I thought this was supposed to be a meeting of the World Trade Organization. Apparently, I showed up instead at a free money sweepstakes.

Here’s the problem. The U.S. and the EU can’t agree on agriculture. The key to understanding why is knowing that each uses different programs to subsidize its farmers. The EU uses a lot of export subsidies to make its overpriced farm goods more competitive in the global market. The U.S. has a growing reliance on other forms of direct aid that are disguised as non-trade-distorting support (like our counter-cyclical payments), but really do distort trade.

So what happens is, the U.S. puts forward a proposal calling for the elimination of export subsidies, but including a loophole for counter-cyclical payments. Of course, the EU objects and puts forward a counter-proposal that removes the loophole and calls for the U.S. to reduce its food-aid program, which it rightly calls a farm subsidy disguised as an aid program. Of course, the U.S. objects and…

You get the idea.

Meanwhile, the poorer countries, many of them dependent on their agricultural sectors and trying to become competitive food exporters, are furious. So the rich countries are trying to buy them off. Yesterday, I wrote about how “aid-for-trade” had become the name of the game. Essentially, the rich countries want to give the poor countries a lot of aid money in order to bribe them into looking the other way on agriculture and opening their markets in areas where the rich countries are most competitive, like industrial goods and services.

Now, the U.S. has refined that art and applied it to a specific problem area: cotton. The West African cotton producers are demanding that the U.S. stop subsidizing its cotton farmers so heavily ($2-3 billion per year). How do you think the U.S. responded?

A) They agreed that U.S. cotton subsidies are egregiously high and offered to make substantial reductions, leading to a zeroing out in the near future.

B) They offered to subsidize West African cotton farmers also.

If you guessed B, you’ve been paying attention. Here’s what U.S. Secretary of Agriculture Mike Johanns said about the issue today:

About a month ago, [U.S. Trade Representative Rob] Portman and I went to Burkina Faso where we launched a West Africa Cotton Improvement Program. This program will strengthen Western African private sector organizations, link United States and West African agricultural research, reduce soil erosion, establish a ginning school, and improve the quality of cotton through better technology.
But fundamentally what will best meet the needs of the West African countries, in the end, is an ambitious outcome in these agricultural negotiations, such as what we proposed in October. I believe that we all recognize this and I have to tell you that the world has applauded our proposal. We have proposed to end all export subsidies and implement new disciplines on export credit programs.

As I mentioned at the top of this post, the U.S. has no export subsidies to eliminate. Also, its export credit programs have already been reformed — the WTO made us reform them after we lost a dispute with Brazil.

So, in sum: We propose to eliminate two subsidy programs we don’t have, leave our current subsidies pretty much intact and add a new subsidy program for West African farmers.

Welcome to the WTO — the Why not? It’s on the Taxpayers! Organization.