ABOUT THE AUTHORS

Ken Cook

Ken Cook is president of Environmental Working Group, a public interest research and advocacy organization known for its Farm Subsidy Database. The author of dozens of articles, opinion pieces and reports on agricultural, public health and environmental topics, "[Cook's] fingerprints can be found on nearly two decades of U.S. farm law" (Omaha World Herald). Read more about Ken.

Craig Cox

Craig Cox is EWG Midwest Vice President. He Mulches from EWG's office in Ames, IA. Prior to EWG, Craig served as Executive Director of the Soil and Water Conservation Society and was Acting USDA Deputy Under-Secretary for Natural Resources and Environment, and Special Assistant to the Chief of USDA’s Natural Resources Conservation Service.

Michelle Perez

Michelle Perez is EWG's Senior Agriculture Analyst. She has a BA in Biology from Occidental, a Masters from the University of Maryland (UMD) and is finishing up a PhD in agricultural-environmental policy at UMD.

Don Carr

Don Carr is EWG's Press Secretary for agriculture and public lands issues. Prior to EWG, Don worked as a Communications Director for the DNC in his home state of South Dakota and on former Senate Leader Tom Daschle's 2004 reelection campaign.

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Farm Bill: Does Breaking WTO Crop Subsidy Rules
Matter To Congress?

Only under one of two circumstances.

The first is when the WTO rules that the violation is outright illegal. That was the case with export subsidies (like the Step 2 program) in Brazil's victory over the United States on cotton subsidies. Congress had no choice but to repeal the program, and did.

The second is when a transgression gains the aggrieved party a WTO-approved shot at trade retaliation, and they take it. Brazil finally has won that shot, years after the WTO determined that an array of domestic U.S. cotton subsidies caused "serious prejudice" to cotton growers in Brazil and elsewhere. The WTO has recently ruled that the elimination of Step 2 and modifications to U.S. loan programs that subsidized exports were insufficient remedies to Brazil's original complaint.

If Brazil does not now press forward, and quickly, with sanctions that have a bite, the subsidy lobby and its defenders in Congress will be reaffirmed in their view that, where U.S. farm programs are concerned, the WTO is mostly there to be ignored.

Nothing breeds disdain or disrespect faster in a red-blooded, red-state, law 'n order type than the whiff of an opponent who is soft on crime.

To the extent that forcing change in our domestic subsidies--meaning reductions in the level of support, not outright elimination--was the goal, Brazil might just as well have wallowed in the tar pits of Doha if it dallies further in pursuing the cotton complaint to a meaningful conclusion. The new, broader subsidy case Brazil has initiated against the US, alleging a breach in our allowed "aggregate measure of support", will be seen as a theoretical threat, years distant, if the clear win on domestic cotton subsidies comes to naught (notwithstanding Canada's pursuit of a parallel complaint). And Brazil's standing as a leader for the developing world at the WTO will suffer a serious, perhaps irretrievable, setback.

Acting USDA Secretary Chuck Conner, like Mike Johanns before him, has described the increased crop target prices and loan rates in the House and Senate farm bills as "a bullseye on the back of the American farmer" at the WTO.

That won't matter one wit to the subsidy lobby if they conclude their adversaries in Geneva are firing blanks.

UPDATE: The AP ran a piece this morning about the increased risk of WTO litigation posed by the House and Senate bills, featuring an interview with straight-shooting (and soon to retire) Keith Collins, USDA's chief economist.

The subsidy challenges by U.S. trading partners have been lodged through the World Trade Organization. A WTO ruling in December slammed the U.S. for not sufficiently complying with an earlier ruling that cotton subsidies need to be curtailed.

Substantial counter-cyclical farm payments and marketing-assistance loan programs are still under fire, Collins said, and Congress' proposals don't address the problems.

"Under the House and Senate farm bill proposals," he said, "they do not reform domestic programs in a way that would eliminate such challenges and, in fact, they may aggravate such challenges."

