Monday, August 02, 2004

While the liberals celebrate the WTO interim agreement on agriculture, rest assured that Cargill will make out like a bandit whether it's shipping US soybeans or Brazilian ones.

The promised end to export subsidies is indeed something to be praised. However, the liberalization of agriculture is hardly stopping there.
"This is the beginning of the end of all subsidies," said Celso Amorim, the Brazilian foreign minister, who became a star of the negotiations. "Export subsidies are now gone, and trade-distorting domestic subsidies are on their way out." . . .

Mr. Zoellick pointedly ignored Mr. Lamy's contention that the United States must eventually follow the European program that is slowly transferring farm subsidies for the production of commodities into subsidies to protect the environment, food security, rural development and animal welfare.

The Europeans, without the vast national park system of the United States, maintain that they must protect the countryside to preserve their countries' lifestyles, and the tourism trade it attracts. As a result, the European Union has begun promoting such programs even though they may eventually hurt exports.

The direction of the United States farm policy is less clear but seems headed in the opposite direction. In recent budget cuts, Congress kept in place the subsidies for commodities - at least a third of that being exports - and cut money for environmental programs.
In theory, absolutely anything and everything can be defined as a "trade distorting subsidy". What makes anyone think that the Conservation Reserve Program will not be targeted for elimination? Is the school lunch program safe from challenge? How about the agriculture extention service, or locks and dams?

Agriculture in the Global North suffers from unusually high costs in labor and especially land. Land is so cheap in places like Brazil that US farmers are beginning to migrate south. So instead of paying Brazil to preserve the Amazon rain forest, we're paying Brazil to cut it down and supply us with soybeans for 1% less. And the depopulation of the Great Plains gets another shove forward.

Welcome to Dan Drezner's brave new world.

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