Our View: Nairobi Sets Stage for 2016 Foreign Subsidy Focus

January 15, 2016

By most accounts, 2015 was a challenging year to be a farmer. Business costs and regulatory burdens were up. Prices and farm incomes were down. Mother Nature and farm policy critics both proved to be destructive and full of surprises.

But the year was not all doom and gloom. Several exhaustive legislative and regulatory battles resulted in optimistic outcomes for the industry. The farming community banded together to defend the farm safety net. The House Agriculture Committee placed foreign subsidies in the crosshairs. And as the year came to a close, WTO negotiations in Nairobi, Kenya concluded with an agreement – albeit a limited one – to eliminate trade-distorting export subsidies.

Nairobi is a good first step that publicized some of the schemes America’s competitors use to manipulate markets, and it proved that global reforms are possible. U.S. Trade Representative Michael Froman’s negotiating team should be applauded for helping reshape the international trade conversation, for paving the way for positive talks in the future, and for holding firm in defense of America’s cotton policies – something the National Cotton Council was quick to commend.

However, we must not lose sight that the agreement reached in December was limited. It carves out exceptions for developing countries, such as India, to continue subsidizing transportation and marketing costs for another eight years, while poorer nations get a free pass until 2030.

Even then, the agreement will only be effective as its enforcement mechanisms, and the WTO has a terrible track record on the enforcement front.

The U.S. sugar industry expressed their concern that the deal, while helpful, will “do little to remedy the massive distortion of the world sugar market that results from the widespread use of subsidies to prop up domestic sugar industries and the pervasive dumping practiced by the world’s sugar producing countries.”

The Nairobi pact also fails to address several foreign offenses that are imperative to improving the international agriculture landscape, such as: market access barriers, domestic subsidy payments, stockpiling, illegal dumping, no interest loans coupled with debt forgiveness, government run monopolies, and currency manipulation just to name a few.

Thankfully, it doesn’t look like U.S. policymakers have any intention of letting up. House Agriculture Committee Chairman Mike Conaway noted in a recent statement:

“I will continue to shine a bright light on the harmful, and in some cases illegal, trading practices of China, India, and other trading partners because they deny America’s farmers and ranchers the level playing field they have so often been promised and certainly deserve. I thank Ambassador Froman for his continued efforts to make inroads in this regard in the face of stiff foreign resistance.”

And we thank you, too, Chairman Conaway, for making sure foreign subsidies finally get put under the microscope. America’s agriculture community looks forward to working with you and other members of Congress in 2016 to fight for much-needed reform.