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Friday, 10 May, 2002, 05:14 GMT 06:14 UK
Anger greets US farm aid
Kansas corn field
Farm states matter in mid-term elections
An international outcry has greeted the decision by the US senate to pass a subsidy bill offering US farmers $173.5bn (118.7bn) over ten years.

It will have an adverse impact on most of the rest of the world

Bill Reinsch
National Foreign Trade Council
The furore arose from representatives of rich countries and poor alike.

"It is a very sad day for the poor farmers of the developing countries," said a senior World Bank official, speaking on condition of anonymity.

"We are absolutely appalled," said Oxfam America policy department director Jo Marie Griegsgraber.

"Logically, it will have an adverse impact on most of the rest of the world," said Bill Reinsch, president of the National Foreign Trade Council.

Australian prime minister John Howard made it clear that the bill - which boosts crop and dairy subsidies by two thirds to shore up support in an election year - runs directly against the US's professed support for freer trade.

"The farm bill is very detrimental to Australia's interests," he said. "We are a close ally of the US... but that won't stop us complaining and campaigning in the strongest terms."

Analysts agreed that the decision would also weaken the US' negotiating position and hold up future progress of free trade talks, not least because it comes just months after a three-year steel tariff regime to protect US steelmakers came into effect.


President George W. Bush has already indicated that he would approve the 10 year bill if it was passed by the Senate.

Activists point out that the US had been a fierce proponent of free agricultural trade in last November's World Trade Organisation (WTO) meeting in Doha, Qatar.

But US trade representative Robert Zoellick insisted this week that the US remained committed to free farm trade, and stressed that the European Union and Japan both had higher levels of subsidies than the US.

The EU has said it is considering whether to file a complaint to the WTO if the bill is signed into law by Mr Bush.

Strained relations

Canada's agriculture minister described them as a "serious blow to US credibility" in global free trade negotiations.

US relations with its main trading partners are already strained by President Bush's decision to levy tariffs of up to 30% on steel imports, a move which is being investigated by the WTO.

The EU is also set to levy up to $4bn of tariff increases on US products in a dispute over tax subsidies to the foreign sales of US companies.

'Vitality protection'

The bill proposes increasing state payouts to US farmers by 70% and authorises the spending of $180bn (123bn) in farm subsidies over the next 10 years.

As well as increasing aid to wheat and cotton farmers, the package diversifies farm aid to cover producers of milk, lentils, honey, chickpeas, mohair and other products.

Higher farm subsidies will provide a welcome boost to the economies of key mid-Western states which President Bush needs to retain to win re-election in two years' time.

Mr Bush has previously said it protected the "long-term vitality" of US agriculture.

See also:

03 May 02 | Business
US farm aid threatens new trade row
02 May 02 | Business
EU-US trade tensions rise
29 Apr 02 | Business
US farm bill raises trade tensions
14 Jan 02 | Business
Q&A: US-EU trade war
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