Transcript Document

Farm Bill Implementation and
the International Trade Agenda
National Cotton Council
Board of Directors
September 12, 2002
Memphis, Tennessee
J. B. Penn
Under Secretary
Farm and Foreign
Agricultural Services
Introduction
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2
Remarks today will focus on:
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Farm Bill Implementation
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International Trade Agenda
September 12, 2002
I. Farm Bill Implementation
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Enormous attention given development of new
farm bill – over 2 years in the making.
Focus now on implementation – applicable to
the 2002 crops – in an election year!
USDA anticipated much – began early – steady
progress since passage.
September 12, 2002
Farm Bill Implementation
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Two aspects to implementation
Internal Aspects – Enormous behind
the scenes work to get to the public part
 The
Public Aspects –
Announcements/Information
 The
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September 12, 2002
Farm Bill Implementation
Internal Aspects
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USDA-wide Implementation Coordination Team
 Expedite
decisions; prioritize regulations;
coordinate negotiations with OMB; etc.
 Streamline
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process to extent possible.
September 12, 2002
Farm Bill Implementation
Internal Aspects cont.
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Stakeholder Meetings
 Expedited/Compressed
process
 Opportunity
to be heard – numerous meetings
 Deliberately
vague language – USDA in the
middle
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September 12, 2002
Farm Bill Implementation
Internal Aspects cont.
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Instructions/Guidance
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Program handbooks, rules, directions
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Unprecedented training
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Software/IT, e-Gov directive
September 12, 2002
Farm Bill Implementation
Internal Aspects cont.
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Resources
 Decade–long
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trend reversal
September 12, 2002
Farm Bill Implementation
Progress
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Loan rates for 2002 crops – market oriented
Acreage Bases and Yields Updates
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Information development
Signup begins Oct. 1 – Payments Thereafter
Direct: Oct. 1 (Final 2002); Dec. (1st 2003)
CC:
October; December; February
Dairy (new); Peanuts (new); Pulses (new); Sugar;
Apples; F&V regs; etc.
September 12, 2002
Farm Bill Implementation
Progress
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Generally on schedule – on track to meet
targets (internal and legislative)
Generally well pleased with progress
Appreciate producer patience and cooperation
with county office personnel
September 12, 2002
II. The Policy Environment
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Playing much larger role than in mid -1990s
Promises to remain important – perhaps in
different ways
New developments:
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–
–
US farm bill
New farm laws elsewhere
The trade agenda
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New US WTO proposal
September 12, 2002
Farm Security and Rural
Investment Act of 2002
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Generated unusual barrage of criticism – at
home and around the world
Much of the criticism is unfounded – used by
others to support their agenda or deflect
criticism
USG mounted aggressive defense
September 12, 2002
Farm Security and Rural
Investment Act of 2002
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Major Criticisms:
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Will depress prices to the detriment of global
farmers
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–
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4-year funding unchanged – so, no supply response
surprises – output changes marginal, at most
Is protectionistic – not so: changes no tariffs,
quotas, market access whatsoever
Violates URAA WTO Agreement – not so! Stays
within allowable limit – US relatively low: $19.1B vs
$62B EU, $32B Japan – “circuit breaker”
September 12, 2002
Farm Security and Rural
Investment Act of 2002
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The real concern
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Would the US still be able to provide strong
leadership for Doha Round? Would we be
compromised – have lost our zeal for reform?
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U.S. remains a strong leader. New US WTO
proposal is evidence enough!
September 12, 2002
Domestic Farm Policies Elsewhere
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Japanese (recent)
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Canadians
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Decided shift
Multifunctionality – Fed to provincial
EU (Mid-term Review)
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Multifunctionality
Food self sufficiency
Decided shift
Budget/EU Expansion
Multifunctionality
September 12, 2002
The Policy Environment – the
Overall Trade Agenda
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Ambitious in scope and schedule
3 major thrusts
–
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–
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Multilateral: Doha Development Agenda
Regional:
FTAA and CAFTA
Bilateral:
FTAs – Singapore – Chile in negotiation;
growing waiting list (Morocco, S. Africa, Australia, etc.)
“A competition for liberalization” - If progress stalls
on one, shift attention and efforts to others
September 12, 2002
U.S. WTO Agriculture Proposal
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Comprehensive reform “package” – addresses
all 3 pillars: export competition, market access,
and domestic support.
Results in:
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reductions in trade barriers
greater equity across world agriculture; and
expanding sales opportunities for low cost
producers
September 12, 2002
U.S. WTO Agriculture Proposal
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Export Competition
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Market Access
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–
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Elimination of export subsidies in 5 years
Reduce all tariffs using Swiss 25 formula approach
over 5 years – global avg. 62% to 15% - maximum
25%
Increase TRQ’s 20% over 5 years
U.S. market already open – avg. tariff 12%; Japan
50%; Cairns 32%; EU 30%.
September 12, 2002
U.S. WTO Agriculture Proposal
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Domestic Support
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Reduce trade distorting support to 5% of value of ag
production over 5 years
Negotiate Date Certain – termination of all
tariffs and domestic supports.
September 12, 2002
Proposed Tariff Reductions
120
100
80
60
40
20
0
Final Bound
20
US
EU
Swiss25
Japan
Korea
India
September 12, 2002
Proposed Domestic Support
Reductions
70
EU
60
Japan
50
US
40
30
20
10
0
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Current Ceiling
U.S. Proposal
September 12, 2002
Negotiations Timeframe
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Ambitious overall
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Doha
FTAA
FTAs
1 Jan 2005
1 Jan 2005
As completed
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Doha Round
– March 31, 2003:
Establish Modalities
– September, 2003: 5th Ministerial – Cancun, Mexico
– January 1, 2005: Negotiations conclude
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Trade environment could be significantly changed in relatively
short time:
September 12, 2002
III. Summary Observations
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Implementation of new farm bill
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Trade Agenda has considerable momentum –
significant potential change possible in near future.
September 12, 2002
Farm Bill Implementation and
the International Trade Agenda
National Cotton Council
Board of Directors
September 12, 2002
Memphis, Tennessee
J. B. Penn
Under Secretary
Farm and Foreign
Agricultural Services