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Partners take aim at U.S. trade policy

Apparently, a whole herd of oxen are being gored. At least that's the conclusion one could draw by listening to agricultural free trade advocates from locations as diverse as Australia, Nigeria, South America, Mexico, Canada, the United States, and the European Union.

The group met in San Antonio recently to explore Free Trade of the Americas, the WTO and newly enacted U.S. farm legislation.

Civilized, presenters strongly defended their individual countries' trade policies and charged others with trade distorting practices that put them at a disadvantage.

The recently enacted Farm Security and Rural Investment Act of 2002 earned honors as ox-most-gored as all delegates from outside the United States and several from inside blasted the policy as unfair to trading partners and especially to developing nations.

“Support for agricultural trade within the United States, Canada and Mexico is remarkably similar,” said Brian Paddock, executive director of Agriculture and Agri Food, Canada. “The level of support among different commodities, however, is significantly different. Since 1990, Canada has transformed its policy of subsidies for crops. Canada's subsidies have declined.”

He praised the United States for reducing subsidies “after the Uruguay Round of 9trade talks). But U.S. subsidies are now back up,” he said.

The new U.S. farm policy could affect relations with the European Union, said Gerry Kielly, agricultural counselor, European Union.

“We are committed to a comprehensive agreement on agricultural trade,” Kielly said. “But the U.S. farm bill could influence negotiations.”

Kielly said the EU policy on agricultural trade has undergone significant reform over the past decade. “The charges that our ag policy is out of date and a massive gravy train with huge subsidies to farmers and that we are against imports is not true,” he said. ‘It may have been true 10 years ago, but we've moved away from guarantees that led to surplus.

“In 1992, we initiated the first major break with high price supports and replaced those with income and environmental support for farmers. We moved further away from production (support) in 1999. We will propose even further adjustments this summer and promote more rural development funds.”

Keilly's assertions that the European community is “prepared to open markets further,” met with skepticism from some participants. One remarked that he found it interesting that the EU would condemn anyone for farm subsidies.

“We are prepared to go further down the road to open markets,” Keilly added, “but we will not go unilaterally. We want discipline in agricultural trade with consequences for actions such as using food aid for surplus disposal.”

Peter Nyikuli, commercial attaché, Embassy of Kenya, said agricultural self-sufficiency and trade form two important pillars for the economic foundation of a developing country.

“But the comparative advantage theory of production has not worked for Kenya,” he said. “Trade policy that is special and differentiated (designed to give developing nations a trade boost) falls far short of what Kenya needs regarding food security.

“As an agrarian nation, we rely heavily on domestic food production (for both internal food security and trade goods).”

Senator Jeffrey Jones, a legislator for the Republic of Mexico, said nations find it easy to defend their own trade policies.

“They use statistics that fit their message,” Jones said. He argued that the United States adopted new farm policy with no regard to how that policy would affect trading partners.

“There was never an opportunity to compare subsidies. There is a subsidy war going on between Canada, the United States and Mexico. And we hear a double message: open markets and increase subsidies.”

He agreed with Nyikuli that developing nations rely heavily on agricultural trade to stabilize their economies. “But we run into subsidies,” he said.

Jones said Mexico's agrarian demographics will change. “Before the North American Free Trade Agreement (NAFTA), 30 percent of the Mexican population worked in agriculture. Now, the figure is 18 percent.

“And we see the United States farm population at 2 percent and can read the writing on the wall.”

Jones said the Mexican government not only will need to address trade issues as its farm numbers decline but also help the citizens directly affected by the shrinkage.

“We are concerned about the people who are displaced in agriculture,” he said. “We're concerned when we see people who should be in agriculture eased out.”

He said the human issue should remain separate from trade, however. “Rural development and food and ag policies should be isolated,” he said.

Jones took a shot at the European Union, “They have a lot of small farms and a significant income from government subsidies. The bigger producers tend to take advantage of the system.”

Jones recommended that Canada, the United States and Mexico work together to form agricultural trade policies.

“Economic factors in all three countries are inter-related,” he said. “They also intertwine within the NAFTA framework so that changes one country makes affect the other two.”

Jones would like to see a model, “similar to FAPRI to allow us to consider ag policies together. NAFTA has to be more than a paper policy. We need to use it and negotiate together with the European Union and the WTO. Currently, NAFTA has no presence in the WTO.”

Jones predicts social problems emerging in Mexico as agriculture declines. “As agriculture is pushed out of a community, drug traffic moves in. Farm disruption also causes increased migration into the United States.”

He concluded with a statement that most applauded. “Food is the best business in the world,” he said. “But we need policies in place that get more money to farmers.”

U.S. delegates defended new farm policy and pledged support for liberalized trade.

“Trade is among the top priorities of the Bush administration,” said Hunt Shipman, deputy undersecretary for Farm and Foreign Agricultural Services, USDA.

“If countries open markets to the United States, we will open our markets to them,” Shipman said. “We expect two bi-lateral (trade) agreements this year. And our goal and challenge is to phase out export subsidies.”

Shipman labeled NAFTA a success. “Trade with Canada has tripled since NAFTA was adopted. Mexico is now the second leading country for U.S. food companies looking for investment opportunities. Canada is the third largest.”

Shipman said the NAFTA transition period expires in January 2003. “Tariffs will then be eliminated,” he said.

Shipman defended the new farm legislation. “It was a compromise. But the allegation that the law includes a 70 percent increase in farm subsidies is false. The last five years, farmers have received about $35 billion in support.

“The new policies provide about $7 billion per year in additional support. And the secretary of agriculture is mandated to reduce support to stay within WTO limits.”

Shipman compared the $19.1 billion WTO limit for U.S. farm support to Japan's, at $30 billion, and the European Union's at $60 billion. “Currently, the U.S. tariff level is at 12 percent, compared to as much as 60 percent in other trade groups.

“We will continue to advocate freer and fairer trade,” he said.

Mickey Paggi, director, Center for Agricultural Business, Fresno State University, took issue with the assertion that U.S. support for agriculture had not increased.

“In the last five years we've seen double AMTA payments. We've gone backwards on liberalized trade, and that puts negotiations in a difficult position. But as long as we have a diminimum provision in WTO, it will be difficult to violate the law. But the spirit of the commitment has already been violated.”

Paggi said the United States takes “comfort in realizing that we're not as bad as Japan or the European Union. But in the next round of trade talks, we will not be just three big players making policy. We'll have to consider 104 other countries.”

Paggi said the United States has little left to sweeten trade policy pots for individual countries. “We already have preferred trading agreements with almost every country,” he said. “All we can do now is gain access to their markets. Unfortunately, the benefit of free trade to the United States adds up to not much.

“We'll have to concentrate on phyto-sanitary regulations and standardization.”

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