February 26, 2020

Johanns Comments on the House Farm Bill

Categories: Doha / Trade /Farm Bill

Reuters writer Missy Ryan reported today that, “The Bush administration brushed aside a new challenge at the World Trade Organization this week, avowing its support for farm subsidies even as another country argues they violate global trade rules…Brazil launched a new challenge on Wednesday at the WTO against U.S. farm subsidies, which it believes distort trade and have stacked up to exceed WTO limits on subsidy spending…We think our programs have been WTO-compliant. We’ll stick with that,’ said Dave Salmonsen, a trade analyst at the American Farm Bureau Federation, the largest U.S. farm group.”

I. Farm Bill
II. Trade

I. Farm Bill

Reuters writer Christopher Doering reported yesterday that, “The farm bill, awaiting a vote in the House Agriculture Committee, does not go far enough to reform U.S. farm policy, Agriculture Secretary Mike Johanns said on Thursday.

“‘It’s not reform….that’s pretty straightforward,’ Johanns told reporters shortly before going to Capitol Hill to meet Collin Peterson, chairman of the House Agriculture Committee.

“The committee proposal, written at Peterson’s direction, is a slightly different version of the 2002 farm bill and unless it is revised, the ‘need for reform’ could be addressed during floor debate, said Johanns.

“‘I do think if there is no reform…it’s an invitation to try to solve the issues on the floor of the House,’ he said.”

And Associated Press writer Frederic J. Frommer noted yesterday that, “Agriculture Secretary Mike Johanns said Thursday the proposed farm bill in the House relies on phony savings that shift expenses from one year to the next.

“‘From what I can determine, they do not appear to be real savings,’ Johanns told reporters.”

The AP article noted that, “[House Ag Committee Chairman Collin Peterson (D-Minn.)], who met with Johanns Thursday, said in a telephone interview that the committee will be making some ‘real reductions’ in the crop insurance program next week.

“As to the shifting of expenses from one year to another, Peterson said with a laugh, ‘We don’t deny that.’

“He said the plan followed budget rules.

“‘This is a normal thing,’ Peterson said.”

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., has named Reps. Earl Pomeroy, D-N.D., and Marion Berry, D-Ark., as co-whips for the 2007 farm bill when it reaches the House floor.

“Whips make sure a majority of House members vote for the bill and negotiate with members to secure their votes. As a northerner and a southerner, Pomeroy and Berry bring regional balance to the job of whipping the bill, but also the power that comes from assignments on other committee of interest to all members. Pomeroy serves on Ways and Means and Berry on Appropriations.”

In more specific Farm Bill developments, Scott Faber noted yesterday at The Ruminant that, “The EAT Healthy America Act introduced by Rep. Dennis Cardoza on behalf of fruit and vegetable growers would increase USDA conservation, research, rural development, and marketing programs — initiatives that boost the profitability of all farmers but that do not provide direct subsidies. In particular, the Cardoza bill — which has 118 bipartisan co-sponsors — would expand links between farmers and consumers, take steps to improve food safety, and reward farmers who use their pesticides with greater care.

“The ‘specialty crop’ provisions of the EAT Healthy Bill would cost about $1.6 billion a year. But, so far, the House Agriculture Committee has provided just $465 million over five years for initiatives support for fruit and vegetable farmers — and roughly $33 billion in direct subsidies over five years for the producers of corn, soybeans, cotton, rice and other beneficiaries of depression-era subsidies.

“That’s not a slice. That’s not even a crumb.

“No wonder Rep. Cardoza, quoted in today’s Congress Daily, is angry.

“He told reporters that the Chairman’s bill, which also shortchanges, conservation, energy and nutrition spending, ‘needs substantial work’ and could not ‘sustain a floor vote at this time.’ While Cardoza would not support proposals to replace subsidies with risk management accounts, as proposed by Reps. Kind and Flake, he does supports efforts to cut subsidies. ‘The bill does not need a total overhaul, but it could use a different direction,’ Cardoza said, and he warned that reformers will get ‘traction if we don’t make changes.’”

In other farm policy legislative news, Congressional Quarterly reported yesterday that, “The House’s top farm-bill writer says the legislation probably will include some new limitations on how much money farmers can receive annually from the government.
Agriculture Chairman Collin C. Peterson, D-Minn., has not offered a specific dollar figure, but agricultural lobbyists say the new cap could be $200,000 a year — down from the current limit of $360,000.

“The payment limitation could be considered next week by the panel, which is expected to take three days to mark up the farm bill (HR 2419).

“Peterson’s plan also could tighten the three-entity rule, which currently bars farmers from collecting federal dollars on more than three properties.”

Also yesterday, U.S. Representatives Earl Blumenauer (D-Oregon) and Ron Kind (D-Wisconsin) discussed opportunities for reforming the Farm Bill in an interesting blog radio conversation that was hosted by Ken Cook, president of the Environmental Working Group.

The entire conversation is available at this webpage; however, I have excerpted a couple of segments that I thought were particularly noteworthy in a six-minute recap that is available here (MP3). Specifically, the lawmakers talk about the atmosphere of reform and detail some conversations that they have had regarding reform proposals.

II. Trade

The Associated Press reported yesterday that, “Brazil has filed a new complaint against the United States at the World Trade Organization, alleging that U.S. payments to farmers have exceeded WTO limits.

“The request for consultations marks the first step in what could become another lengthy dispute between the U.S. and Brazil over the billions of dollars (euros) Washington gives out annually in farm subsidies. They have argued for the last four years over the legality of U.S. payments American cotton farmers.

“The new case also comes amid strained commercial relations between the U.S. and Brazil, which publicly blamed each other for the collapse of talks last month seen as critical in the 150-member WTO’s drive to conclude a new global trade pact.”