Comments

The WTO is a joke. Brazil had increased cotton acreage over the last five years despite low world prices, while the United States reduces acreage over the same time period. Cotton acreage in 2008 will be lowest since 1989. Not to mention that Brazil and other complaining nations constantly pirate technology that United States farmers pay huge amounts of money in order to receive. This is NEVER addressed by the national media, the EWG, or Oxfam. In addition, Brazil dumped massive tonnage of cotton on the world market in 2006 to SUPPRESS world prices. It is amazing that a group like KEN COOK's EWG, an American organization is so supportive of foreign countries, yet would love to see American farmers forced out of business. Simply amazing.

There's no rule that says America gets to prevent Brazil from increasing cotton production. There's no rule that says we get to keep our technology bottled up at home for the rest of history. However, as part of mutually advantageous trade negotiations, America did solemnly agree to very limited rules about certain trade-distorting subsidies. And why should we break our word on those? Unless you think America has grown old and decrepit, you gotta think we can do just fine competing with Brazil while playing by the rules.

COOK: Well said, Parke, well said.

Thanks for your response, Parke. However, I don't think you understand the whole scope of the Brazilian WTO challenge. Of course, reading only the material that Mr. Cook would want you to see, I can where you are coming from. However, if these subsidies are so "trade-distorting", then why does Brazil continue to increase cotton acreage while the United States reduces cotton acreage? I never said that the US should be able to prevent Brazilians from planting cotton. If it weren't for US technology, Brazil likely wouldn't be in the cotton business as it is. I don't think you understand about the technology aspect of my argument either. You see, American farmers pay very handomsly for this technology through technology fees, mainly to Monsanto. For example a bag of cotton seed costs approximately $625 per bag, of which almost $500 of this is a tech fee. This bag will plant cotton over about 7 acres. A grower that plants 500 acres in the United States will spend $45,000 on seed alone, of which $35,000 of that is strictly for technology. In Brazil, this seed will cost the farmer less than $10,000. These Brazilian farmers will tell you that they are not planting Roundup Ready varieties when they most certainly are doing so. Our technology is pirated by their farmers with no fear of repercussion. They do not pay technology fees. American farmers are and have paid for the technology that the rest of the world is using, basically free of charge, to catch up to our yield potential. Believe me, American farmers can compete very well with the Brazilians on a level playing field. Do you not think that Brazilian farmers are subsidized? Do you realize the lax environmental regulations in Brazil as compared to the United States? Subsidation comes in many varied forms. It is well-documented that the United States is in the bottom-half of subsidy dollars per farmer when compared with all food-producing nations in the world. Trust me, on a level playing field, American farmers can MORE than compete.

Parke, I'll try to respond again. I did so on the 7th but my response was mysteriously held by the Blog owner (not the first time that's happened.) First of all, nowhere has it ever been stated that the United States has tried to limit cotton production in Brazil. In fact, if it weren't for Cotton Incorporated and our technology, Brazil probably would not be in the cotton business to begin with. My point was that where does Brazil have a legitmate claim in the WTO when the facts are that they have been increasing acreage while the US has been decreasing acreage under the current farm bill. The Brazilian government dumped large quantities of cotton on the world market in the face of a very low world market price. Does this seem like an act of a country that is worried about low market prices? Cotton acreage in the US in 2008 will be the lowest since probably 1982. How are we continuing to hold these countries back when this is the case? As far as your technology comment, it is obvious that you are misinformed. Do you realize that an American farmer pays almost $700 per bag of cottonseed, of which roughly $550 of this is a "technology fee". The cotton seed itself is only costing about $150. The farmer pays the remainder for the "technology". FWIW, a bag of cottonseed will plant about 7 acres. Do you think farmers in Brazil pay a similiar tech fee? Of course, they don't. Yield potential in Brazil and India are going throught the roof because of this technology that the American farmer has paid handsomly for. Then the technology is "brown-bagged" and pirated in these foriegn countries. Don't even get me started on the lax environmental regulations in Brazil as compared to the United States. Trust me, Parke, American farmers can MORE THAN COMPETE on a level playing field. The fact is that this playing field doesn't exist. Every farming country in the world, save possibly New Zealand, susidizes their farmers in some respect. United States farm programs rank in the bottom half of these as far as payment go. Maybe this information gets to you, maybe it doesn't. We'll let Cook decide.

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