The debate over the next U.S. farm bill is beginning. This will have important implications for trade. Improved access by U.S. farmers to foreign markets may depend on our ability to rein in subsidies in this bill.
The Cato Institute' Center for Trade Policy Studies is gearing up for the debate. One of their first steps has been to take on economist Sallie James as a new trade analyst. James will be responsible for analyzing the costs of current U.S. subsidies, both to U.S. citizens and to persons in other countries. She's got the qualifications:
James previously served as an executive officer in the Office of Trade Negotiations in the Australian government’s Department of Foreign Affairs and Trade in Canberra and as a senior policy adviser in the Australian Department of Agriculture, Fisheries and Forestry. She holds a Ph.D. in Agricultural Economics from the University of Western Australia.
And she's off and running, with this column on proposals to extend the provisions of the existing farm bill - including the generous subsidies to some agricultural sectors: A raspberry for free trade (Pittsburgh Tribune Review, May 19, 2006):
Every year we delay reform is one more year that Americans are stuck bearing the costs of unjust and ineffective farm programs. Those costs are significant.
The higher prices U.S consumers pay for food prices transferred over $16 billion from consumers to producers last year.
Then there are the not-inconsiderable transfers from taxpayers in the form of subsidies to farmers -- many of them large agribusinesses.
U.S. agricultural policy also imposes costs on other U.S. industries that use agricultural inputs to produce final goods for domestic consumption and export.
The policies also promote inefficiencies because government farm programs that artificially raise domestic prices encourage production that would not exist in a competitive and free market. It concentrates payments on a narrow range of commodities, undermining diversification and competitiveness and leading to practices that damage the environment.
Contrary to Lincoln's [Senator Blanche Lincoln, of Arkansas] insistence that it is in the best interests of the United States to extend the farm bill for reasons of "national security," the damage done to U.S. foreign relations from the hypocrisy it shows in world trade talks is not trivial.
U.S. agricultural policy causes resentment in developing countries and undermines its credibility as a nation that believes in economic opportunity for all.
Here's a link to the USDA's Economic Research Service web page on the farm bill: Farm Bill Forums .
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