-Lame Duck Congress Ratifies GATT
-Uruguay Round Sets Ag in New Direction
-Consequences of New GATT Negative for Farmers, Consumers,
-Crafting Sustainable Farm Programs Nearly Impossible
LAME DUCK CONGRESS RATIFIES GATT
Members of the 103rd Congress returned last week for a special
lame-duck session to pass implementing legislation for the Uruguay
Round of the General Agreement on Tariffs and Trade. President
Clinton prepared and submitted the 4,004-page GATT implementing
legislation to Congress September 27. For a variety of political
reasons, Clinton postponed the vote on GATT until after
Thanksgiving; entrusting what he called a Rhistoric vote for American
workers, farmers and familiesS to nearly 100 lame-duck members of
Congress who will not return to implement the agreement next year.
Despite a wide array of opposition to the trade accord over potential
negative implications for agriculture and the environment, the House
of Representatives voted in favor of the accord November 29
followed by the Senate December 1.
Some nations will begin implementing the Uruguay Round January 1,
when the World Trade Organization replaces GATT. Others who have
not yet approved the accord will have until 1997 to do so. Of the
123 GATT contracting parties, fewer than 45 have ratified the trade
pact. Many of the US.' key agriculture trading partners and
competitors are among those who have yet to approve
implementation of the Uruguay Round. Australia, Japan, South
Korea, India and the European Union, for example, are still in the
process of considering adoption of the accord. Much national debate
in these countries over agriculture and other issues has stalled their
The GATT Uruguay Round is expected to directly affect family
farmers around the world. In the United States mandated imports,
cuts in farm programs and restrictions on environmental farm
incentives will seriously limit the arena within which Congress can
negotiate sustainable farm bills.
URUGUAY ROUND SETS AG IN NEW DIRECTION
The General Agreement on Tariffs and Trade has historically
supported countries' rights to craft food production systems that
support national needs and demands. When GATT was signed into
effect in 1947 by 25 member countries domestic agriculture laws
were specifically protected by the international body.
Today, however, more than 120 contracting parties belong to GATT
and participate in the trade negotiation process largely focused on,
among other issues, dismantling domestic agricultural provisions.
The Uruguay Round took more than seven years to draft amid
controversy, particularly over agricultural tariffication provisions.
The final terms of the Uruguay Round mandate serious changes in
U.S. farm laws and limit the future ability of our country to craft
sustainable farm legislation.
CONSEQUENCES OF NEW GATT NEGATIVE FOR FARMERS, CONSUMERS,
The United States is not required to make many immediate farm
program changes to satisfy new GATT rules. However, by approving
the GATT Uruguay Round, Congress committed the United States to
uphold the following future conditions and changes in U.S. farm
Mandated Imports and the Elimination of Import Control Laws.
The GATT final text mandates minimum imports of 5 percent of
domestic consumption for every farm commodity. For items where
the U.S. currently imports less than 5 percent, such as dairy products,
peanuts, soybeans and in some years wheat, 3 percent must first be
imported and then raised to 5 percent within 6 years. For example,
under the new GATT the United States will be required to import
roughly 5 billion pounds worth of dairy products per year, which
could displace 5-10,000 small to medium-sized U.S. dairy farmers.
Import control laws which protect farmers from low priced imports
subsidized below farmers' cost of production are banned. Existing
U.S. import control laws, like Section 22 and the Meat Import Act,
must be converted to tariffs and reduced by 36 percent over the
next 6 years.
Farm Program Cuts.
Domestic farm programs were divided into two categories under
GATT - those that are not subject to GATT mandated cuts and those
that must be reduced or eliminated.
The first set which remains untouched by GATT regulations includes,
research; extension; some conservation programs; and direct
government payments like deficiency payments. The second set of
farm programs which must be reduced by 20 percent from a 1986-
90 base period over the next 6 years includes all programs which
stabilize farm prices and reduce direct costs. Despite promises
made by outgoing Agriculture Secretary Mike Espy, CCC loan rates
are eligible for cuts under the GATT.
