Magazine article Foreign Policy in Focus

Problems with Current U.S. Policy

Magazine article Foreign Policy in Focus

Problems with Current U.S. Policy

Article excerpt

The AoA prescribes a model for agriculture that has basically only one dimension: increasing agricultural production for exports, importing what cannot be produced without tariff protection or subsidies to producers. This model is imperfectly articulated and includes various exceptions that have proved of more use to developed than developing countries.

In fact, it has been widely noted that the AoA seems to have more S&D provisions for rich countries than for poor. The AoA includes several "boxes" that disproportionately benefit developed countries. Boxes are categories of exemptions from the AoA's reduction rules in order to meet particular social or environmental objectives. The "green box" (Annex 2) contains policies that affect both developed and developing countries, but it primarily lists spending exemptions, thereby excluding countries that do not have revenue to invest in agriculture. The "blue box" (Article 6.5) exempts deficiency payments to farmers based on their acreage or quantity of livestock. This was entirely for the benefit of the U.S., which has since discontinued such programs, and the European Union, which remains heavily dependent on these measures in the implementation of its agriculture policy.

In the U.S., 1996 domestic farm legislation shifted the basis for making payments to grain farmers from the types and quantities of crops produced to so-called "&coupled" payments. This was expected to break the production enhancing element of government support. In practice, however, farmers have increased production in response to both high and low world prices, against the expectations of trade theorists. The new payments remain as a subsidy to agriculture, without the benefit of controlling production levels.

In contrast, the S&D provisions for developing countries--e.g., longer implementation periods--have failed to offer the flexibility they need to address their food security needs. Many countries submitted their tariff schedules and estimates of domestic support without sufficient care. In so doing, they have lost the flexibility to build in trade-offs between tariff levels on specific products and to ensure that sensitive are continue to receive support (for example, subsidies to encourage yield increases in food deficit areas). Many developing countries register a negative balance of support to their farmers because local prices are less than world market prices.

Analysis from the Food and Agriculture Organization (FAO) shows that, despite record low prices over the last three years, poor developing countries' food bills have increased by an average of 20% since 1994, the year the AoA was signed. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.