US Farm Subsidies Increased to US$14 Billion in 2013, New Data Suggests

2 June 2016

New figures from the US government suggest that Washington’s trade-distorting agricultural domestic support increased to US$14 billion in 2013.

The report, which was submitted to the WTO last week, indicates that the country’s farm subsidies have increased slightly from the US$12 billion reported for 2012. (See Bridges Weekly, 16 January 2015)

According to the new US figures, US$6.9 billion was provided under the highly trade-distorting category of “amber box” support. Under WTO rules, this is capped for the US at US$19.1 billion.

The US also reported another US$7 billion of trade-distorting “de minimis” payments, which are not counted towards Washington’s ceiling at the WTO on the basis that the support represented less than five percent of the value of production.

The US continued not to report any spending on “blue box” schemes, which cover spending under production limiting programmes in the WTO framework.

Trade sources observed that US farm subsidy spending is nudging close to US$14.5 billion, the level which during negotiations in 2008 was proposed as a new limit on Washington’s overall trade-distorting support – the sum of amber box, blue box, and de minimis payments.

Focus on dairy, corn

Trade-distorting payments were concentrated on just a few products, with dairy at US$3.2 billion and corn at US$3 billion benefiting the most.

These two products accounted for 45 percent of the government’s US$14 billion spending in overall trade-distorting support.

The other products receiving significant amounts of trade-distorting support in 2013 were livestock at US$1.6 billion, soybeans at US$1.5 billion, and wheat at US$1.2 billion.

Green box payments

Another US$132 billion was classified as causing no more than minimal trade distortion, known as “green box” support at the WTO. Spending in this category increased marginally from the previous year, the new figures suggest.

Domestic food aid payments in the US represented 80 percent of the country’s total green box spending, accounting for US$109 billion in 2013. Food stamps represented two-thirds of these payments.

Support for “general services” – such as research or farmer advisory services – accounted for another US$12 billion.

Another US$4.9 billion was reported as environmental support, which is also classified as green box spending under WTO rules.

Farm support in major economies

Trade-distorting support in the US appears to be below that notified by some other major economies, according to the most recent reports that members have submitted to the WTO.

China reported that its trade-distorting subsidies amount to US$18 billion (¥123 billion) in 2010, while Japan has said it provided ¥1140 billion (US$14 billion) in 2012. (See Bridges Weekly, 13 May 2015 and 10 April 2014)

However, the most recent domestic support notification from the EU, for the 2012-13 marketing year, reported that the bloc’s trade-distorting farm subsidies amounted to just €6 billion (US$7.7 billion). One month ago, Russia reported that it provided US$5 billion in 2014, and India has reported spending of just US$2 billion in 2010-11. (See Bridges Weekly, 12 November 2015, 4 May 2016, and 18 September 2014)

Negotiating in the dark

The chair of the WTO agriculture negotiations, New Zealand ambassador Vangelis Vitalis, warned in early May that data gaps were hampering talks aimed at improving the trade body’s rules on agricultural domestic support. (See Bridges Weekly, 12 May 2016)

“We cannot negotiate in the dark,” said Vitalis at the time, speaking during an informal meeting of the WTO’s agriculture negotiating committee.

Trade officials told Bridges that while the new US data was helpful, it still shed no new light on domestic agricultural support under the current Farm Bill, which was only enacted in 2014.

One source said that the lack of more recent US farm subsidy figures could hamper efforts to make progress on improving WTO rules in this area ahead of the trade body’s eleventh ministerial conference at the end of next year – dubbed MC11 by negotiators.

“It would obviously make it difficult to get something done by MC11 on domestic support,” the source said.

The notification of the US (G/AG/N/USA/108) is available online here.

ICTSD reporting.

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