US SENATE PASSES FARM BILL, DESPITE THREATS OF VETO, WTO LITIGATION

The US Senate last month voted overwhelmingly to largely extend existing farm subsidy practices, despite threats of a presidential veto and litigation at the WTO.

The bill approved by the Senate on 14 December proposes to spend some $286 billion over five years on farm payments. The House of Representatives approved a largely similar bill earlier last year. The House and the Senate will need to meet to 'reconcile' what differences exist between the two proposed pieces of legislation.

The George W. Bush administration criticised the Senate bill for requiring a tax increase worth some $15 billion per year, and for failing to place a stringent income limit beyond which farmers would cease to be eligible for subsidies. "The bill further increases price supports and continues to send farm subsidies to people who are among the wealthiest 2 percent of Americans," said acting Agriculture Secretary Chuck Conner, describing the legislation as "fundamentally flawed."

In approving the bill, the Senate turned down the modest reforms proposed by the Bush administration. These would have tried to insulate US farm subsidy programmes from challenge at the WTO, and cut of payments to farmers or corporations making over $200,000 annually (see BRIDGES Weekly, 7 February 2007). Senators also rejected a more radical overhaul that would have seen existing payment programmes, which go to a handful of different crops grown by a minority of farmers, replaced by a less expensive crop insurance programme for which all farmers would be eligible.

Bob Stallman, head of the American Farm Bureau Federation, believes that the White House is serious about vetoing the bill if its own objectives are neglected, the California Farmer newspaper reported this week.

US farm subsidies came under scrutiny at the WTO only days after the Senate vote, when a new dispute panel was created to examine claims from Canada and Brazil that the US had in recent years exceeded its permitted spending limits on trade-distorting farm subsidies (see BRIDGES Weekly, 28 November 2007). A day later, on 18 December, a separate WTO compliance panel issued a final report confirming that the US had not done enough to bring its cotton subsidy programmes in line with an earlier ruling, potentially opening the door to billions of dollars in sanctions from Brazil.

The legislation passed by the Senate would leave the challenged subsidies largely intact.

"Farm Bill Veto a Serious Threat," CALIFORNIA FARMER, 14 January 2008; "WTO releases formal ruling against US cotton subsidies, opens door to sanctions," CANADIAN PRESS, 18 December 2007; "W.T.O. to Look at U.S. Subsidies," ASSOCIATED PRESS, 18 December 2007; "Farm Belt Follies," NEW YORK TIMES, 3 November 2007.