Canadian official sees veto in U.S. Farm Bill’s future

(Resource News International) — The latest U.S. Farm Bill could be vetoed by President George W. Bush in coming weeks unless significant changes are made to the controversial legislation, according to Stephen Lavergne, director of U.S. trade advocacy for Agriculture and Agri-Food Canada.

U.S. Farm Bills, re-drafted every five years, play a significant role in determining U.S. agricultural policy. The last bill (the Farm Security and Rural Investment Act) was drafted in 2002.

A conference committee is currently in place to iron out differences in the versions presented by the U.S. House of Representatives and the U.S. Senate. Yet even if their efforts are successful and a version acceptable by both chambers is drafted, the final test for the package of legislation will come from the White House, where Bush has the option of rejecting it.

“Certainly the acting secretary of agriculture has re-affirmed that unless certain actions are taken the administration would recommend a veto,” Lavergne said. He did not wish to speculate, however, as to whether changes will be made.

“Right now they’re kind of stuck at this point,” said Kristin Sosanie, spokesperson for the U.S. House agriculture committee. “It is still early but the administration has said they would recommend a veto if there is any new revenue or changes to the payment limitation.”

The ongoing negotiations are of interest to both the Canadian government and Canadian producers. It is their position that many trade-distorting U.S. subsidies stem from Farm Bill programming and that although new legislation is in the works, the proposals being considered do not address Canadian concerns.

“We continue to express our concerns to the U.S. Congress. Specifically, the government is concerned with the level of support provided to certain industries. We question some of the programs that tend to mask market signals and create incentives to overproduce,” Lavergne said.

Michael O’Shaughnessy, spokesperson for Canada’s foreign affairs and international trade department (DFAIT), said “Canada remains concerned that the United States has breached its international obligations by providing trade-distorting domestic support to U.S. agricultural producers in excess of its WTO commitments.”

“Canada is trying to level the playing field for Canadian farmers who have to compete against large trade-distorting U.S. subsidies,” O’Shaughnessy said. He added that the government expects the U.S. to live up to its World Trade Organization (WTO) obligations.

O’Shaughnessy and Lavergne emphasized that Canada’s objections to trade-distorting domestic support are supported by the WTO dispute settlement panel on U.S. agricultural subsidies that was established at the request of Canada and Brazil on Dec. 17, 2007.

The dispute panel will examine Canada’s claim that for a number of years the U.S. exceeded the amount of subsidies allowed under WTO regulations. It is Canada’s position that a number of subsidy programs were mislabelled and thus not taken into account by the U.S. when it calculated its expenditures.

When asked which programs Canada felt were mislabelled, Lavergne said he did not wish to comment while the case was underway.

Don Connick, with the Agricultural Producers Association of Saskatchewan (APAS), expressed concern that the latest U.S. Farm Bill will continue to place Canadian producers at a disadvantage.

Predictability

“My understanding of the U.S. Farm Bill is that it stabilizes prices, which in turn stabilizes production and allows a value-added industry to be built alongside agricultural production. In Canada we have margin-based programs which have no predictability and lead to fluctuations in production. It deters growth of a value-added agricultural industry because commodity supplies are not predictable, like they are in the U.S.”

Using ethanol as an example to highlight his point, Connick said, “I think that if we’re going to build industries here like an ethanol or bio-based plastics industry, then we need to have some predictability in the production of raw materials.”

Even the land conservation programs in the U.S. Farm Bill provide advantages to U.S. producers, Connick said. “The U.S. has nearly 40 million acres of wetland or grassland in the conservation reserve program, which provides advantages in two ways. It has a societal advantage but it also takes marginal land out of production and helps to stabilize commodity prices.”

Looking ahead, the House agriculture committee, led by Rep. Collin Peterson, would like to have a House-Senate bill done before a week-long break beginning Feb. 18. That would provide enough time to deal with a veto before a short-term extension of the 2002 Farm Bill expires on March 15. In the event of a veto, the possibility exists that legislation dating back to 1949 could come into effect, including payment levels established at that time.

“Chairman Peterson has said that it is very hard to do a straight extension of the current law. What would happen in March is when the law expires, if we don’t re-authorize it, it would revert back to the 1949 Permanent Law,” Sosanie explained.

“He said that if the administration is not willing to budge on [the Farm Bill], that is something he is willing to let happen and that they better get ready to implement it,” she continued.