“The Domestic Politics of Trade: A U.S. Farmers View” Ron Heck, President American Soybean Association “Agricultural Trade Negotiations: Politics and Prospects” Brussels, Belgium 17 May 2004

Issues To Be Addressed: “U.S. Agriculture’s Position on Doha Round WTO Negotiations” “Correcting Myths” Summary and Conclusions

“U.S. agriculture producers are committed to a WTO negotiation that will continue to reform agriculture and food trade”

Source: USDA

AgTrade Coalition strongly supports: Phase-out of export subsidies Significant increase in market access Substantial reductions in trade distorting domestic supports by all countries

I. Phase-out of export subsidies The elimination of export subsidies and similar trade-distorting policies (e.g. State Trading Enterprises and export monopolies) United States willing to eliminate subsidy component of export credit guarantee programs

II. Increased Market Access In September, 2003, in Cancun, USA farmer groups and Cairns Group Farm Leaders issued a joint statement, calling for a “BIG” result in the negotiations: Eliminate all forms of export subsidies Substantial improvement in market access by all countries Substantial reduction of trade-distorting domestic support by all countries

III. Commitment to Reductions in Domestic Support U.S. agriculture is fully prepared to negotiated significant reductions in distorting domestic supports… *AgTrade Coalition letter to U.S. Trade Representative Zoellick

Source: USDA

Commitment to Reductions in Domestic Support, cont’d World-class food exporting developing countries must face the same disciplines as developed countries Countries providing higher levels of trade distorting subsidies must be required to make larger reductions Expenditures for non-trade distorting policies must not be subject to limits or caps.

Special and Differential Treatment Must be used to aide truly developing countries Must not serve as a loophole for world- class agriculture exporters who are self- declared developing countries.

Special and Differential Treatment, cont’d U.S. and Canadian agriculture interests are prepared to give generous S&D treatment to developing countries at true disadvantage in agriculture U.S. and Canadian agriculture will support S&D only if competitive, world-class developing country agricultural exporters will be subject to the same disciplines as the developed countries

Developing Countries benefit from well thought-out S&D policies Trade between developing countries has grown rapidly, with 40% of their exports going to other developing countries. (IMF) Advocating indiscriminate S&D treatment limits gains in market access, and disadvantages developing countries

“Correcting Myths” The "$320 billion" often referenced as the amount of "subsidies rich countries lavish on farmers.” "U.S. farm programs are leading to increased production of U.S. crops." "US farmers are receiving even more subsidies now under the 2002 Farm Bill than before.”

The "$320 billion" often referenced as the amount of "subsidies rich countries lavish on farmers.” Several of the 25 member countries are not “rich”: Mexico, Czech Republic, Slovak Republic, Poland, Korea, etc. In the Total Support Estimate for the U.S., $37.9 billion was provided to poor people to BUY food Correcting Myths

How much does the U.S. domestic support payment help my soybean operations? My property taxes: $25.10/acre My decoupled soybean payment: $13.06/acre Fixed Government Tax Liability*:$12.04/acre *Does not include any taxes for income, consumption, social programs, licenses or fees

"U.S. farm programs are leading to increased production of U.S. crops." Correcting Myths

Source: USDA Correcting Myths

“U.S. farmers are receiving even more subsidies now under the 2002 Farm Bill than before.”

Correcting Myths Source: USDA ; Congressional Budget Office estimates March 2004

WTO Trade is a 2-way street

Conclusion US producers can support significant reductions in trade-distorting domestic support if: -substantial gains in market access in both developed and developing countries -all major agricultural exporters accept similar disciplines on trade policies -elimination of export subsidies