The cloudy future for trade talks

With smaller issues settled, market access remains the one sticking point in the WTO talks. There is little optimism that this issue can be resolved, although anything can happen between now and June 2007, the 'drop dead' deadline for the round.

In the short-run U.S. farmers may be better off without a WTO agreement. But if talks fall apart altogether the long-term outlook is less certain. Protectionist tariffs, trade-distorting subsidies and a confusing maze of less-efficient, bilateral trade deals won't bode well for richer countries. The U.S. faces more and more challenges to its current farm programs.

"We're going to lose marketing loans and counter-cyclical payments," predicts Robert Thompson, noted University of Illinois ag policy expert. "We can give them up in negotiations and get something for them, or we can let the round fail, lose them in litigation and get nothing for them."

Short-term, Leon Corzine, past president of the National Corn Growers Association, says the WTO issue must be resolved before the next farm bill is written. "Otherwise, we're shooting in the dark," he notes. "We have always said we want to get our income from the marketplace and not the government," he adds. "It's not there yet. We still have to have a safety net, with agriculture working at the whims of weather and foreign governments. And younger producers are more highly leveraged, so they need that safety net."

It is very likely that any multilateral agreement made in WTO will not be great for U.S. farmers. But no agreement will probably be worse. Brazil has already brought a case against U.S. cotton programs, and won. The same formula may be used by other countries. If we lose programs like counter-cyclical payments in litigation, we gain nothing. Negotiation is the greater of two evils.

Globalization is all about helping countries benefit from their comparative advantage — what they grow or produce better than farmers in other countries. Like it or not, globalization is linking our economy with others in the world, including protesting farmers in South Korea. How the U.S. comes out in WTO will have a big impact on who else is protesting at the next WTO meeting.

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