US AGRICULTURAL ACT OF 2014 FARM BILL
US Agricultural Act of 2014 [Farm bill]
Aziza Ahmed Al Rabea
ECO500 – Global Economics
Colorado State University – Global Campus
Dr. Theresia Wansi
May 01, 2014
US Agricultural Act of 2014 [Farm bill]
President Obama signed the Agriculture Act of 2014, which is commonly called the farm bill, on February 7, 2014. The farm bill is a statue that governs the U.S. spending on the agriculture and regulates farm production and prices. Under the new bill, the United States continues its subsidy program which is highly controversial within the U.S. and internationally. Despite the fact that the United States urged all countries to go with the principle of free trade and eliminate all trade barriers, including subsidies, it violates this by its agricultural subsidy program.
This paper is intended to discuss and explain both sides of the controversy regarding the U.S. subsidies program. The proponents of the program contend that the U.S. without subsidies will be under the mercy of other countries imports, and its farmers will be driven out of the business because of the strong global competition. However, the opponents argue that the alternative, which is free trade in agriculture, would be positive for the United States and global welfare.
Agriculture and Free Trade Theory
Historically, the agriculture sector was relatively isolated from trade negotiations until the Uruguay Round ended this in 1986. During the final meeting in Morocco in 1994, number of governments signed the Agreement on Agriculture (AOA) which was the first multilateral agreement to create binding rules on agricultural trade (Murphy, 2009). This agreement aimed to remove all trade barriers and especially to reduce trade-distorting subsidies in agriculture; the governments support through agricultural subsidies, which is one of the non-tariff barriers, is against the principles of free trade. The implementation of the agreements was expected to benefit the consumers and
Aziza Ahmed Al Rabea
ECO500 – Global Economics
Colorado State University – Global Campus
Dr. Theresia Wansi
May 01, 2014
US Agricultural Act of 2014 [Farm bill]
President Obama signed the Agriculture Act of 2014, which is commonly called the farm bill, on February 7, 2014. The farm bill is a statue that governs the U.S. spending on the agriculture and regulates farm production and prices. Under the new bill, the United States continues its subsidy program which is highly controversial within the U.S. and internationally. Despite the fact that the United States urged all countries to go with the principle of free trade and eliminate all trade barriers, including subsidies, it violates this by its agricultural subsidy program.
This paper is intended to discuss and explain both sides of the controversy regarding the U.S. subsidies program. The proponents of the program contend that the U.S. without subsidies will be under the mercy of other countries imports, and its farmers will be driven out of the business because of the strong global competition. However, the opponents argue that the alternative, which is free trade in agriculture, would be positive for the United States and global welfare.
Agriculture and Free Trade Theory
Historically, the agriculture sector was relatively isolated from trade negotiations until the Uruguay Round ended this in 1986. During the final meeting in Morocco in 1994, number of governments signed the Agreement on Agriculture (AOA) which was the first multilateral agreement to create binding rules on agricultural trade (Murphy, 2009). This agreement aimed to remove all trade barriers and especially to reduce trade-distorting subsidies in agriculture; the governments support through agricultural subsidies, which is one of the non-tariff barriers, is against the principles of free trade. The implementation of the agreements was expected to benefit the consumers and
References: Baragona, S. (2014, February 20). Brazil says us farm bill violates trade rules. Retrieved April 26, 2014, from http://www.voanews.com/content/brazil-says-us-farm-bill-violates-trade-rules-/1856057.html Barrie, L Lavender, M. M. (2014, January 24). Will cotton subsidies ignite new trade dispute?. Retrieved April 26, 2014, from http://www.ewg.org/agmag/2014/01/will-cotton-subsidies-ignite-new-trade-dispute Carbaugh, R.J (2011) Edwards, C. (2007, June 28). Ten reasons to cut farm subsidies. Retrieved April 26, 2014, from http://www.cato.org/publications/commentary/ten-reasons-cut-farm-subsidies Griswold, D Lavender, M. M. (2014, January 24). Will cotton subsidies ignite new trade dispute?. Retrieved April 26, 2014, from http://www.ewg.org/agmag/2014/01/will-cotton-subsidies-ignite-new-trade-dispute Nixon, R Panagariya, A. (2005), Agricultural liberalisation and the least developed countries: Six fallacies. World Economy, 28: 1277–1299. doi: 10.1111/j.1467-9701.2005.00734.x Smith, W., & Imbornoni, B Riedl, B. (2007, June 20). How farm subsidies harm taxpayers, consumers, and farmers, too. Retrieved April 26, 2014, from http://www.heritage.org/research/reports/2007/06/how-farm-subsidies-harm-taxpayers-consumers-and-farmers-too