTO to establish a dispute settlement panel, charging that the U.S. had breached WTO commitments by surpassing a $19.1 billion WTO spending limit in six out of the past eight years.”
In news developments regarding the Doha round of WTO trade talks, Tim Colebatch argued yesterday at The Age Online that, “By and large, trade raises living standards. So why have governments erected barriers to hinder, even prohibit, imports cheaper than local products from entering their countries?
“And why, after six years of largely fruitless negotiations, is the Doha round, which was meant to lower global trade barriers and raise living standards, now heading for the cliff — delaying the next wave of trade liberalisation until some time next decade?
“Part of the answer is simple, part of it complex. The simple bit is crucial: free trade loses votes. Reducing trade barriers can put domestic producers out of business. Democratic governments need to win votes to stay in power, and all their voters are domestic. They have no incentive to sign trade deals that could cost them office.”
Mr. Colebatch added that, “Why does a country as rich as the US need to subsidise its farmers? It doesn’t. But some farm sectors — mainly sugar, dairy, corn, rice and cotton — have big subsidies, and big lobby groups that pay senators and members of Congress to keep them flowing.
[U.S. Trade Representative Susan Schwab] is an experienced hand who knows how far she can go in this environment. India is now demanding more than she can deliver. It’s not unreasonable to suspect that is deliberate.
“But the Bush Administration too has little reason to welcome a Doha deal. An NBC-Wall Street Journal poll in March found that only 28 per cent of Americans think that free trade agreements benefit the US. In Washington culture, taking benefits off a group of voters is full of danger. The Republicans’ political interest, like India’s, is to let Doha die.”
Later, the opinion item indicated that, “Second, over the whole Doha negotiations looms the spectre of China, potentially using its hugely undervalued currency to push its manufactures into the markets of the developing world, driving local manufacturers out of business as it has done here.
“Schwab argues persuasively that China would be the main beneficiary of a Doha round agreement. Others see that as a good reason not to have one.”
An item posted earlier this month at the Trading Ideas Blog (A Blog from the International Food & Agricultural Trade Policy Council) by C Joe O Mara stated that, “At this stage of the DDA negotiations, with the advances that have been made, it is important for all WTO Members to focus on the way forward and not on the lack of agreement at Potsdam. Determining the way forward should be developed in several steps.
“First, all WTO Members should reflect on the consequences of the DDA not being successful. All WTO Members, developed and developing, have a major positive stake in the successful conclusion of the DDA. Bilateral and regional trade agreements can supplement a WTO Agreement but they are not an alternative. In agriculture, bilateral and regional agreements cannot establish international legally binding rules in all policy areas of agriculture. Also, in market access, the benefits are limited by exceptions for commodities and products which are designated for sensitive treatment. Specifically in Agriculture, without a DDA Agriculture Agreement there will be no:
“- Duty Free – Quota Free market access for the least developed WTO Members;
– For developing and developed Members, elimination of export subsides; the most trade distorting subsides in agriculture;
– Substantial reduction of trade distorting domestic support programs; and,
-Substantial reduction in market access barriers.
“Second, despite the major progress that has been made in informal negotiations since the July 2006 suspension, the G-4 has shown that another approach to develop convergence among WTO Members on major issues is necessary. On substance, the approach must concentrate in the near term on areas of the widest divergence: the terms and conditions of Special Product designation and treatment and the Special Product Safeguard. Clearly the roles of WTO Director General Lamy and Agriculture Negotiating Chairman Falconer are critical to facilitate the process. But the negotiation of the substance is clearly the role of WTO Members.”
An opinion item posted today at The Wall Street Journal Online stated that, “The whirling President of France, in Brussels yesterday, persuaded the EU to endorse his choice to lead the IMF and sign off on his government’s budget plans. Nicolas Sarkozy has fast established himself as a savvy powerbroker at home and in Europe. He has also renewed concerns about his true intentions.
“In two months in office, the contradictions at the heart of Mr. Sarkozy’s presidential campaign and his political career are as wide as ever. He is an eager modernizer; he is a fervent protectionist. So who is he?
“The ‘market-friendly Sarkozy’ is easier to spot in France. Plans for tax cuts on home loans and overtime pay are in the works. Limiting public-sector transport unions’ ability to strike ought to prevent them from hijacking planned future reforms. Mr. Sarkozy wants to overhaul the labor and tax codes, which as any economist worth his pay will tell you is the way to get the French economy growing.”
The opinion item added that, “Then, on the European stage, emerges Monsieur Hyde. Mr. Sarkozy immediately declared EU farm subsidies a sacred cow, hurting efforts to revive Doha trade talks. At last month’s EU summit, the President yanked out of the proposed new ‘reform treaty’ the bloc’s 50-year-old commitment to ‘free and undistorted competition.’ ‘Competition as an ideology, a dogma — what has it done for Europe?’ he mused. Last week, in a speech in Strasbourg that in passing attacked the independence of the European Central Bank, Mr. Sarkozy called for an EU ‘that does not submit itself to the pseudo-dictatorship of the market.’”
In summary the Journal item indicated that, “Mr. Sarkozy’s efforts to rehabilitate protectionism are not only bad for Europe but for his own ambitious efforts to reform France. Though he won a mandate for change in May, the President’s European rhetoric is pushing public opinion against it. He also risks giving the impression that his policies are tailored to help only his rich friends in industry by cutting their taxes and regulations while shielding them from foreign competition.”
With respect to EU policies on biofuels, FarmPolicy recommends this update, “EU Plans to Foster International Trade in Biofuels,” by Ulrike Leis that posted yesterday at the German Marshall Fund Blog.
In part, the update stated that, “EU Trade Commissioner Mandelson strongly argued for increased international trade in biofuels and emphasized that biofuels produced in countries like Brazil have a stronger carbon performance and are cheaper and cleaner than their European counterparts. The Swedish Trade Minister Sten Tolgfors would even like to abolish import tariffs on biofuels altogether. He criticized that Brazilian ethanol was still met with tariffs of up to 55% while the tariff on petrol was as low as 5%. Sweden and the Netherlands recently commissioned a comprehensive OECD study on a trading system for biofuels that will be released in spring 2008. In contrast to the European approach, the US biofuels strategy is much more focused on local production. Experts predict that this year US import figures for biofuels will be even lower than they were in 2006.”