COL EU, U.S. farmers headed for showdown

Third World watches with keen interest

The cat fight between the United States and the European Union over trade issues continues. The EU, in its latest gambit, says that it will open markets to commodities containing genetically modified organisms if such products are labeled.

The Bush administration responded by saying the proposed regulation is too cumbersome and represents more stonewalling on the EU's part.

EU ag ministers recently announced an overhaul in the EU farm subsidy system. The new system means farmers wouldn't receive payments based on the amount produced -- annual payments would be made based on farm size. The French, who served as America's whipping boy in the prelude to the Iraq War, are fighting hardest to maintain the current subsidy system.

That system was created in World War II's wake, when much of Europe's population was saved from starvation only through U.S. food imports. The system is designed to ensure surplus food production in the EU. However, the cost has gotten burdensome to a new generation, which has no recollection of the shortages caused by the war.


The U.S. farm subsidy system was founded on the notion that government policy could help keep farmers on the land while providing a plentiful supply of cheap food. It's worked on the later score, but failed miserably on the former.

The EU announcement that intends to decouple subsidies from production is designed to put pressure on the United States to cut subsidies.

Third World nations are watching this wrestling match with keen interest, convinced that a world freed of farm subsidies would provide them the opportunity to develop their own agricultural industries and export more of their foodstuffs.

These issues will come to a head in September, when new world trade talks are held in Cancun, Mexico.

Meanwhile, the Foreign Agriculture Service wants to expand trade assistance funds available to farmers. Trade Adjustment Assistance is already offered to workers who have lost jobs as the result of international trade agreements.

The assistance was expanded to include farmers in 2002. USDA is required to provide funds to eligible farmers when the current year's price of a commodity is less than 80 percent of the national price for the commodity for the five marketing years preceding the most recent marketing year; and increases in imports contributed significantly to the decline in price, to be determined by the secretary of agriculture.

The Foreign Agriculture Service estimates that about 500 U.S. farmers will need the help annually. Each qualified farmer would receive a maximum of $10,000.

The Minneapolis-based Institute for Agriculture and Trade Policy is upset because the public had only four working days to comment on the program's administrative rules. It maintains that the program is too important to rush through the comment process. It wants the comment period extended by 60 days and has asked FAS to hold hearings around the country.


"Both the FAS proposed formula for calculating adjustment assistance payments and the $10,000 ceiling for payments per farmer during a 12-month period, together with the many other qualifications for receiving any Trade Adjustment Payment, are sorely in need of explanation that is not provided in this proposed rule,'' said Steve Suppan, director of research at the Institute for Agriculture and Trade Policy.

Suppan's right about that. More needs to be learned before the FAS gets the program running.

Mychal Wilmes is Managing Editor of Agri News.

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