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Titles:
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TITLE III. Agricultural Trade And AidC. U.S. Farm Bill and U.S. World Trade Organization Obligations When the Federal Agriculture Improvement and Reform Act of 1996 went into effect, the North American Free Trade Agreement (NAFTA) and the Uruguay Round Agriculture Agreement (URAA) were just beginning to be implemented. Today, the situation is different. Trade obligations play a large role in the way countries support their farmers. In November 2001, more than 140 World Trade Organization (WTO) member nations agreed to launch a new round of multilateral trade negotiations. These negotiations, called the Doha Development Agenda, seek to reduce and possibly phase out all forms of export subsidies, improve market access, and reduce trade-distorting domestic support. Attainment of these goals would expand global markets and reduce trade barriers. The start of a new round has brought into sharp focus the trade-distorting policies of developed countries, such as the European Union (EU), Japan, and the United States. Developed countries account for virtually all domestic support and export subsidies, which distort agricultural markets worldwide. However, the United States subsidizes its agricultural products less than other countries. Currently, the U.S. domestic support commitment ceiling is $19.1 billion, compared to the EU’s ceiling of about $60 billion and Japan’s ceiling with respect to trade-distorting policies of $30 billion. In the area of market access, U.S. tariffs on agricultural imports average a modest 12 percent compared to more than 60 percent for all WTO members, more than 50 percent for Japan, and more than 30 percent for the EU and Cairns group of 17 agricultural exporting nations. Under URAA commitments, to which all member countries, including the United States, adhere, policies that seriously distort trade were differentiated from those with minimal trade effects. The two respective categories were labeled "amber box" and "green box." For amber box policies, countries are not able to exceed the level of support to which they have agreed as measured by their Aggregate Measurement of Support (AMS). The AMS essentially totals, commodity by commodity, a country’s support measures linked to price or production. The WTO amber box ceiling for the United States is $19.1 billion. With the enactment of the Food Security and Rural Investment Act of 2002 (FSRIA), domestic spending levels appear high. However, they are no higher than what has been provided to U.S. farmers over the past few years when you add appropriations and the total of ad hoc programs authorized in various acts to annual farm program costs. Much of the new support is minimally trade distorting. In addition, the FSRIA contains a provision that mandates the Secretary of Agriculture to keep spending on domestic programs within U.S. WTO commitments. This so-called "circuit breaker" provision will mean that the United States will not exceed its WTO limits. The Doha Development Agenda gives all countries, including the United States, the opportunity for freer trade in food and agricultural products. By March 2003, WTO members have agreed to establish commitments to reduce export subsidies and domestic support and to improve market access in both developed and developing countries. The entire negotiations are to be completed by January 2005. A successful agreement must especially include, among other results, large and meaningful improvements in market access and appropriate disciplines on export subsidies and state trading enterprises. The overall benefits to U.S. farmers and ranchers can be considerable.
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