Here's something unexpected: the World Trade Organization (WTO) -- one of the most powerful forces for globalization and international homogenization -- might actually help the local foods movement in the United States.
A little while ago I wrote about how planting restrictions in certain farm subsidy programs. These restrictions impede the creation of a local food system by requiring farmers to permanently withdraw from the program if they grow fruits and vegetables on the program land. Clearly, no one should receive corn, soy or cotton subsidy payments for land that is used to grow fruits and vegetables, but I think it makes no sense to permanently penalize farmers for trying to grow crops that people who live nearby might want to purchase.
It turns out that the WTO might have a problem with those planting restrictions. It is another example of the messiness that exists at the intersection of international relations and domestic politics.
A recent FarmPolicy.com newsletter explained the WTO's concerns and the implications for U.S. farm policy in great detail. In less detail, the WTO agreements strive to eliminate all trade-distorting subsidy programs (subsidies that give certain producers an advantage over others), thus allowing something resembling "free trade." In WTO documents, farm subsidies are classified into three "boxes" according to their trade distorting effects "Blue box" payments are the most trade distorting and are essentially forbidden by the trade agreements; "amber box" payments are marginally distorted and are subject to a limit; "green box" payments do not distort trade and therefore have no limits.
The U.S. has been classifying two types of subsidies (production flexibility
contracts and direct payments)
as green box payments even though they include planting restrictions.
The WTO has ruled in the past that planting restrictions are trade
distorting, and therefore should go into the amber box and be subject
Without getting into the complicated issue of whether our farm policy should be driven by a relatively secret process in some international bureaucracy (something which can pose great dangers to environmental and labor laws), this case poses a messy problem for Congress, especially the so-called free traders. Do they remove the planting restrictions to head off potential conflict with other WTO-member states? Or do they take a chance that the current programs will be ruled to be acceptable in the future despite the previous rulings? Congress is in a tough place here (and it's a self-imposed tough place -- in the past they have directly or indirectly approved the WTO agreements and farm programs), with any action likely to annoy one or more interest groups. For example, removing the planting restrictions will cause conflict with big vegetable growers in California and Florida. But if the WTO rules that the programs are in violation of the rules, other nations could take retaliatory action, like imposing a tariff on imported U.S. corn or meat, thus annoying different interest groups in the U.S.
Perhaps in response to concerns about WTO actions, Congress is starting to nibble away at planting restrictions, with both the House-passed and Senate Ag Committee Food and Farm Bill containing pilot programs allowing planting flexibility on previously subsidized acres. The pilot programs are a good start, and will demonstrate that local demand for local foods is a good reason to change farm policy, regardless of what the WTO bureaucrats do.
The three boxes have the following characteristics:
- The green box is for non-trade distorting payments. They are neither directed at specific products nor connected to production or prices. Some green box programs include rural development, renewable energy, and land conservation. They are allowed under WTO agreements without limit.
- The amber box is for trade distorting payments. These are payments directly connected to production levels or that support prices such as export credits or commodity subsidies. WTO agreements allow "minimal" amber box payments (roughly 5% of agricultural production for developed nations, 10% for developing nations).
- The blue box is for programs are similar to amber box programs, but that require limits on agricultural production to prevent surplus output from flooding the international markets. The blue box programs are seen as transition away from the amber box.