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.