"With the future of the world trading system at a critical juncture, an improved American Farm Bill would help facilitate a WTO agreement to reduce trade-distorting agricultural subsidies and end dumping," said Celine Charveriat, head of Oxfam's Make Trade Fair campaign. "The ball is now in the court of the US Congress to build upon the Bush Administration’s proposal to deliver a pro-development Farm Bill."
The proposal, presented yesterday in Washington by US Agriculture Secretary Mike Johanns, would reduce so-called “trade-distorting” payments, and direct more money towards other forms of support, such as direct payments. These are meant to be less trade distorting because they are not directly dependent on production levels. However, Oxfam warned that there was more to be done to ensure a pro-development outcome.
"Although this proposal signals a shift away from trade-distorting subsidies towards more WTO-friendly farmer supports, much more needs to be done to align the Farm Bill with existing international trade rules," said Charveriat. "The devil is in the details, and at this point it is unclear how far these reforms would reduce the trade-distorting effects of the current subsidy system and allow the poorest farmers of the world to benefit from trade. A litmus test would be whether these reforms would benefit West African cotton farmers by substantially reducing US export dumping."
The projected fall in US trade-distorting subsidies is partly due to high commodity prices – especially in maize and other cereals. Since many existing and proposed US farm subsidies are triggered by low prices, subsidies could grow in the future if prices fall.
Furthermore, reducing trade-distorting subsidies by de-linking them from production (so called “partial decoupling”) may not necessarily lead to a decrease in export dumping. Reforms implemented in Europe among similar lines have not yet significantly affected production levels.
The proposal shifts 25 percent of the food aid budget to cash in order to facilitate purchase from regional sources, a move welcomed by Oxfam as food aid shipped in from the US is not only inefficient, but can also destabilize local food production.
Contact
Romain Benicchio (Geneva) on +41 22321 2372 or Laura Rusu (Washington, DC) on +1 202 496 3620
Notes to Editors
- Reduced Amber Box subsidies (“loan deficiency payments”), shifting funding to Green Box payments instead (“direct payments”)
- Bringing US decoupled payments (“direct payments”) more into compliance with Green Box criteria by removing planting restrictions
- Expansion of Blue Box payments, replacing “counter-cyclical payments” with “revenue assurance” that responds to shortfalls in both reductions in price and production – although does not require recipients to produce
- Untying a portion (one-quarter) of US food aid to permit local and regional purchase of food aid would go in the direction of proposed food aid reforms in the Doha round negotiations.
