Monday, February 02, 2015

WTO-Doha Restrictions on Agricultural Payments

In the late 90's, IIRCC, we were just starting to deal with our commitments under the WTO, commitments which restricted nations' ability to provide support to their farmers. There were different color categories, depending on whether the payments had the effect of distorting trade.  One reason for changing from deficiency payments tied to planted acreage to direct payments based on past history (i.e, the Freedom to Farm formula in 1996) was to change the categorization.  The theory was that payments based on planted acreage increased production in a country, payments based on historical base acreage delinked payments and production.

Anyhow, years have passed.  Generally countries have reduced their supports and because negotiations for new WTO agreements failed, we haven't heard much about the subject in recent years.  Today though  Farm Policy quotes an article:

"...only the United States wouldn’t be able to meet the commitments assigned to it under draft 2008 Doha texts. However, that calculation is based on U.S. subsidies from 2012 and doesn’t factor in changes in U.S. agricultural policies in the new farm bill.
“Under the proposed commitments, the United States would have exceeded its trade-distorting subsidy limits by $3.6 billion in 2012. A diplomatic source said it’s unclear whether the farm bill will help or hurt in this area particularly because it’s not clear whether the U.S. will classify crop insurance as trade-distorting in its next subsidy notification.”
 My impression is that crop insurance used be considered as something which encouraged production; certainly EWG believes that, especially with regards to the Great Plains. 

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