May 8, 2008

Does Bush Have The Balls To Veto US Farm Bill?

The success or failure of the WTO Doha Round could depend upon the answer. This article from the Wall Street Journal explains the issue well. We quote some key passages:

Presidents don't usually veto farm bills. But now President Bush seems intent on making good on his threat to reject the nearly $300 billion farm monstrosity advancing through Congress.
Back in November, the White House threatened to veto the legislation because – in addition to the usual pork barrel projects – it contained trade-distorting subsidies. These would sow havoc in our international agreements, and perhaps lead to markets being closed to American products.

Congress hasn't stripped out the offending subsidies, even as a House and Senate conference are now putting the final touches on the bill. That leaves Mr. Bush with two options: Reveal that he issued an empty threat, or make use of his veto pen.

This farm bill would be, as some have noted, the costliest in history. Mr. Bush called it "massive and bloated." The price tag on the previous farm bill in 2002 was under $200 billion. Today it is almost 50% higher. This comes at a time when, as a recent Office of Management and Budget report notes, the farm economy "has never been stronger" and there's no need to increase supports and subsidies "to people who are among the wealthiest 2% of Americans," as Congress's subsidies would do.

The president's veto threat of the farm bill was an answer to complaints that U.S. farm subsidies are the main obstacle to completing the Doha Round.

In February, Deputy Agriculture Secretary Charles F. Conner put the issue succinctly: "We need to be in compliance" with WTO rules, otherwise "our $91 billion in farm exports will suffer." He also noted that should the U.S. not comply with WTO rules, the country would be vulnerable and probably lose high-profile agricultural disputes. The U.S. lost just such a dispute in 2005, when the WTO found that U.S. cotton subsidies violated its international trade agreements.

There's another benefit to vetoing the farm bill: Reaching a Doha deal will help forestall efforts to turn, instead, to regional or single-country trade deals. These pacts blossomed in recent years – there are now more than 380 of them world-wide – and are billed as "free trade agreements." In fact they are preferential trade agreements.