Why are US farm interests taking a more aggressive stance?
Is it just me, or is there a new, more combative tone coming from US agriculture interests in recent days? The focus of their attack is other countries, namely countries to which US exports to and countries with which the US competes.
I’ve noticed that the ag groups recently visited Geneva, home of the World Trade Organization, to mouth-off at the subsidies that middle-income countries are providing their farmers. They commissioned a paper to document these subsidies, which finds, not surprisingly, that US subsidies are comparatively smaller. The US cotton industry, having come to a settlement with Brazil over US violations of WTO rules, now feels it’s “no more Mr. Nice Guy” and is pounding China and other countries for their supposed violations. The US poultry industry is screaming about South Africa’s tariffs and pushing to exclude South Africa from trade programs unless they admit more US chicken. The sugar industry has always used offense as the best defense of their huge subsidies, they are emphasizing foreign subsidies to Congress and have been desperately working to put limits on Mexican sugar imports, despite the fact that a free trade agreement (NAFTA) is supposed to exist between the US and Mexico.
None of these positions is really new, but the tone and aggression are. Why? One reason is that the Farm Bill is now completed, which diverted a lot of attention for the previous two years. Second, is that commodity prices are low and that’s making agriculture grouchy and in a mood to point fingers and find someone to blame. Third, is that trade negotiations, after a long period of quiescence, may actually be making progress and show some prospect of completion.
The hypocrisy is always shocking to observers, given the long history of massive subsidies that US agriculture has received and continues to receive today.
The bellicosity could backfire, as the US continues to be vulnerable to possible litigation at the WTO. Turkey recently filed a motion that could target US cotton dumping and retaliate. And US agriculture’s aggression could be an over-reach and undermine the trade negotiations in the first place (which might be part of the goal). Other countries also maintain the discretion to make life hard on US agriculture exporters if they like – most notably China, which caused waves by rejecting US corn exports last year.
Banging on China and South Africa might serve the interests of the trade associations and commodity groups. It gives them something to tell their memberships. But the truth is there are much bigger fish in the ocean if they want them. McDonalds can drive poultry prices single handedly with menu changes, for example.