*EPF315 09/10/2003
Fact Sheet: USTR Describes Farm Bill in Context of Other WTO Members' Support Limits
(Says average U.S. agricultural tariff only 12 percent) (590)

The Office of the U.S. Trade Representative (USTR) says in a just-released fact sheet that the 2002 Farm Bill addresses world agricultural markets that "are badly distorted." Agriculture is one of the main topics to be discussed at the World Trade Organization (WTO) mid-term negotiations September 10-14 in Cancun, Mexico.

Following is the text of the fact sheet:

(begin fact sheet)

Office of the United States Trade Representative, www.ustr.gov
September 9, 2003

U.S. FARM BILL AND THE WTO NEGOTIATIONS

Background

-- The Farm Bill was written to address current conditions in agricultural markets, which are badly distorted by trade measures. The WTO [World Trade Organization] negotiations, and U.S. pursuit of ambitious reforms, are about the world of tomorrow.

-- Under WTO rules, the United States is allowed to provide up to $19.1 billion annually in "trade-distorting" support. The Farm Bill is the first legislation Congress drafted with these limits in mind. The bill not only specifies the manner in which farm programs would count against the U.S. allowed support levels but also establishes an unprecedented "circuit breaker" that mandates the Secretary of Agriculture to modify programs to ensure U.S. compliance with international obligations.

Support in the United States is Not Slated to Increase under the Farm Bill

Average annual spending in the years 1999-2001 was $24.5 billion. Under the new Farm Bill, the annual average is projected to be less than $20 billion, a 20 percent decrease.

Under the Farm Bill, the United States continues to provide the bulk of its support through "non-trade distorting" support. Under the previous legislation, in 1999 (the last year notified) the U.S. provided 75 percent of its support through "non-trade distorting" programs -- the highest proportion of all major countries. This basic relationship continues under the new legislation. In contrast, the EU provided less than half of its support through "non-trade distorting measures" and provides three times the level of "trade-distorting" support as the United States.

The Farm Bill in Context

It's important to put U.S. policy into perspective: Under WTO commitments, the EU is allowed to provide more than $60 billion annually in trade-distorting support. Additionally, the EU exploits the absence of a "blue box" [production-limiting] cap to provide further trade-distorting support. Japan is allotted more than $30 billion in annual support. The limit on the U.S. is less than $20 billion.

-- The EU relies heavily on export subsidies to dispose of surplus production that drives down world prices. The EU spends over $2 billion a year on export subsidies, accounting for 90 percent of all WTO notified export subsidies. The United States spent less than $60 million in 2001, one thirty-fifth of the EU total.

-- The average allowed tariff on agriculture products for WTO members is greater than 60 percent.
-- The EU more than 30 percent
-- The Cairns Group more than 30 percent
-- Japan more than 50 percent

The average U.S. agricultural tariff is only 12 percent.

What the Farm Bill Does Not Change

The 2002 Farm Bill will not change our agricultural trade relationship with developing countries.

The 2002 Farm Bill does not impose any new restrictions on access to the U.S. market for agricultural imports. U.S. tariffs and the tariff preference programs that benefit developing countries remain unchanged.

The 2002 Farm Bill does not increase U.S. agricultural export subsidies.

(end fact sheet)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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