The AP article also explained that, “Brazil’s WTO complaint initiates a 60-day consultation period. If the two sides fail to solve their dispute amicably, Brazil can ask for the Geneva-based trade body to launch a formal investigation.

“Canada, whose Governor General Michaelle Jean also met Thursday with Lula, could move its case forward at the next session of the WTO’s dispute body on July 24.

“The U.S. blocked Ottawa’s first request for a formal WTO inquiry into the subsidies, but is prevented under WTO rules from delaying the establishment of an investigative panel a second time.”

Despite the pressure from Canada and Brazil, Reuters writer Missy Ryan reported today that, “The Bush administration brushed aside a new challenge at the World Trade Organization this week, avowing its support for farm subsidies even as another country argues they violate global trade rules.

“Brazil launched a new challenge on Wednesday at the WTO against U.S. farm subsidies, which it believes distort trade and have stacked up to exceed WTO limits on subsidy spending.

“‘We think our programs have been WTO-compliant. We’ll stick with that,’ said Dave Salmonsen, a trade analyst at the American Farm Bureau Federation, the largest U.S. farm group.

“The Bush administration said the allegations ‘were unfounded when they were made by Canada, and they are just as unfounded when they are made by Brazil.’”

More specifically, Ms. Ryan stated that, “The new challenge lands as debate intensifies over the direction of U.S. farm policy and as Congress drafts the 2007 farm bill, which will set subsidies, nutrition and farm conservation for five years. While the Bush administration has advocated some subsidy reform, in part to avoid new WTO challenges, it appears lawmakers have a different vision.

“Salmonsen, noting the new case could drag on for years, doesn’t see the challenge redirecting debate on Capitol Hill.

“Rep. Collin Peterson, who chairs the House committee drafting the new farm law, said on Thursday that his fellow lawmakers were not shaken by these kind of cases.

“‘Probably, some of these people are doing these things to try to influence us,’ he said. The Minnesota Democrat is confident the new farm bill will comply with WTO rules.

“Senate Agriculture Committee Chairman Tom Harkin, meanwhile, said he will keep a close eye on the challenge as he leads the farm bill process in the Senate.”

In news regarding the WTO round of trade talks, Heather Timmons reported in today’s New York Times that, “As the unofficial voice of developing countries in the deadlocked World Trade Organization talks, Kamal Nath has been called a lot of names in recent weeks — including stubborn and irresponsible.

“The latest round of talks among a group known as the G4 nations — India, Brazil, the United States and a representative of the European Union — ground to a halt late last month after Mr. Nath, India’s minister of commerce and industry, and Brazil’s foreign minister, Celso Amorim, walked out. The United States trade representative, Susan C. Schwab, described their actions as ‘inflexible’ and ‘low ambition,’ and said they could harm emerging nations.

“The stalled talks are emphasizing a deeper issue: In some ways, the balance of power between advanced and developing countries is shifting, politicians outside the West, including Mr. Nath, say. ‘The reality is that there is a new economic architecture,’ Mr. Nath said in an interview this week in his New Delhi office. ‘This new economic architecture is going to have new windows and new doors. It can’t be wished away.’”

Ms. Timmons added that, “W.T.O. members are preparing for what is expected to be a decisive round of negotiations at the group’s headquarters in Geneva. On Monday, the presiding officers will release draft agreements that could form the basis of a compromise or, depending on the view of countries like India, give a firm indication that the current round of trade talks begun in 2001 is on its last legs.

“Mr. Nath, whose office includes a shelf of thick W.T.O.-related publications, was quick to brush off questions about his flexibility, but still left no room for compromise.

“The issue is not flexibility, he said: ‘It is removal of subsidies, which are a distortion of global trade.’ Unless they are removed or substantially reduced, he continued, there will be no way to go forward with the talks. ‘Is anyone saying that fair trade means the continuation of subsidies?’”

Lastly today, Grant Aldonas, in an item published in today’s Financial Times, noted that, “How will the WTO’s Pascal Lamy and the lead negotiators for the US, European Union and their counterparts in the developing world back out of the crash scene and get moving again? The answer does not lie in publishing a ‘Lamy draft’ that offers the director-general’s best judgment as to where a deal lies, based on six years of fruitless negotiations.

“The answer lies in creating a new structure for the Doha development agenda that would yield real gains in trade, offer real help to the least developed countries and provide a significant incentive for further liberalisation. Towards that end, I would suggest that the director-general canvass as many members as he can, starting with the US and the EU, in support of the following four-part arrangement.”

The FT item then noted that, “The first part would involve a ‘plurilateral’ agreement among all WTO members willing to move directly to free trade on a global basis. To participate, members would have to eliminate all barriers to trade in goods and services, including agriculture, and immediately decouple all agricultural subsidies from production. What this would do is create a free trade core within the WTO, provide significant trade benefits to its participants that would ease approval of the overall accord back home and provide a significant incentive for non-participating WTO members to join as soon as they were ready to accept these obligations.”

“The second part of a new Doha development agenda would involve what is commonly characterised as ‘Doha Lite’ – an agreement involving all WTO members that locks in commitments made thus far in the Doha round in their relatively limited form (that is, a formula that requires steeper cuts in higher tariffs, which would be acceptable to developing countries).”

“The third part of this new initiative would involve the harmonisation and expansion of preferences for the least developed countries in the world.”

And the with respect to the final part of a possible accord, the item indicated that, “The fourth part of the initiative would involve the immediate elimination of barriers to trade and investment in goods and services that contribute to energy efficiency and the reduction of carbon dioxide emissions. It would also include the elimination of any barriers to trade in financial services that would inhibit the development of a worldwide market for carbon.”

Keith Good

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