Weeding Out Subsidies

BREAD-and-butter domestic politics have been forced to make at least a little more room for liberalized world trade. But it wasn't easy. Nothing gave the heads of the seven leading industrialized nations more trouble last week than the prickly issue of subsidies for farmers. What emerged was a willingness, on the Europeans' part, to name the worst offenders - export subsidies - and commit themselves to reduced reliance on these price-bending tools.

President Bush, who relentlessly attacked export subsidies before and during the summit, seemed pleased. Carla Hills, US trade representative, stopped short of calling it a breakthrough, but said the way is cleared for world trade negotiators, meeting later this month, to ``put some meat on the bones'' of the Houston agreement. That meat, presumably, will eventually include a fairly rigid schedule for implementing reductions.

The process is given urgency by the December deadline for wrapping up the current round of talks on the General Agreement on Tariffs and Trade. Those negotiations have the goal of arriving at a expanded world trade accord embracing agriculture, textiles, and such new items as trade in services and intellectual property rights. Disagreement over farm subsidies has long been a hindrance.

Though giving some ground, the West Germans and other Europeans felt far from beaten on the farm issue. The summit communiqu'e, after all, calls for reducing these subsidies, not eliminating them, as Mr. Bush had wanted. And it also acknowledged the differing social and political status of agriculture within the European Community, where small, relatively inefficient farms are the rule.

It's still anything but certain the political will exists to dismantle EC programs that jack up internal prices for food and create surpluses that are absorbed by governments and sold at a discount on the world market. It's also uncertain how far the Bush administration will get in removing the price-support programs that help US farmers. But after running up the flag of subsidy-free trade for all the world to see, it's duty-bound to try.

Farmers aren't likely to be completely cut off by the US government or any other. Supports for farm income - direct payments to farmers to use as they please, as opposed to payments that affect prices - could be devised. But for the good of all nations - not least the poorer ones who have nothing to trade but agricultural products - programs that tinker with prices, and thus distort trade, should be yanked out.

You've read  of  free articles. Subscribe to continue.
QR Code to Weeding Out Subsidies
Read this article in
QR Code to Subscription page
Start your subscription today