Trump farm bailouts raise risks of trade reprisals: critics
U.S. President Donald Trump’s billions in bailout payments for farmers probably pushed the U.S. past international treaty limits on subsidies, potentially inviting retaliation from trading partners, according to an advocacy group.
The Environmental Working Group, a critic of farm subsidies, calculated that the aid pushed “trade distorting” subsidies covered under a 1994 international agreement to US$34 billion in 2019, far above the pact’s US$19.1 billion cap for the U.S.
The analysis projected the U.S. probably will exceed the cap again in 2020.
The European Union, China and five other World Trade Organization members have already raised complaints that Trump’s farm assistance payments may violate international rules. Canada, Brazil, Australia, New Zealand and the EU raised more questions about the assistance payments in advance of a WTO agriculture panel meeting last week in Geneva. The U.S. Agriculture Department denies it’s violating the treaty.
“The administration will ensure that all payments are consistent with the WTO Agreement on Agriculture, including obligations capping trade distorting domestic support,” a USDA spokesperson said in an emailed statement.
Several independent analysts agreed that the U.S. is likely in violation, though any official action by the WTO might not come for years, if at all. Still, other nations could respond with retaliatory measures on U.S. products or escalate their own farm subsidies, cheapening their exports and lowering global prices.
Breaching the international limits “cuts the legs out” from long-standing U.S. efforts to control other countries’ subsidies of agricultural production, said Jeffrey Schott, a former U.S. Treasury official and trade negotiator in Republican and Democratic administrations who is now a senior fellow at the Peterson Institute for
International Economics.
“Agriculture subsidies have been a big problem,” Schott said.