USDA Erodes Farmer's Footing on Market Loss Payments with WTO

Jun 22, 2001

House Agriculture Committee Chairman pulls support for bill on Trade Promotion Authority

(June 22, 2001) U.S. House Agriculture Committee Chairman Larry Combest (R-Texas) expressed stern displeasure that the USDA is unilaterally eroding farmers' footing in world trade with today's notification to the World Trade Organization that late-season Market Loss Assistance payments made to American farmers in 1998 were trade-distorting. The Agriculture Chairman noted that beginning with Agriculture Secretary Dan Glickman – for more than two years and two agriculture secretaries – he has insisted the U.S. adhere to the tenet guiding domestic supports: that payments made after producers have made their planting decisions can in no way distort trade by enticing the production and marketing of certain crops. Chairman Combest observed, in a letter this afternoon to the current Secretary of Agriculture that, "I expressed my concern to Secretary Glickman that there seems to be a disturbing departure from that long held position at USDA. I regret that what I saw in 1999 has continued under your tenure at USDA."

"USDA's decision to classify the 1998 payments as trade distorting is equivalent to a unilateral disarmament that cedes ground and gains nothing in return," said Combest in separate comments. "The USDA decision creates a precedent for classifying assistance that will apply to payments also made in 1999 and 2000, as well as restrict our ability to make these payments in the future."

In his letter today, Agriculture Chairman Combest wrote Secretary Ann Veneman, "I am informed that USDA plans to report to the WTO that market loss payments made to U.S. farmers in 1998, are to be placed in the 'amber box', a category known as 'trade distorting payments'. This is being done despite the fact that the payments were made after the production year and could have no effect on producers' planting decisions. Additionally, since market loss payments are based on Agricultural Market Transition Act payments, this action could call into question the placement of non-trade distorting AMTA payments in the WTO 'green box'."

"This decision will have a profound impact on U.S. farmers and on the ability of Congress to help farmers deal with financial stress," the Agriculture Chairman's letter continued. "The United States has strong adversaries in the international agricultural trade arena and therefore must be resolute in its pursuit of free and fair trade. Abandoning the principle of assistance to our farmers does not instill any faith that the outcome of trade negotiations will be fair to United States agriculture."

Citing his concern about the fair outcome of trade negotiations in light of USDA's unilateral change in its view of assistance to American farmers, House Agriculture Committee Chairman Combest today also announced he has withdrawn his name as a cosponsor of the Trade Promotion Authority legislation currently before the Congress.

Chairman's warning to previous USDA Secretary Dan Glickman: June 1999

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