Posted September 23, 2013
U.S. business groups recently said both the House and
Senate versions of the farm bill may violate World Trade Organization (WTO) rules
against trade-distorting subsidies, according to a Reuters article available here.
The U.S. Chamber of Commerce, National Association of
Manufacturers, and National Foreign Trade Council sent a letter to leaders of
the House and Senate Agriculture Committees expressing concern that provisions
of the bills “could expose U.S. exports to retaliatory tariffs if there is a challenge.” This would be an “ironic turn, since the farm
bill was intended in part to resolve a WTO ruling against cotton subsidies.” For background on the Brazil’s WTO cotton
case, a post from this blog is available here. A report from Congressional Research Service
is available on the National Agricultural Law Center’s website here.
According to an Agri-Pulse article available here,
the letter stated, “We write to express our concern that the new Farm Bill may
have the unintended consequence of exposing the United States to the risk of a
World Trade Organization (WTO) finding of noncompliance and sanctioned retaliation
that could harm American farmers, ranchers, workers, and companies.”
The business groups pointed to the Senate Adverse
Market Payments (AMP) program and the House Price Loss Coverage (PLC)
counter-cyclical programs, noting that they “run the substantial risk of
violating obligations the United States has undertaken as a signatory of the
WTO agreements for the same reasons a WTO panel found the U.S. noncompliant in the
U.S.-Upland Cotton dispute.”
The groups also targeted a provision in the House bill
that “recouples program payments with actual acreage,” which “will quickly
invite other nations to initiate dispute settlement against the United
States-and do so with a good chance of success.”
The groups relied on an analysis by White & Case
law firm, available here. The analysis stated that the House PLC
program “is highly problematic from a WTO perspective.” In addition, the
analysis stated “Because payments under the AMP program would not be coupled
with production acres, there is a smaller risk both that other WTO Members
would challenge it and that a panel would conclude the program is inconsistent
with U.S. obligations under the SCM Agreement.
That, said it is important to bear in mind that AMP program would be
similar to the current CCP program, which was successful challenged by Brazil
with respect to cotton.”
For more information on farm bills, please visit the
National Agricultural Law Center’s Farm Bills page. Another excellent resource for daily updates
on the farm bill is Farmpolicy.com.
