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US Agriculture Subsidies
 

US Agriculture Subsidies

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    US Agriculture Subsidies US Agriculture Subsidies Presentation Transcript

    • US Cotton Subsidies Current policy implications and recommendations TO: Ron Kirk From: Agricultural Policy Analysts from DOC
    • Problem
      • Definition of the Problem
        • U.S. is the second largest cotton producer in the world
        • U.S. government pays $3B annually to domestic cotton producers
        • Creates a trade imbalance and international economic inequity
        • Policy is illegal under international regulations (WTO)
        • Brazil recently rewarded $300 million annually
    • Problem (Continued)
      • Those negatively affected by U.S. domestic subsidies
        • "Some years ago, cotton was a source of wealth for us.               But these days it has become our burden, a cause of               poverty." - President of Mali
        • "White gold" is a main source of sustenance for 20 million people in Africa, mostly West Africa- Benin, Cameroon, Mali, Niger, Nigeria, Mali, Guinea, Ghana, Cote d'Ivoire, Chad, Central African Republic,             Senegal, Togo, Burkina Faso, and other regions in the world
    • Background
      • The international community’s approach to U.S. agricultural subsidies:
      • Developing Countries:
        • The Brazil cotton case
        • The African Sectoral Initiative
        • The role of NGOs and IGOs: Oxfam and ICAC
      • Developed countries:
        • Disagreements between the EU and the U.S.
        • “ Arms’ race”: No country wants to reduce their subsidies first
      • World Trade Organization:
        • The Doha Development Round
    • The Doha Round
      • The Doha Development Round: Agricultural Negotiations  
      • Main Themes:
        • Market Access
        • Domestic Support
        • Export Competition
        • Development Issues
      • Main Parties:
        • G20, Cairns Group, G10, the E.U. and the U.S.
      • Repeated failures to reach agreement on agricultural issues
    • WTO Evaluation
      • WTO and Domestic Allocation
        • Domestic support categories
          • Green Box, Blue Box, and Amber Box
        • Indirect export subsidies
          • US export credit guarantees
      • Retaliation
          • Trade wars
          • Small economies
      • Time Issue
    • US Policy
        • History of Cotton Case
          • Bush Administration eliminations
          • Panel reconvened
          • Brazil Retaliation
        • Issues
          • WTO integrity
          • Loss of income
          • Possible spillover affects
          • Possible further retaliation
    • Criteria
      • Political Feasibility:
        • measured by the degree of acceptance by in the US congress.
        • willingness to accept and implement
      • Equity :
        • How fair is the alternative, in relation to WTO challenges.
        • Measures the ability of producers to compete in the market.
        • is this a free market economy?
        • the foundation of the WTO is based on Neoliberal economics
        • To liberalize trade means to reduce trade distorting mechanisms
      • Affordability:
        • What costs do cotton producers face depending on the alternative
        • Cost of possible retaliation will be calculated as well
        • Can they afford to do it?
    • Alternatives
      • Alternative 1:
        • Follow the recommendations of the African Sectoral Initiative – The proposal calls for an end to all cotton export subsidies and domestic support programs within 4 years, as well as establish a transitional financial compensation mechanism in favor of cotton-exporting developing countries affected by the subsidies.
      Political Feasibility Equity Affordability Total Alternative 1 1 4 2 7
    • Alternatives
      • Alternative 2:
        • Follow the current USTR recommendation to include its cotton program under a comprehensive negotiation regarding export subsidies and domestic support negotiated in the Doha Round.
      Political Feasibility Equity Affordability Total Alternative 2 4 1 3 8
    • Alternatives
      • Alternative 3:
        • Adjust US cotton program to remove “amber” box measures and only include “blue” and “green” box domestic support program with parameters set by ICAC.
      Political Feasibility Equity Affordability Total Alternative 3 2 4 3 9
    • Criteria Scoring Political Feasibility Equity Affordability Total #1 1 4 2 7 #2 4 1 3 8 #3 2 4 3 9
    • Final Recommendation
      • Alternative 3:
        • Adjust US cotton program to remove “amber” box measures and only include “blue” and “green” box domestic support program with parameters set by ICAC.