Not only are these programs set for 20 percent cuts, they are also
bound against increases regardless of future increases in farmers'
input costs, health care premiums, taxes and environmental
mandates. This prohibition makes it nearly impossible to overcome
the chronic negative economic conditions facing most family
GATT states that budgetary outlays for direct export subsidies must
be reduced by 36 percent over six years. In addition, the quantity
of goods to which these subsidies can be applied must be reduced by
21 percent compared to the 1986-90 reference period.
However, because GATT members agreed to use 1986-1990 as the
reference period, the final agreement has permitted an overall
increase in both the percentage of export dumping for some crops
and in the quantity of some commodities that can be dumped.
Therefore, countries, like the U.S. and EU will be able to continue
dumping subsidized commodities on the market and to continue to
force down international and domestic prices below farmers' costs of
Harmonization of Domestic Food Safety Laws.
Federal and state food safety standards that are more strict than
global standards will be open to GATT challenge as trade barriers if
applied to imported food. This process of setting ceilings on food
safety regulations is called harmonization.
This means that food safety standards applied to imported foods will
be under downward pressure towards generally less stringent
international standards. Although domestically produced foods will
still be required to meet local, state and federal government
standards, there will be significant pressure to lower these standards
to the weaker international levels to avoid placing U.S. farmers at a
CRAFTING SUSTAINABLE FARM PROGRAMS NEARLY IMPOSSIBLE
Overall, the most serious consequence of the GATT Final Act for U.S.
producers is its impact on the U.S. farm movement toward economic,
environmental and social sustainability. There are a number of
specific provisions within the agreement that work against current
efforts to encourage farmers to farm in more environmentally
First, in Annex 2 of the GATT text, local, state or federal
governments are specifically prohibited from providing economic
incentives to encourage farmers to adopt environmentally sound
Second, the lower farm prices and resulting lower farm income
resulting from GATT will make it much more difficult for farmers to
move toward more sustainable practices. Lower farm prices have
traditionally resulted in:
%increased land under cultivation;
%cultivated land farmed with more chemical intensity to increase
%organic producers encounter more difficulty in market;
%agricultural land is more rapidly converted to industrial and
%families owning their land are forced out and replaced by
absentee/corporate owners; and
%diversified livestock producers are replaced by large-scale feedlots.
Third, The GATT Final Act specifically allows for the replacement of
domestic farm programs with GATT-legal "decoupled" government
payments. Family farmers have traditionally opposed this type of
farm subsidy which they call "welfare payments." Past and current
decoupling proposals in the United States call for a 30 percent cut in
CCC loan rates and the elimination of set-asides and other supply
The National Farmers Union and National Family Farm Coalition are
working with Citizens Trade Campaign to monitor the impacts of
GATT on family farmers, rural economies, the environment,
consumer food prices and food quality. These groups will continue
working with Congress and the Administration to create viable
economic and environmental opportunities through the 1995 farm
bill and in drafting yearly budget acts and by pressuring GATT
members when they reconvene in 5 years to revisit agriculture
Sources: "Tokyo Move on Uruguay Round," FINANCIAL TIMES,
December 2, 1994; Frances Williams, "GATT Criticizes Canada's High
Farm Trade Tariffs," FINANCIAL TIMES, November 23, 1994; Mark
Ritchie, "Final Agriculture Text of the Uruguay Round of the General
Agreement on Tariffs and Trade," IATP, December, 1993; "National
Farmers Union President Reacts to GATT Vote," NFU NEWS RELEASE,
December 1, 1994; "U.S. Leads GATT Ratification Rush," FINANCIAL
TIMES, December 6, 1994; Kevin Watkins, "Agriculture and Farm
Trade in the GATT," CAP BRIEFING, March, 1989.
We welcome comments and suggestions: contact Harry Smith at
FARM AID, (617) 354-2922. We encourage the reproduction of
FARM AID NEWS. Produced by The Institute for Agriculture and
Trade Policy (IATP) for FARM AID. Editors: Gigi DiGiacomo and
Harry Smith. For information on other agriculture bulletins, contact
IATP: (612) 379-5980.