As ag embraces climate mitigation, trade may benefit — researchers
The Biden administration’s plan to enlist American agriculture in mitigating climate change through cover crops and carbon trading could pay dividends in another field entirely — negotiations for freer agriculture trade, said an American Enterprise Institute paper on Tuesday. The United States would be in a stronger bargaining position if it shifted some of its farm subsidies into so-called green box programs that are deemed not to distort international trade, said the paper written by three farm policy experts.
“A reduction in U.S. trade-distorting supports would better position the United States in multilateral trade negotiations in which trade-offs between reduced domestic support and increased market access could bring significant access gains to U.S. producers,” wrote Eric Belasco and Vince Smith of Montana State University and Joe Glauber of the IFPRI think tank.
Farm subsidies tripled in cost during the final years of the Trump administration and all but certainly exceeded the limits set by the WTO, said the AEI paper. Outlays are expected to decline this year. The Biden campaign said last fall that it would reorient two USDA stewardship programs, the Conservation Reserve and the Conservation Stewardship Program, to sequester carbon in the soil and reduce greenhouse gas and carbon emissions by livestock farms.
“While expanding these programs would involve increased payments to farmers, depending on how they are structured, these expenditures could be classified as minimally distorting measures under Annex 2 of the WTO Agreement on Agriculture [the so-called green box].”
The author also said the U.S. farm sector was in a strong financial condition compared with the rest of the economy, thanks to the large subsidy payments of the past couple of years and the rally in commodity prices that started last summer. “Claims the sector is facing a serious financial crisis and needs more government subsidies are overblown.”
The paper, “Whither agricultural policy in 2021 and beyond,” is available here.