From Global to Local: Why Global Trade Matters

How do global trade talks affect me? Why should I care about the World Trade Organization and farm subsidies? How can I influence the outcome of international negotiations?

When we hear about the global economy, the discussion is rarely linked to our daily lives. But international trade boils down to the welfare of individual businesses and local workers, to American farmers trying to sell their goods at a larger worldwide marketplace.

Since 2001, the United States, the European Union (E.U.), India, Brazil, Japan, and Australia have discussed lowering trade barriers around the world to permit free trade among countries of varying prosperity. But the talks screeched to a halt when the U.S. and E.U. failed to resolve an impasse that’s been simmering for years.

Doha Development Agenda

The international multi-nation organization that sets the rules for the global trading system - the World Trade Organization - instigated the negotiations in Doha, Qatar in 2001. They broke down on July 24, 2006 when the United States and European Union failed to agree on agricultural subsidies and tariffs. The E.U. wants the U.S. to drastically reduce subsidies to American farmers. The U.S. wants the E.U. to lower its import tariffs and open its markets to more American products.

American subsidies

Since the Agricultural Adjustment Act of 1933, the federal government has paid farmers to produce fewer crops, thus raising the prices of their goods. The federal government pays an estimated $16 to $20 billion in subsidies directly to farmers each year.

And these subsidies are ending up in fewer and fewer hands since farmers are a shrinking population. In the 1930s, about a fourth of the U.S. population lived on six million small farms. By 1997, only 2 percent of the population lived on just 157,000 large farms that accounted for 72 percent of agriculture sales.

Subsidies change as farming changes, and they can have a range of goals, including regulating the supply level, stabilizing prices, ensuring high quality products, and regulating land use.

Subsidies are important to farms across the country. The Midwest receives corn and soybean subsidies; the Great Plains - a wheat program; the Southwest, Texas and California ask for help for cotton, rice and peanuts; the Northeast, upper Midwest and Southeast appeal for dairy programs; and growers in Florida, Louisiana, Hawaii seek support for their sugar cane.

And some farming states, including Idaho, Iowa, and Kansas, have Senators up for reelection in 2006.

Subsidies as barriers

Agricultural subsidies are often seen as trade barriers because they affect the market system by influencing product prices. Some say that developing countries don’t stand a chance against American and European farmers who get billions in subsidies and therefore can afford to charge less for their goods.

The Bush administration offered a 60 percent reduction on some farm subsidies over five years, but the European Union said it wasn’t enough. The White House wasn’t willing to budge without reassurance from the E.U. that it would open its markets to U.S. farmers in return. And the E.U. wasn’t ready to move without smaller U.S. subsidies.

Some analysts say the inflexible negotiations cost American farmers the opportunity to greatly expand their overseas trade. And developing nations like Sudan, Malawi, and Bangladesh have lost out on the chance to raise their standards of living by participating in the global market, they say.

Others say that the negotiations were fair because the U.S. could not give up farm subsidies without a fair deal for farmers. Along this line, some argue that it would be too risky to shake the farm lobby in an election year.

What this has to do with you

International trade agreements drastically impact the U.S. economy and jobs as well as the price we pay for many goods, including our food. From what’s on the table to the car we drive, global trade affects our everyday lives.

Some believe that we should protect ourselves from globalization and create legislation that limits trade and the hiring of international workers. Others say that globalization is unavoidable and that opening ourselves fully to the world market will help our businesses thrive.

What do you think?

How should farm subsidies factor into our negotiations with the world? Do you think agricultural subsidies are a good use of taxpayer dollars? Would you have liked to see the U.S. give up more subsidies in exchange for access to more international markets?

Your input matters

Your representatives in Congress DO care what you think. Especially now -- 2006 is an election year and many representatives will be looking to reconnect with their constituents. Let your congressmen and women know what you think! Give your senators a piece of your mind! To find your reps, click here.

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Article Posted on: 7/29/2006