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Published: Thursday, 8/12/2004

Beware WTO pact

THE importance and controversial nature of the World Trade Organization agreement reached in Geneva, Switzerland, by 147 member countries, including the United States, regarding domestic politics could be a lethal combination.

It's quite possible it will benefit from little discussion and no legislative attention until after the November elections.

The United States, the European Union, and Japan all pay large subsidies to their domestic agricultural producers, amounting to some $300 billion a year. The U.S. alone pays its farmers $18 billion a year.

That means that Americans, Europeans, and Japanese get hit twice, first in their tax money transferred to the farmers, second as consumers because basically the $300 billion finances inefficient and excess agricultural production.

American, European, and Japanese citizens may be prepared to pay this penalty for other reasons.

These include preserving domestic agricultural production in case of emergency, pleasing voters in farm states, causing campaign contributions to continue to flow to legislators and political parties, and indulging Willie Nelson-type sentimentality about preserving America's origins as a nation of small farmers.

The trouble is that American, European, and Japanese agriculture - subsidized, technologically sophisticated, and efficient - inevitably butchers international competition from poor, underdeveloped states, many of which have nothing else to sell other than their agricultural products.

The new draft WTO agreement is designed to level the playing field to a degree. The developed producer countries will lower subsidies to their farmers and tariff barriers to imports from the poor agricultural producer countries; the poor countries will lower their tariff barriers, opening their markets to U.S., European, and Japanese exports in other sectors of industrial goods and services.

How hard this will be to sell to the American Congress is indicated by the recent sweetheart deal the Senate has voted for American tobacco farmers - the producers of perhaps the most odious of all legal U.S. crops - to get them to give up quotas for tobacco that shouldn't be produced in any case, given the impact on Americans' health.

If that measure passes, it will put a cool $12 billion into tobacco planters' pockets, with two-thirds of it going to the big 10 percent of producers, not to Mom and Pop down on the farm. In any case, the draft WTO agricultural agreement will require close attention when the American government and Congress get around to considering it in the new year.

There will be tremendous political pressure, particularly from lobbyists, to keep U.S. subsidies to farmers in place, one way or the other.

Congress can yield to that pressure if it wants to, but part of the price, apart from pitting the United States against other WTO members, will be increasing the ghettoization of the planet into poor countries like Afghanistan and most of Africa, and the rich parts of the world, like the United States, Canada, Europe, and Japan.

It is hard to imagine that rejection of the WTO agricultural agreement makes long-term sense for the United States in those terms. But, given the jobs shift from the farm to elsewhere that it might contribute to, a decision will require careful thought, ideally as free from lobbyists with big money in hand as possible.



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