Two witnesses at a House Agriculture Committee hearing on foreign ag subsidies said the U.S. government should ensure foreign countries' compliance with trade rules to keep the American economy working.
Dr. Darren Hudson, Director of the International Center for Agricultural Competitiveness at Texas Tech University, and Craig Thorn, partner at DTB Associates, LLP in Washington, D.C., were panelists at the hearing, a review of foreign ag subsidies.
Hudson and Thorn explained the scope and nature of foreign agriculture subsidies, their effect on U.S. farmers and ranchers and the economy, and needed steps for the U.S. to maintain countries' trade compliance.
According to the ICAC database, America ranks near the bottom of the subsidy and tariff scales, meaning the U.S. maintains an open market and offers low support for farmers and ranchers, while many of the biggest foreign players in global agriculture trade are practicing trade-distorting tactics that violate their trade commitments.
Hudson and Thorn warned that the U.S. is outpaced by competitors in terms of subsidies and other protections, putting U.S. farmers and ranchers at a competitive disadvantage.
"There may be sound economic arguments that support a world without subsidies," Hudson noted in his testimony, "but we do not live in one. Other countries are treating their agricultural sectors as a national asset for security purposes and for the U.S. not to consider the implications of those choices would leave us at a competitive disadvantage."
Hudson's testimony also noted that while the U.S. does provide significant support, the level of U.S. support is "only average or below average in most cases." Overall support, he said, is trending downward and U.S. support is small relative to other major producing countries.
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In his testimony, Thorn underscored the importance of subsidy distortion issues to U.S. farmers.
"I am convinced that [subsidies in advanced developing countries] have become significantly more trade-distorting than subsidies in developed countries," he wrote. "The U.S., as the biggest agricultural exporter, suffers most from these distortions."
Thorn cited the Doha Round discussions for agricultural trade as a crucial point of negotiation on subsidies. He said that the advanced developing countries involved in the discussions have so far been unwilling to make concessions; current working text would require the U.S. to change its subsidy policies but require little to no changes for advanced developing countries, he said.
While Thorn said U.S. officials have been working on the subsidy issue, he has "not yet seen any indication that advanced developing countries are ready to acknowledge the facts." He said it would be "foolish" for the U.S. to restart Doha negotiations until a plan is in place to ensure compliance with current commitments.
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News source: House Ag Committee