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Trade Talks May Hinder 2007 Farm Bill

posted on March 10, 2006

Hello, I'm Mark Pearson. For the first time in more than four years, the efficiency of American workers has declined. * Americans' productivity in the last quarter of 2005, dipped to an annual rate of five-tenths of one percent, * while wages rose at a pace of just over 3 percent. Mortgage rates also are on the rise. * Higher inflation sent the average 30-year, fixed rate mortgage to its highest level in 3 1/2 years. * And the trade deficit surpassed 723 billion dollars last year, setting yet another record. Economists believe the 2006 imbalance will be worse. While the trade deficit continues to rise, food and agricultural products remain a major sticking point in the negotiations among the world's trading partners ... and also may hindering progress on the next U.S. farm bill.

Trade Talks May Hinder 2007 Farm Bill

The clamor for a new farm bill in 2007 is rising, but the job facing Congress in writing a new farm law is formidable ... thanks in large part to the uncertainty over ongoing talks at the World Trade Organization.

House Agriculture Committee Chairman Bob Goodlatte this week said the 2007 farm bill will be "dramatically affected" by WTO negotiations, but the Virginia Republican said, "The next farm bill will be written in the United States Congress, not Geneva, Switzerland."

Partisan disagreement, the typical roadblock to the drafting of a farm bill, seems to be muted this time around ... at least so far. In fact, the main bone of contention to date has been over whether to simply extend the existing farm law until WTO negotiations are complete. Most Democrats and some Republicans are in favor of a limited extension while trade talks continue. But the White House is opposed, saying current U.S. commodity programs are unacceptable to WTO partners ... and will complicate trade talks.

Mike Johanns, Secretary of Agriculture: "The most optimistic suggestion I've seen is that markup on the Farm Bill would probably occur in spring of '07, and this WTO process is to be wrapped up by the end of this year. Because of that timeframe I just don't think it's going to be an issue in terms of trying to extend the Farm Bill, waiting for the outcome of this process."

Either way, forcing the WTO to bend to one nation's will is NOT likely to happen. In fact, the long arm of the global trade body was evident this week in a ruling that went against a U.S. trading partner. A WTO panel denied an appeal by Mexico that it violated global trade rules in a soft-drink dispute with the U.S. An earlier WTO ruling supported U.S. claims that Mexico breached international law when it imposed a 20 percent tax on soft drinks sweetened with anything other than cane sugar grown in Mexico.

Mexico was a top market for high-fructose corn syrup from the U.S. before the tax was imposed in 2002. The tax made it too expensive to use the corn sweetener in soft drinks, and now the U.S. share of the market in Mexico is only 6 percent of pretax levels.

Tags: agriculture government news policy trade