A farmer read my article about the U.S. position in the current WTO negotiations over agriculture subsidies. His response:
Full dislosure: I’m a farmer. I receive no ag subsidies. Aside from a PELL grant received in my first year of engineering school, I’ve never
taken a dime from Uncle Sugar.
I’d like to direct your attention to the EWG database of US farm subsidy payments, organized in a nice, neat little table — neater and more useful than anything the USDA publishes.
OK, let’s look at the counter-cyclical program totals and the overall farm subsidy totals for the years the counter-cyclical programs were in place and paid, which would be 2001, 2002, 2003 and 2004:
Total ag subsidies for 2001 to 2004: $64,389,551,512.00
Total counter-cyclical payments for 2001 to 2004: $3,625,249,434.00
Counter-cyclical payments as a percentage of the total: 5.63%.
Let’s cut to the chase here: the counter-cyclical program has far fewer participants and fewer farmers chasing that program than many of the
other programs out there and the money distributed is but a small fraction. The use of the counter-cyclical programs as the stalling tactic by the EU is just that — a stalling tactic. Sure, they have a WTO ruling. Whoopie.
I have to interject here. These statistics are not valid. The counter-cyclical payment wasn’t created until mid-2002. Broken down by year for 2001-2004, the counter-cyclical payments were as follows:
They are a large and, by some estimates, growing part of our farm-subsidy regime. So I don’t buy that they’re just an insignificant part. If they were, we wouldn’t be going to so much trouble to change the WTO rules just so we could keep them.
However, despite that, this correspondent makes several good points:
What free-trade purists and academics have to realize is that the EU will NEVER, EVER drop their ag subsidies. It WON’T HAPPEN. It wouldn’t
happen if we dropped all our subsidies and tax credits for farmers. They’ll always find something else to complain about to prevent real cuts to their ag subsidies and free trade on their part.
When President Bush offered his plan of huge subsidy cuts if the EU would drop theirs, President Bush was showing that he’s a lot, lot smarter than people give him credit for, because his offer seriously upset the apple carts in France and Belgium. PM Tony Blair offered to do the heavy lifting on cutting subsidies (what a steadfast friend of the
US Mr. Blair has been), but the French had a conniption fit internally and they spit some of their venom back at Mr. Blair.
France receives 40 percent of all EU ag subsidies in the EU budget. They’re pigs — real porkers. And the French government is scared of any proposals to cut subsidies to the French farmers — because France is scared of their farmers.
See, here’s what you free trade advocates don’t understand about this
situation: American farmers lobby (successfully) for subsidies. French farmers *riot* (successfully) for subsidies. Heck, look at the wine producers in France after the 30 percent decline in Froggish wine sales due to US consumers saying ‘non’ to French wines after March, 2003 — they burned the equivalent of a couple of our ag co-operative extension offices. They’re agitating for the government to bail them out, because, after all, it was Chirac’s mouth that cost them their wine market. The French mindset isn’t to kick Chirac and his cronies out of office — it’s to have the government bail them out. Are you seeing the difference here?
We Americans can have a conversation about ag subsidies in the US, because we Americans (and American farmers) know subsidies aren’t our ideal or a long-term solution. We all know they’re ultimately “not American” and American farmers have a huge rift in their own ranks over subsidies. Culturally, (with exceptions of nutjob communities of
dim-bulb lefties like Berkeley, CA, Ithica, NY, Boulder, CO, San Francisco, CA et al) we Americans recognize there’s this ideal of a “free market,” “invisible hands,” “animal forces,” “creative destruction” and so on. Ag subsidies are a blemish on our economic mindset here in the US. People constanly are harping on farm subsidies because the public, as a whole, does not like them.
In France, there is no conversation — there is only shouting. For more. Because every Frog thinks of money, benefits and coddling by the
government to be his birthright. And, to put an earthy description on it, the French (as a nation and a culture) are scared s***less of the “Anglo-American model” of economics — i.e., free markets. Their politicians continually deride, ridicule and disparage the “Anglo-American model” of economics — and promise to “not go there.”
Their farmers are especially scared of free markets. The Germans are not far behind in their economic mindset, but are less subsidized and more civil about how they discuss these things. Still, between the two, they’re in no hurry to adopt anything remotely like a “free market” model in ag policy, much less the rest of the country. People in France
worry that if ag subsidies are cut… well, then, none of their cushy government benefits are safe.
And that’s why, modulo WTO decisions with which we must comply, all attempts to eliminate ag subsidies to curry favor with the EU are a dead end. They’re never going to eliminate theirs, so let’s just call them on it, the way President Bush has already. Twist the knife in their backs
with proposals that are sure to cause riots and political discord in France and Germany — God Himself knows the French deserve it and the Germans are a bonus.
But don’t reckon that we’re changing our subsidies to gain actual free trade with the EU. It won’t happen. So we should realize that and use
whatever policy is necessary to achieve our own ends as we’d like them.
While this reader makes valid (and funny) points about the European mindset with regard to agriculture, he missed one of the points I was trying to make in my article: That it is in our best interest to lock ourselves into ag subsidy reform during these talks, regardless of what the Europeans do. The fact that it would make the Europeans look even more cynically protectionist is just an incidental benefit.
We should drop the insistence on a loophole for counter-cyclical payments because economically it is the right thing to do. The bonus is watching the EU squirm as they try to come up with more excuses to avoid reform.