The global financial crisis is hurting American
farmers already. Record harvests in the United States and other
countries, worldwide grain surpluses, and the slumping demand in
Asia have combined to drive the prices of agriculture commodities
to their lowest level in decades. Farmers appealed to the 105th
Congress to help expand U.S. agriculture exports by promoting free
trade through legislation renewing the President's fast-track
negotiating authority. But, in late September, Congress rejected a
fast-track bill (H.R. 2621) by a vote of 243-180. The bill failed
primarily because President Bill Clinton had made no concerted
effort to garner support for its approval.
addition, instead of expanding agricultural trade, Congress voted
to give farmers $8.5 billion in subsidies, a practice that only
undermines the market-oriented goals of the 1996 Federal
Agriculture Improvement and Reform Act (FAIR). Senate Majority
Leader Trent Lott (R-MS) described the agriculture subsidies as
atrocious and far beyond what was reasonable. Secretary of
Agriculture Dan Glickman, however, said the increased subsidies
would not end the farmer's market crisis and reaffirmed the Clinton
Administration's determination to expand the federal crop insurance
program and raise the cap on marketing loan rates.
the answer to the farm crisis lies not in more government subsidies
but in freer trade. The solution to the stagnant agricultural
market lies outside U.S. borders, where 96 percent of the world's
hungry people live.
HOW CONGRESS CAN
American farmers are more reliant on
foreign agriculture markets than the workers in any other sector of
the U.S. economy. One out of every three acres of cultivated
farmland in the United States is dedicated to exports, but trade in
U.S. agricultural exports has grown at a considerably slower pace
than has trade in U.S. merchandise goods exports overall.
North American Free Trade Agreement and the Uruguay Round Agreement
on Agriculture were important steps toward opening the world's
agriculture markets to American farmers. But even today, foreign
agriculture remains one of the most protected and subsidized
sectors of the world economy. On the international level, the
average non-farm tariff is 4 percent, but the average tariff on
farm products is about 50 percent--and sometimes more than 100
World Trade Organization (WTO) is scheduled to begin a new round of
agriculture negotiations in December 1999. These talks are part of
the so-called built-in agenda of the Uruguay Round Agreements that
created the WTO. The agenda, adopted in 1994 mainly at the
insistence of U.S. trade negotiators, includes agriculture,
services, and other trade-related issues. The outcome of these
negotiations will affect the strength and prosperity of American
agriculture during the next decade. The United States must be
prepared to lead the negotiations. To do so, however, the President
will need fast-track negotiating authority.
Fast-track negotiating authority is not a
trade agreement. It merely sets out the process by which Congress
will consider certain trade agreements. Under fast-track authority,
trade agreements negotiated by the President are submitted to
Congress for a speedy up-or-down vote under rules barring committee
or floor amendments. Fast-track authority does not give the
President a blank check to negotiate trade agreements, and it does
not deprive Congress of any of its constitutional authority to
regulate commerce with other countries. Congress defines the
objectives and limitations in fast track, and requires the
Administration to give frequent consultation and to coordinate with
the House Ways and Means Committee, the Senate Finance Committee,
and special advisers designated by Congress. Fast track, then,
facilitates free-trade agreements.
United States has missed numerous opportunities to expand free
trade since 1994 without fast-track negotiating authority, which
hobbled U.S. trade policy and eroded the international leadership
role of the United States. If Congress wants to help struggling
farmers, it should assist them by working to open foreign markets
to their products. Specifically, Congress should:
Leave FAIR alone. It works and does
not need to be fixed.
Renew fast-track negotiating
authority. Without it, no country will engage in serious talks
with the United States to reduce high tariff and non-tariff
barriers to U.S. farm exports.
Urge the President to launch a new
round of global trade negotiations at the WTO and accelerate
the pace of regional talks in the Western Hemisphere and
Make compliance with current trade
agreements a condition for foreign aid from such organizations
as the International Monetary Fund (IMF) and the World Bank.
Withhold funds to the IMF and World
Bank until they amend their bylaws to require aid recipients to
comply with WTO rules.
only way to guarantee the future health of U.S. agriculture trade
is to expand the access of American farmers to overseas markets.
Free-trade initiatives that increase agricultural exports would
lead to an increase in farm income and export-related jobs.
Moreover, as the U.S. government shifts its emphasis away from a
reliance on commodity price supports, trade with other countries
would expand and become the best hedge against the market
uncertainties that farmers face.
Without fast-track trade negotiating
authority, the United States is losing its competitive advantage.
Its agricultural position in global grain trade is being
threatened, and the economic stability of American farmers is
eroding. By supporting free-trade initiatives and granting the
President fast-track authority in 1999, Congress would ensure that
the United States continues to shape the rules and dynamics of
international trade, and that American farmers have access to
--John Sweeney is Latin
America Policy Analyst in The Kathryn and Shelby Cullom Davis
International Studies Center at The Heritage Foundation.