The United States is behaving with blatant hypocrisy when it comes to farms subsidies. It trumpets the virtues of free trade when it comes to getting its products into foreign markets and takes other nations to the World Trade Organisation seeking penalties if other nations subsidise their trade products or attempt to exclude US products on the grounds of health or safety. The US acts tough on enforcement of pharmaceutical patents when another nation attempts to make generic drugs to meet national emergencies (such as AIDS in southern Africa immediately threatening millions of lives), yet as soon as the US has a national emergency (such as anthrax posing a remote threat) it starts talking about breaching patents so it can make generic drugs.
And so it was this week that the US ignored pleas from Australia and others and continued with its plan to massively subsidise US farmers. The US support package to farmers will run to the equivalent of $A340 billion. It will mean that Australia’s unsubsidised farmers will have little chance to compete in the US market.
Australian Trade Minister Warren Truss points out that US farmers – once the most efficient in the world – are now dependent on the taxpayers for half their income.
US President George Bush is right to trumpet the virtues of free trade, because it carries significant benefits. The benefits are not only for exporting countries, but also for consumers and taxpayers in importing countries who pay twice over. They pay through their taxes to subsidise their farmers who can then put produce on the shelf more cheaply. In this environment foreign competitors cannot get a toehold. It means there is no competition in the US to give their farmers an incentive to achieve efficiencies. Instead, they just put their hand out for more government money and the taxpayer and consumers pay.
American consumers should be kicking up a fuss. The history of US farm subsidies is that the more they get the more they want and they get into the habit of calling on the taxpayer instead of getting more self-reliant.
Further, under the subsidy scheme, US farmers will get paid for over-production. They will be paid for producing products not wanted in the US which then might be dumped on the world market, denying farmers from Australia or other countries from getting into those markets. There is no incentive to change to change to another product to meet a market demand – as ahs happened in Australian agriculture over the years.
The US stand on farm subsidies undermines its other more sound message on free trade. The hypocrisy is obvious.
This is not sour grapes on Australia’s part. Moreover, there should be no question of linking security with trade. Australia should not get some special arrangement with the US just because we are joining them in Afghanistan or because we were with them in Vietnam. The free-trade argument should run on its merits. If there is to be a free-trade agreement with the United States it will be a two-way street – the consumers of both countries benefiting from lower prices and the industries of both countries benefiting from competition.
Unfortunately, these farm subsidies will jeopardise a lot of the benefits that would flow from a free-trade agreement with the US.
Australia did not do enough work in the US against the subsidies. An eleventh-hour delegation pleading our case on the grounds that we are an ally was no substitute for a longer campaign pointing out that it is not the US’s interests to engage in subsidisation.