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EU And US Headed For A Trade War Over Agriculture

Following a breakdown at the WTO talks in Seattle, the US House Agriculture Committee is planning a series of hearings on farm policy early next year that will consider greater subsidies for US farmers. Will it lead to a Trade War? John Howard reports.

The world watches as direct subsidies to US farmers this year already total US$22.5 billion. That includes spending on conservation programs as well as US$8.7 billion in emergency assistance.

In a provocative statement, US House Agriculture committee chairman, Larry Combest said, " If we (WTO) are not going to begin to discuss the elimination of export subsidies then we should as a country look at all the ammunition we have on export subsidies and not be outspent ten to one by the Europeans."

EU farm supports are worth US$324 per acre, compared to US$34 for the United States, according to the Agriculture Department. Canada and Australia are lower and New Zealand has none.

EU officials say they doubt any new WTO negotiations can begin until after the US elections later in 2000, although some technical discussions on agriculture issues may continue.

Congressman Combest said, " We can't simply sit back and allow someone else to buy the markets that we should certainly be participating in."

The Senate, meanwhile, does not plan to hold any hearings, but Sen. Kent Conrad introduced legislation this week that would offer an increase to $US25 billion to farmers in direct payments and crop subsidies.

"We've got to make a decision as a country. Are we going to roll over or are we going to fight back? " Conrad said.

Mary Thatcher, a lobbyist for the American Farm Bureau Federation, said, " The Clinton administration should push for issues such as financial services where the EU is seeking concessions. That will give the US leverage to push for EU concessions on farm issues."

US agriculture exports dropped to US$49 billion this year, down from nearly US$60 billion in 1996. Nearly half the wheat that US farmers produce is destined for export as well as a third of soybeans, 20 percent of corn and more than 10 percent of meat and poultry.

The House Agriculture Committee is planning hearings in Washington and in up to 12 different regions of the country starting in February and running through to March. Combest says the hearings will cover all aspects of farm policy.

With the EU announcing over the weekend that it plans to expand its membership by 13 member states and to now include Turkey with its population of 65 million, two powerful regional trading blocs - EU and NAFTA - are developing which could bring a new urgency to reconvene another APEC forum as soon as possible.

Internationally, events are now moving fast and the Asia-Pacific nations, and the developing nations, have to keep up.

Significantly also for EU/US relations this week, the EU leaders decided at their summit to approve the creation of a multinational European force of 50,000 soldiers by 2003 which could jump into Kosovo-like hotspots without what they see as a US-dominated NATO.

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