U.S. breaks with tradition in putting its subsidies into play - Business - International Herald Tribune
News Analysis: U.S. breaks with tradition in putting its subsidies into play - Business - International Herald Tribune
WASHINGTON It was described as a listening tour to figure out how to write the 2007 farm bill. But when the U.S. agriculture secretary, Mike Johanns, visited 17 farm states this summer, he was preparing the ground for the significant U.S. trade compromise announced Monday.
By going to America's farmers and ranchers, whether they tended small fruit orchards or huge rice plantations, Johanns was breaking with tradition. He put on public record voices that are rarely heard from: the majority of American farmers who are failing under the U.S. subsidy system - not just the heads of trade associations and agribusinesses that benefit mightily from the $19 billion annual program.
Late last week he announced the results of his talkfest: Existing U.S. farm subsidies are seen as unfair by many American farmers and need to be changed. It was a conclusion that has been the gist of public debate in recent years - 10 percent of American farmers receive more than half of the subsidies - but rarely among American politicians worried about the farm vote.
Having done his duty, Johanns passed the baton to the U.S. trade representative, Rob Portman, who was able to make the offer in Geneva, knowing that the ground had been plowed and Congress was on notice that farm subsidies were in play.
The U.S. proposal, which would cut contentious tariffs by 55 percent to 90 percent over five years and reduce some kinds of farm subsidy programs by 60 percent, shows that the administration is serious about this trade round: Bush is spending some of his dwindling political capital to attack the holy grail of farm subsidies.
But the political tradeoff could be big: Wall Street and many other American businesses have increased their lobbying power in Washington. They are desperate to get these talks to work so that new markets will be opened to U.S. business and trade. If the administration can crush farm subsidies, it will also reduce America's gaping budget deficit.
To be sure, that means answering farm state politicians in Congress who see Europe - not the United States - as the guilty party in the global farm debate. But to the outside world, the subsidies have become a rallying cry to eliminate poverty - and farm subsidies are considered one of the worst evils.
The so-called Doha round of trade talks is meant to help developing nations by improving the access for their goods to wealthy markets, and agriculture is the crucial issue for those whose farmers are being crushed by inexpensive food exported by farmers from rich nations who receive heftier subsidies. But that argument does not move many in Congress or the administration who are desperate to reduce U.S. farm subsidies to help whittle the deficit.
Indeed, it is this talk of fairness within the American farm community - and not bleeding hearts for impoverished African farmers - that could become the rationale for reducing farm subsidies.
The European Union gives its farmers huge subsidies, imposes higher tariffs and - worst of all in the view of the administration - closes its market to some of the United States' biggest farm exports. The ban on American beef from cows raised on growth hormones is just one that stirs strong feelings.
According to Bob Goodlatte, the Virginia Republican who is chairman of the Agriculture Committee of the U.S. House of Representatives, the only way to break the logjam is for the United States to negotiate greater market access for its products, not only in Europe but the big developing countries like Brazil and China.
"Our trading partners need to understand that we will do everything possible to ensure the competitive position of American farmers and ranchers," he warned recently. "However, we cannot unilaterally disarm and scrap our farm support programs without other countries doing the same thing at the same time."
To pull off this political hat trick, Portman will have to rely heavily on his personal popularity in Washington and his genial profile abroad.
Unlike his predecessor, Robert Zoellick, who was accused of arrogance by members of Congress and clashed openly with Peter Mandelson, the European trade commissioner, Portman has the confidence of members of both U.S. political parties for his rare sense of bi-partisan compromise: he puts even sharp-witted figures like Mandelson at ease.
And his teamwork with Johanns shows more than a small resemblance the duo of Franz Fischler, the former European agriculture commissioner, and Pascal Lamy, Europe's former trade commissioner, both of whom worked together to persuade the EU to offer to eliminate all of its contentious agricultural export subsidies at trade talks in Geneva last years.
This summer, as he was preparing to take over as the new director general of the World Trade Organization, Lamy was closely watching Johanns' forays into the American heartland.
While Johanns' conversations with U.S. farmers may not be as glamorous as the summer rock concerts that helped break the logjam on relieving the debt of impoverished nations in July, they could prove as least as effective for helping those same countries in the trade round in Hong Kong this December.
