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Amid wrangling trade issues lurk

As the Bush administration's first year rapidly runs down and Congress (finally) is back in action, the ailing economy that the policy “doctors” expected to jump-start with tax rebates and tax cuts is still gasping for breath. Now the Washington crash team is searching for the defibrillator paddles to apply a few jolts to try and keep the patient from going into full cardiac arrest.

And like Titanic passengers heading for the lifeboats, virtually every U.S. business sector, sobered by the fall from grace of the technology sector, has gone into crisis mode, laying off people right and left and shutting down the investment spigot. It's the old joke made real: “Everybody's been saying times are bad — and sure enough they are.”

The ailing agricultural economy is nothing new — most farmers have been on life support for quite a while now, managing to hang on with massive transfusions of government money. The rosy picture painted for agriculture in a world market economy and a free trade arena, after the euphoria of the first two moneymaking years of Freedom to Farm, has been tarnished by commodity prices sinking lower and lower.

More government aid is in the works for this year. A new farm bill is in gestation, but with a vanishing surplus and a continuing fight over the validity of the president's tax cut package, Social Security, Medicare, education reform, a missile defense system, and a host of other massively expensive spending programs, it remains to be seen whether there'll be the financial wherewithal to fund the new legislation sufficiently to give farmers something significantly better.

Lurking in the background, while all these big ticket debates are going on, are a number of trade issues that can have an impact on agriculture.

Secretary of Agriculture Ann Veneman has warned that unless the U.S. “gets on the bandwagon soon” and negotiates new trade agreements, American farmers stand to lose valuable overseas sales. Key to these agreements, the administration contends, is for Congress to approve trade promotion authority, the new title for what previously was fast track authority. Whatever the name, it gives the administration the power to negotiate trade agreements on which Congress can only vote yes or no and cannot amend. Ten former agriculture secretaries recently sent a letter to Ms. Veneman in support of the authority, saying “American agriculture has much to gain” by its passage and “too much to lose if Congress fails to seize this opportunity.”

An obstreperous Republican-controlled Congress refused in 1997 and 1998 to grant fast track authority to President Clinton, and it may not be an easy sell for Bush. More than a few lawmakers with an agricultural policy base say previous trade agreements inked by the U.S. have undermined the interests of American farmers and have been easily circumvented by other countries. They want assurance that they'll get administration support for farm programs before they commit to authorizing trade promotion authority.

Some 30 percent of the output of U.S. farms goes overseas, and the USDA is now predicting a 7 percent increase for ag exports in the new fiscal year beginning Oct. 1. The forecast $57 billion would be the highest since 1997 and would, the USDA says, be the third consecutive year of export growth.

However cheering this news might be to a depressed agricultural economy, the USDA's export forecasts have themselves come under fire from ag interests contending that the projections of export trends have been overly optimistic, particularly with respect to China, South Korea, Taiwan, Brazil, and other countries. Faulty forecasts by the USDA, critics say, have had repercussions throughout the ag economy, resulting in massive overproduction for markets that didn't materialize, and have had a major negative impact on farm policy.

USDA notes its export forecast numbers could be revised downward if China increases exports and the world economy stagnates further, both of which aren't that unlikely, given current trends.


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