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New us farm bill...more of the same

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    New us farm bill...more of the same

    CBC News HomeWorld

    U.S. President Barack Obama takes to a
    stage backed with harvesters and hay on
    Friday as he travelled to Michigan to
    sign the nearly $1 trillion farm bill
    into law. The law cuts direct farm
    subsidies but replaces them with more
    generous government-paid crop
    insurance. (Reuters)

    i

    New U.S. farm bill coddles farmers,
    ignores Canada's plea

    When it comes to its farmers, the U.S.
    is a veritable nanny state

    ANALYSISFeb 11, 2014 9:11 AM ET

    Neil Macdonald, CBC News

    Among the many myths Americans entertain
    about themselves is the belief they're
    self-made; that any success they might
    enjoy is in spite, rather than with the
    help, of government.

    As Ronald Reagan once said, to a great
    chorus of cheers, "government isn't the
    solution to our problem, government IS
    the problem."

    Nowhere is that notion more fiercely
    beloved than in the vast spaces between
    this nation's cities; in gun-toting,
    Republican-voting, tall-standing, rural
    America.

    It's a delusion, of course. U.S. farmers
    are practically wards of the American
    nanny state.

    But it's a delusion the legislators who
    represent rural America — both
    Republican and Democrat — are willing to
    pay to maintain.

    Big time, in fact: propping up delusions
    wins elections.

    Take the outrageous story of
    Washington's hush money to Brazil. It's
    not one that's widely known in the U.S.,
    probably because it cuts against
    Reagan's government-is-the-problem
    narrative.

    But it beautifully illustrates the
    lengths to which Congress will go to
    coddle and protect certain American
    businesses, even as Washington accuses
    other countries, like China or even
    Canada, of unfair trading when they do
    the same thing.

    Brazil's hush money

    The Brazil story goes back to 2002 when
    the government of Brazil lodged a
    complaint against the U.S. government
    for unfairly subsidizing American cotton
    farmers.

    The Brazilians had an excellent case;
    Washington has for decades been paying
    farmers cash whether they grow crops or
    not.

    Some U.S. legislators tried to end
    tobacco subsidies fully in the new farm
    bill but didn't succeed. (Reuters)

    But U.S. cotton producers are a powerful
    lobby. They account for most of the
    world's cotton exports, and employ
    200,000 people in 17 states.

    Between 1995 and 2012, the U.S.
    government has paid its cotton producers
    $32.9 billion, giving them a crushing
    advantage over farmers in other
    countries, particularly those struggling
    along in poor nations like Mali.

    So, Brazil took the U.S. to the World
    Trade Organization for arbitration, and
    Brazil won.

    The Americans appealed, and the
    Brazilians won again. And again.

    Finally, in 2010, with the WTO's
    approval, Brazil began compiling a list
    of retaliatory tariffs against American
    goods, in effect threatening a trade
    war.

    It was at that point that someone in
    Washington came up with the idea of
    simply bribing the Brazilians.

    As a strategy, it was very effective.
    For $147 million a year, the Brazilian
    cotton growers agreed to shut up and let
    the Americans keep subsidizing their
    cotton growers.

    Voters in the 17 cotton-producing states
    would continue to send (mostly)
    Republicans to Congress, and Ronald
    Reagan's small-government delusion would
    remain intact.

    "Wow," said a Canadian official I know,
    when told about the sweet Brazilian
    deal. "Our beef producers would love
    some of that action."

    Not so COOL

    For livestock producers, country-of-
    origin labelling is currently Canada's
    biggest beef, so to speak, with the
    Americans.

    Since 2002, largely as a result of the
    mad cow scare in Britain, the U.S. has
    required meat producers to segregate and
    label animals from abroad, which makes
    it more expensive to sell Canadian beef
    here, and therefore injures Canadian
    meat exports. They've dropped by about
    half since 2008.

    The Canadian government regards county-
    of-origin labelling, or COOL, as a legal
    gimmick where the real intent is to
    protect the American beef industry from
    competition. (The beef in both countries
    is genetically identical, and the herds
    are for all intents and purposes
    integrated.)

    So Canada, like Brazil, took the U.S. to
    the WTO and won its case.

    But the Americans came up with a legal
    workaround that just made matters worse
    for Canadian farmers. And the recent
    farm bill from Congress failed to make
    the change Ottawa asked for, so the
    Canadian government is now threatening
    to go back to the WTO.

    Canada warns of trade retaliation as
    U.S. fails to change labelling rules

    For all the good that will do.

    As Canada has learned during its many
    years of struggling with the Americans
    over softwood lumber exports, taking on
    the protectionist American behemoth
    (which believes itself to be a fair
    trader) can be self-defeating.

    Big vs. small

    "It's not a matter of right and wrong,
    or fair and unfair, it's a matter of
    bigger and smaller," says Peter Clark, a
    former trade negotiator who runs a
    consultancy in Ottawa. "The Americans
    have enough economic clout to do what
    they want, and Canada has to keep
    looking over its shoulder."

    Agriculture Minister Gerry Ritz had been
    hoping the U.S. Congress would change
    the country-of-origin labelling rules
    when it passed the new farm bill. But it
    didn't and now, he says, Canada might go
    back to the WTO to see trade redress.
    (Canadian Press)

    Take that massive farm bill just passed
    by Congress.

    It will spend a trillion dollars over 10
    years, much more than President Barack
    Obama's stimulus spending that
    Republicans railed against so angrily,
    and yet it has gone largely unreported
    in U.S. media.

    The bill is a cornucopia of government
    subsidies and largesse — to satisfy
    Democrats, a lot of it actually goes to
    food-stamp programs in urban areas.

    But it is also a massive crutch for
    American agribusiness, mostly courtesy
    of congressional Republicans, who are
    supposed to stand for lower spending and
    less government.

    The irony here is that Canada, regarded
    by American conservatives as some kind
    of socialist co-operative, has actually
    been doing the opposite: reducing farm
    subsidies and making farmers more
    responsible for their own losses, while
    the U.S. Congress keeps the public teat
    open.

    And all the while, says Peter Clark,
    "Americans actually don't think they are
    subsidized."

    That's not to say there aren't angry
    conservative voices here. The Wall
    Street Journal called the farm bill a
    raid on taxpayers: "Handouts to
    agribusiness and millionaires? Continued
    trade protectionism for the sugar
    industry? It's all still there."

    Brazil wasn't terribly impressed,
    either. Last fall, after the arbitrary
    cuts to government spending known as
    "the sequester" put an end to
    Washington's millions in hush money to
    Brazilian cotton producers, the
    Brazilian government once again began
    readying barriers against a wide range
    of U.S. goods.

    A trade war could be under way by the
    end of this month. Unless, that is,
    Washington figures out some new way to
    protect its protectionism.

    Share this story

    Neil Macdonald
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