Agricultural Trade Controversies and the Florida Connection: Watch the WTO

  
On September 1, 2002, Dr. Supachai Panitchpakdi (Thailand) took over his duties as director general of the WTO for a three-year term. This switch mid-way through the usual four-year term was the result of a hard-fought battle between developed and developing countries over who would succeed former Director General Renato Ruggiero. As the organization's first leader from the developing world, a great deal of pressure has been put on Panitchpakdi to champion the causes of the poor.

One of the concerns of the new director general, aside from ensuring that the latest round of negotiations finishes on schedule, is the declining trend in the terms of trade of developing country (the value of their exports versus their imports). The international community must find "more innovative solutions to arrest this decline," Panitchpakdi has said. He has also stated his intention to back all projects-whether led by the WTO or other organizations, public or private-aimed at assisting developing countries.

This new tone will certainly be felt in the FTAA negotiations, which are being held in the shadow of the Doha Round of the WTO. Many issues overlap, but at this moment of crisis in the commodities trade, the agricultural subsidy issue is perhaps the greatest challenge. Here the great rivalry between Brazil and the United States becomes clearest. As the two countries take over as co-chairs of the final phase of the FTAA negotiations, these tensions will become even more dramatic over the next few years. And no issue will have more influence than the question of markets for agricultural goods, whether orange juice, coffee or the current campaign against sugar subsidies.

On August 30, WTO arbitrators gave the European Union permission to apply sanctions (in the form of duties) on US goods valued at more than USD$4 billion until the US changes its tax policy. Everywhere, new pressures are mounting on the US and other developed nations to dismantle their trade subsidies. Recent discussions in the WTO have focused on sugar subsidies, an issue that again pits Brazil against the United States. Interestingly, as pressures over agricultural issues continue to mount in the WTO and the FTAA negotiations, members of the Bush administration have asked for an independent study by the US International Trade Commission (ITC) concerning the impact of removing tariffs on farm goods from 33 countries in the Western Hemisphere. The request for the study has caused some serious concern among US farmers, as it includes certain goods that have been highly protected in the past, including peanuts, sugar and orange juice. These products have an important impact on Florida agriculture, especially sugar producers, who enjoy a water subsidy and low taxes among other incentives that allow them to perpetuate an economically inefficient and politically powerful industry.

Adding fuel to the fire over farm subsidies is the latest Oxfam trade report, "The Great EU Sugar Scam". It bolsters recent calls by the world's top two sugar-exporting countries, Brazil and Australia, for the need to reform the sugar regime, which, they charge, is depressing world prices and destroying market opportunities for more efficient producers (many of which are developing countries). Joined most recently by Thailand, these countries have indicated that they are considering challenging these "trade-distorting" subsidies, which they view as export subsidies, at the WTO. Such criticisms lie at the heart of the WTO's ongoing agricultural negotiations, which were intensified under the mandate given at the last Ministerial Conference in Doha. Coming on the heels of the largest application of WTO trade sanctions at the end of August, this effort on sugar subsidies through the WTO mechanism, coupled with the attitude of the new director general, improves the climate for these types of protests. The new environment will be tested at the FTAA Trade Ministerial in Quito at the end of October.

Now that Trade Promotion Authority has been approved by the US Congress and signed by the president, many of the "commitments" that the Bush administration made to gain votes in the House of Representatives are being put to the test. Much has been made of the rollback of restrictions on foreign steel imports. Will agriculture be next? This issue could have a significant impact on Florida farmers.