US farm groups worried

Associated Press

Washington, April 28:

World Trade Organisation (WTO) desicion to challenge US farm subsidies for cotton has lawmakers and farm groups wondering if other crops could be next. The WTO finding that US cotton subsidies are unfair to farmers in developing countries “is detrimental to all farmers in the United States,” Larry Mitchell, chief executive officer of the American Corn Growers Association said yesterday. Farm leaders in Congress were quick to applaud the Bush administration for planning to defend the US farm support system.

“Reports indicate that the administration intends to appeal this WTO decision,” said a joint statement by the House of Representatives’ Agriculture Committee Chairman Bob Goodlatte, a Virginia Republican, and the panel’s senior Democrat, Congressman Charles Stenholm of Texas, “We support that action.” Agriculture secretary Ann Veneman and US trade representative Robert Zoellick are scheduled to testify today at a hearing on the matter before Goodlatte’s committee. White House spokesman Scott McClellan said president George W Bush’s position is that the US already is complying fully with WTO obligations. “We will be defending US agricultural interests in every forum we need to, and have no intention of unilaterally taking steps to disarm.”

Brazil, the world’s fifth-largest cotton producer, had filed the complaint with world trade regulators. It contended that the US continued to be the world’s second-leading cotton grower because its subsidies allowed American farmers to boost cotton production and exports while lowering world cotton prices. The Bush administration says that some payments cited by Brazil do not count as subsidies under WTO rules. The whole issue of agriculture subsidies has been a major stumbling block in current WTO global trade negotiations, known as the Doha Round. Some trade experts said the cotton ruling will make those talks even more difficult for the administration. But Allen Johnson, the chief US negotiator on agricultural issues, disagreed. “I wouldn’t say it necessarily makes the negotiations more difficult,” he told reporters during a conference call, “Agricultural negotiations are always difficult.”

Details of the lengthy WTO report were not released. But some farm group officials said they were worried by what they had learned through the news media. Mitchell said the WTO action draws into question the ability of the US to set its own farm policies. “One of the issues we are testing is the sovereignty of the nation.” Brazil could enact retaliatory tariffs against the US to compensate for economic damage to Brazilian producers if the WTO preliminary findings survive several appeals. But trade regulators have yet to determine whether to issue penalties. Rosemarie Watkins, director of trade policy at the American Farm Bureau Federation, said the full extent of potential damage to other US subsidy programmes won’t be known until the full WTO report is made public.