THE PAST, PRESENT AND FUTURE OF SUBSIDIES IN THE GLOBAL MARKET.
US farm subsidies do more harm than good in the international marketplace. Agricultural trade is distorted by both import barriers and production and export subsidies. Smaller, more developing countries suffer in the market because of the Development experts agree and say the effects ripple throughout developing economies. American farm exports drive down prices paid to local farmers, and in turn, reduce rural income around the world and push farmers off the land and into different markets. This paper will cover the current issue of national protectionism and its faults in the global market, and the reasoning and history of government farm subsidies in the first place. .
It has been more than 5 months after President Bush signed the new $180 billion farm bill. Agriculture has leaped from the diplomatic background to near the top of the list of international complaints against the United States. Portrayed by Bush and its supporters as a necessary safety precaution for farmers and by those against it as an election-year welfare program to win Midwestern votes, the huge increase in subsidies has become an international crisis. Europe's foreign policy chief, Javier Solana, declared that the new American agriculture policy has created the "most profound" division between Europe and the United States, worse than disputes over steel tariffs, the Kyoto environmental treaty or the international criminal court. In Rome, at a United Nations conference on hunger, developing countries pointed this week to the huge new subsidies to American farmers as one of the biggest obstacles to creating vital opportunities for their own farmers and enabling them to climb out of poverty (Becker, NY Times).
With President Bush pushing for other countries to knock down their trade barriers and expand open markets, his approval of an 80 percent increase in farm subsidies, with all the advantages that confers to American grain exports, is viewed as a move in the opposite direction by many in the media.