.Both sides were largely correct. Nevertheless, the Bush administration did come forward with a fairly sizeable offer that included deep cuts in U.S. farm subsidies — a step whose boldness was not matched by the EU. It is now clear that the EU isn’t serious about opening its agricultural markets. Unfortunately, putting off farm-subsidy reform in the U.S. until the EU gets serious would mean putting it off for the foreseeable future. But American farm subsidies have become so wasteful and ineffective that reform cannot wait. President Bush and Congress should unilaterally enact the subsidy cuts they proposed in this latest round of trade talks (known as the Doha round), with or without the EU.
The objection one always hears from the “ag members” of Congress — upon whom the commodity groups that support farm subsidies have a seemingly unbreakable hold – is that we must continue to pay farmers billions of dollars each year so that we have a “bargaining chip” to use in our negotiations with the EU. But internal political squabbles in the EU have effectively shut down negotiations. The fiercely protectionist French have cut off every attempt Mandelson has made to meet the U.S. halfway. We no longer have a negotiating partner. Our bargaining chip is useless.
It’s therefore time to cash it in and return the proceeds to the American taxpayer. The U.S. farm program adds around $20 billion a year to the deficit, awards billions to landowners who don’t grow anything, and increases the price of farmland and equipment — trapping farmers in a cycle of dependency on the federal government. The farm program is a monument to waste, fraud, and abuse. And the idea that American agriculture depends on subsidies is simply wrong: They go to the producers of only a handful of crops, and most farmers don’t receive them. It’s true that, without the subsidies, some farms would go out of business; but many more would continue to thrive. And all U.S. consumers would benefit from being able to buy less expensive farm commodities.
As the Washington Post has documented in a series of articles this year, the 2002 farm bill might be the most wasteful and ineffective such legislation in the 70-year history of the farm program. Opponents of subsidies had hoped that the Doha-round agreements would force Congress to make deep cuts. But, depressingly, the World Trade Organization’s suspension of talks has now made the reauthorization of the 2002 farm bill in its current form more likely.
Nevertheless, there are several reasons to hope that this time Congress will do the right thing. First, there is a group of fiscal conservatives in the House, led by Mike Pence, Jeff Flake, and Jeb Hensarling. They have won a few small victories against profligate spending this year by taking firm stands and offering innovative new ways to fight waste and abuse. They should now make phasing out farm subsidies a top priority for 2007, as few programs are more wasteful or susceptible to fraud.
Second, the WTO has already determined that most of the U.S. farm program violates existing WTO agreements and must be reformed. The Bush administration was hoping to solve this problem by negotiating a resolution in the Doha round. But now that this effort has failed, the WTO is likely to give countries like Brazil — whose farmers have difficulty selling crops in the protectionist U.S. market — the green light to start imposing retaliatory tariffs on a wide variety of U.S. exports. This should in turn give Congress an incentive to cut subsidies and bring the farm program into compliance with WTO rules.
Finally, President Bush has found his veto pen. Last week he vetoed a bill that would have provided federal funding for embryo-destroying stem-cell research. Bush declared last fall that he supports “elimination of trade-distorting agricultural subsidies and tariffs.” If he means it, he will call on Congress to pass legislation that conforms to the proposals his administration offered in the Doha round, and he will threaten to veto any bill that exceeds those limits.
In the parlance of international trade talks, getting rid of a trade barrier is usually described as a concession to other countries. But unilaterally dismantling trade barriers would be good for the U.S. economy. The collapse of the Doha round is lamentable, but it should not stop Congress and President Bush from making some “concessions” to American taxpayers and consumers.