U.S. Agricultural Policy and WTO Commitments Anne Effland Economic Research Service, USDA The views expressed here are the author s and may not be attributed to the Economic Research Service or the U.S. Department of Agriculture
U.S. WTO commitments under the Agriculture Agreement Uruguay Round Agreement on Agriculture commitments comprised 3 pillars: Market access Tariff reductions and tariff rate quotas (TRQs) Export subsidies Export subsidy reductions Domestic support Domestic support disciplines
$U.S. million Domestic support disciplines: Aggregate Measurement of Support (AMS) 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Other Wheat Soybeans Cotton Corn Sugar Dairy Final AMS ceiling $19.1 million 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: U.S. domestic support notifications to the WTO
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Domestic support disciplines: De minimis exemption US$ thous 20000 Product specific expenditures below de minimis vary US$ thous 18,000 Non-product specific expenditures consistently below 5% de minimis 18000 16,000 16000 14,000 14000 12,000 NPS de minimis level 12000 10,000 10000 8,000 8000 6,000 6000 4,000 4000 2,000 2000 0 0 AMS de minimis Source: U.S. domestic support notifications to the WTO MLA/CCPs Crop insurance Other
Domestic support disciplines: Green box exemption US$ million 140 120 100 80 60 40 20 General services Decoupled income support Environmental payments Domestic food aid Disaster assistance Other 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: U.S. domestic support notifications to the WTO
U.S. farm policy has undergone significant changes since 1995 1996 Federal Agriculture Improvement and Reform Act Ends program of target prices and deficiency payments with acreage controls Introduces decoupled payments based on historical production 1999-2001 annual ad hoc market loss payments 2002 Farm Security and Rural Investment Act Introduces countercyclical payments tied to historical production and milk income loss payments Peanut quotas and tobacco allotments end with buyouts Annual ad hoc disaster programs
U.S. farm policy has undergone significant changes since 1995 2008 Food, Conservation, and Energy Act Introduces ACRE revenue guarantee based on current plantings Introduces permanent disaster programs for crops and livestock Dairy product price support program replaces dairy price support Current Farm Bill debate remains uncertain Current proposals include: ending decoupled payments tied to historical production introducing new revenue guarantee program changing cotton support to meet dispute settlement requirements replacing dairy price support with dairy margin insurance
Government payments are only a small share of U.S. farm cash receipts $ billion 400 Farm-related income 350 300 250 200 150 100 50 Government Payments Livestock Crops 0 1980 1985 1990 1995 2000 2005 2010 Calendar year Source: Farm Income Data, Updated November 2011. Economic Research Service, USDA.
Farm program payment distribution reflects U.S. agricultural patterns Total farm program payments, 2009 Source: ERS Farm Program Atlas
Planting flexibility has allowed producers to alter historical planting patterns Corn planting compared to historical corn base, 2009 Percent Source: ERS calculations with FSA and NASS data Source: ERS Farm Program Atlas
Percent Market access: tariff reductions and TRQs 60 50 40 30 20 10 0 Selected U.S. tariff levels under the URAA U.S. average tariff level and individual commodity tariffs reduced TRQs with minimum access levels established to replace non-tariff barriers URAA base avg commodity tariff Final bound avg commodity tariff URAA base avg all tariffs Final bound avg all tariffs Source: U.S. tariff schedule
Percent Tariff cuts in products subject to TRQs 120 100 80 60 40 20 0 butter cheese milk non-fat dried milk URAA base avg URAA base avg in-quota tariff URAA base ave over-quota tariff other dairy whole dried milk Final bound avg beef Final bound avg in-quota tariff Final bound avg over-quota tariff sugar Source: U.S. tariff schedule
Export subsidies: expenditure and quantity reductions Reductions made in both U.S. export programs Export Enhancement Program (EEP) Dairy Export Incentive Program (DEIP) EEP little used after 2000 DEIP used at bound quantities through 2003 Commitments Outlays (US$ million) 1995 2000 2000 2001 2002 2003 2008 2009 Wheat 765.5 363.8 Poultry 21.4 14.8 6.8 Butter 44.8 30.5 15.5 11.3 2.1 Skim milk powder U.S. export subsidy expenditures 121.1 82.5 6.7 53.7 14.8 1.8 7.2 Cheese 5.3 3.6 1.8 0.9 1.2 0.9 0.3 0.2 Source: US export subsidy notifications to the WTO
1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Share of U.S. agricultural trade exported under supported programs* has fallen 40% 35% 30% 25% 20% 15% 10% 5% 0% *Includes export subsides, export credits, and food aid. Source: USDA Foreign Agricultural Service and UN World Food Program
Concluding comments The U.S. has faced relatively few challenges in adjusting its agricultural policies to meet WTO commitments In some cases, agreed reductions reflected current conditions or already anticipated reforms In others cases, unrelated factors led to changes that mitigated possible constraints Chief among these have been changing domestic and world market conditions keeping prices above supported levels for all but a few commodities in most years since 1995
Additional resources Economic Research Service (ERS) web site http://www.ers.usda.gov U.S. domestic policy & program details http://www.ers.usda.gov/topics/farm-economy/farmcommodity-policy.aspx