If you want open international markets, it’s time to curb agricultural subsidies
In a new R Street Institute policy study, Trade Policy Analyst Clark Packard lays out the benefits of liberalization and why distortionary domestic subsidies ultimately undermine free trade, thereby hurting American farmers, ranchers and consumers.
“As Congress begins piecing together the next farm bill, it is important for legislators to understand that overly generous domestic agricultural subsidies hamper our ability to expand foreign trade in agricultural products,” said Packard. “To get serious about opening markets abroad, policymakers need to prioritize curbing domestic agriculture subsidies.”
Given the failure of the World Trade Organization’s Doha Round and the Trump administration’s professed hostility toward multilateral negotiations, broad-scale multilateral reform may seem unrealistic. Thankfully, the administration’s budget proposal would cut crop insurance subsidies and commodity support payments in ways that, if adopted by Congress, would curb agricultural subsidies by $38 billion over 10 years, giving the United States major leverage to negotiate better terms for American farmers and ranchers abroad.
“It’s always tempting to kick the subsidy reform can further down the road,” notes Packard. “But delaying difficult but necessary reforms only hampers our ability to expand market access abroad. In order to make a credible case for further liberalization, we must lead by example and cut our own agricultural subsides.”
R Street is a nonprofit, nonpartisan public policy research organization whose mission is to promote free markets and limited, effective government. It has headquarters in Washington, D.C. and five regional offices across the country. Its website is www.rstreet.org.