NCPA - National Center for Policy Analysis

THE FARM BILL AND FREE TRADE

May 8, 2008

Presidents don't usually veto farm bills. But now President Bush seems intent on making good on his threat to reject the nearly $300 billion farm monstrosity advancing through Congress, says Bernard K. Gordon, professor emeritus at the University of New Hampshire, and Sungjoon Cho, a professor at Chicago-Kent College of Law.

Back in November, the White House threatened to veto the legislation because it contained trade-distorting subsidies.  These would sow havoc in our international agreements, and perhaps lead to markets being closed to American products.  This farm bill would be, as some have noted, the costliest in history:

  • The price tag on the previous farm bill in 2002 was under $200 billion; today it is almost 50 percent higher.
  • The farm economy has never been stronger and there's no need to increase supports and subsidies to people who are among the wealthiest 2 percent of Americans, according to an Office of Management and Budget report.

Fiscal prudence alone dictates that the farm bill be stripped down to its bare essentials. But its trade-distorting subsidies also have the potential to be disruptive and destructive to our economy.  International trade is essential for the American farmer:

  • The United States exports tens of billions of dollars worth of farm products every year.
  • To keep markets open and find new places for Americans to sell their goods, the United States works with the World Trade Organization (WTO) to hold ongoing talks in Geneva.
  • The so-called Doha round currently underway deals especially with trade to developing countries. It has been stuck at an impasse over subsidies that developed countries give to farmers.

We need to be in compliance with WTO rules, otherwise our $91 billion in farm exports will suffer, says Deputy Agriculture Secretary Charles F. Conner.  He also noted that should the United States not comply with WTO rules, the country would be vulnerable and probably lose high-profile agricultural disputes.

Source: Bernard K. Gordon and Sungjoon Cho, "The Farm Bill and Free Trade," Wall Street Journal, May 7, 2008.

For text:

http://online.wsj.com/article/SB121011980315972441.html 

 

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