WASHINGTON It was described as a listening tour to figure out how to write the 2007 farm bill. But when the U.S. agriculture secretary, Mike Johanns, visited 17 farm states this summer, he was preparing the ground for the significant U.S. trade compromise announced Monday.
By going to America's farmers and ranchers, whether they tended small fruit orchards or huge rice plantations, Johanns was breaking with tradition. He put on public record voices that are rarely heard from: the majority of American farmers who are failing under the U.S. subsidy system - not just the heads of trade associations and agribusinesses that benefit mightily from the $19 billion annual program.
Late last week he announced the results of his talkfest: Existing U.S. farm subsidies are seen as unfair by many American farmers and need to be changed. It was a conclusion that has been the gist of public debate in recent years - 10 percent of American farmers receive more than half of the subsidies - but rarely among American politicians worried about the farm vote.
Having done his duty, Johanns passed the baton to the U.S. trade representative, Rob Portman, who was able to make the offer in Geneva, knowing that the ground had been plowed and Congress was on notice that farm subsidies were in play.
The U.S. proposal, which would cut contentious tariffs by 55 percent to 90 percent over five years and reduce some kinds of farm subsidy programs by 60 percent, shows that the administration is serious about this trade round: Bush is spending some of his dwindling political capital to attack the holy grail of farm subsidies.
But the political tradeoff could be big: Wall Street and many other American businesses have increased their lobbying power in Washington. They are desperate to get these talks to work so that new markets will be opened to U.S. business and trade. If the administration can crush farm subsidies, it will also reduce America's gaping budget deficit.
To be sure, that means answering farm state politicians in Congress who see Europe - not the United States - as the guilty party in the global farm debate. But to the outside world, the subsidies have become a rallying cry to eliminate poverty - and farm subsidies are considered one of the worst evils.
The so-called Doha round of trade talks is meant to help developing nations by improving the access for their goods to wealthy markets, and agriculture is the crucial issue for those whose farmers are being crushed by inexpensive food exported by farmers from rich nations who receive heftier subsidies. But that argument does not move many in Congress or the administration who are desperate to reduce U.S. farm subsidies to help whittle the deficit.
Indeed, it is this talk of fairness within the American farm community - and not bleeding hearts for impoverished African farmers - that could become the rationale for reducing farm subsidies.
The European Union gives its farmers huge subsidies, imposes higher tariffs and - worst of all in the view of the administration - closes its market to some of the United States' biggest farm exports. The ban on American beef from cows raised on growth hormones is just one that stirs strong feelings.
According to Bob Goodlatte, the Virginia Republican who is chairman of the Agriculture Committee of the U.S. House of Representatives, the only way to break the logjam is for the United States to negotiate greater market access for its products, not only in Europe but the big developing countries like Brazil and China.
"Our trading partners need to understand that we will do everything possible to ensure the competitive position of American farmers and ranchers," he warned recently. "However, we cannot unilaterally disarm and scrap our farm support programs without other countries doing the same thing at the same time."
To pull off this political hat trick, Portman will have to rely heavily on his personal popularity in Washington and his genial profile abroad.
Unlike his predecessor, Robert Zoellick, who was accused of arrogance by members of Congress and clashed openly with Peter Mandelson, the European trade commissioner, Portman has the confidence of members of both U.S. political parties for his rare sense of bi-partisan compromise: he puts even sharp-witted figures like Mandelson at ease.
And his teamwork with Johanns shows more than a small resemblance the duo of Franz Fischler, the former European agriculture commissioner, and Pascal Lamy, Europe's former trade commissioner, both of whom worked together to persuade the EU to offer to eliminate all of its contentious agricultural export subsidies at trade talks in Geneva last years.
This summer, as he was preparing to take over as the new director general of the World Trade Organization, Lamy was closely watching Johanns' forays into the American heartland.
While Johanns' conversations with U.S. farmers may not be as glamorous as the summer rock concerts that helped break the logjam on relieving the debt of impoverished nations in July, they could prove as least as effective for helping those same countries in the trade round in Hong Kong this December.
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