'Green' US farm payments may run afoul of WTO
Date: 10-Sep-01
Country: USA
Author: Charles Abbott
Environmentalists see this year's overhaul of U.S. farm policy as their best chance in a decade to expand soil, water and wildlife conservation programs. They hope to capture a larger share of the $73.5 billion bill than now offered.
In particular, they trumpet the potential of "green" payments to growers who integrate conservation into their daily operations. There are more than 900 million acres 364 million hectares of "working" lands on U.S. farms and ranches.
Lawmakers and farm analysts said the the bill now awaiting debate in the House could exceed World Trade Organization rules that limit outlays on trade-distorting farm subsidies.
"There is some chance," House Agriculture Committee chairman Larry Combest agreed during a Reuters interview.
WTO MEETING TO MULL SUBSIDIES
U.S. lawmakers are tackling the issues of environmental payments and bigger farm subsidies as the WTO prepares for a November meeting to launch world trade talks. Farm subsidies will be a key issue for the meeting in Qatar.
The United States seeks elimination of export subsidies, removal of import barriers and deep cuts in trade-distorting domestic farm subsidies. But other nations have criticized the United States for its export credit program and $30.5 billion in bail-out payments to American farmers since 1998.
U.S. analysts said a plan for new "green" payments could require skillful drafting to avoid WTO strictures, although proponents are confident their programs are allowed.
"Any kind of conservation spending is going to fit into the green box," said a spokesman for Rep. Ron Kind, Wisconsin Democrat and sponsor of a "working lands stewardship" plan that could cost $3.6 billion or so a year.
In WTO parlance, "green box" programs have little impact on farm production or trade and are permitted. The United States agreed to spend no more than $19.1 billion on "amber box" - or trade distorting - subsidies linked to farm production.
Craig Thorn, of the consulting firm DTB Associates, said care would be needed to assure a conservation program satisfied WTO rules.
"It's possible to create these (green box) programs," Thorn said. "You just have to be careful when you're doing it."
For example, WTO rules on agriculture say environmental payments "shall be limited to the extra costs or loss of income" due to requirements of a government program, "including conditions related to production methods or inputs."
Some House Agriculture Committee staff workers say that language would disqualify the hefty payments envisioned by Senate Agriculture Committee chairman Tom Harkin. The Iowa Democrat is a leading advocate of paying growers up to $50,000 a year if they follow a variety of conservation practices.
Thorn said Harkin's plan might fit within other WTO rules allowing direct payments to farmers, or "decoupled" income supports that are not linked to crop or livestock production.
"You'd have to look at the details of the program to figure out if it would be green box," he said.
NEW SUBSIDIES FOR US FARMERS
Agricultural economist Dave Orden of the Virginia Polytechnic Institute said proposals for green payments, "may suffer from the same weak WTO constraints as the House bill does."
The bill written by the House Agriculture Committee would trigger an estimated $37 billion in so-called deficiency payments over the next decade when prices received by farmers fell below target prices set by Congress.
Those payments probably would be classified as "amber box," analysts said.
Combest said the threat of exceeding WTO spending limits could be eased by shifting some farm aid into decoupled payments, which also are part of the farm bill. Other routes might be available too, the Texas Republican said.
But the debate over WTO compliance obscures the question of whether an emphasis on conservation would be good policy and what benefits it would bring, said agricultural economist Bruce Gardner of the University of Mary
