Agricultural Mischief
Leading representatives of American agriculture are mounting a campaign to restrict farm loans to poor nations. The objective ostensibly is to curtail mounting surpluses, but the result would be a new brand of protectionism--restraining competition in world export markets while crippling Third World development programs.
The desperation of American farmers is understandable. Their shortsightedness is not.
The new coalition is called Foreign Agriculture Investment Reform--FAIR. Among the leaders are Sens. Steven D. Symms (R-Ida.) and Don Nickles (R-Okla.) and Reps. Larry E. Craig (R-Ida.) and Beau Boulter (R-Tex.). The coalition’s establishment, paradoxically, coincided with the 40th anniversary of George C. Marshall’s historic speech setting forth the bold and imaginative Marshall Plan that engineered the economic recovery of Europe after World War II. The heavy investment of the American taxpayers was returned many fold in sharing the resulting global prosperity.
Under provisions of legislation that FAIR is preparing, the U.S. government would be required to vote against all loans in the World Bank and other international development banks for commodities judged to be in surplus. The United States does not have veto power in the banks, although it is currently trying to buy a veto in the InterAmerican Development Bank in exchange for increased capital. We know of no instance in which a negative U.S. vote, implementing earlier Congress-mandated sanctions, has served to cut off funds. America’s allies have never joined in this strategy. That is fortunate, because the development programs at stake--beyond their obvious importance to the poor nations themselves--hold the potential, through future growth, of providing markets for American exports. Indeed, most economists see the Third World as the largest potential market for the expansion of U.S. exports in the years ahead. Prosperity is indivisible.
We think the acronym FAIR particularly inaccurate for this campaign. The very surpluses that are the target of this coalition are largely the creation of the $26 billion in annual U.S. farm subsidies and an even larger annual subsidy that is paid by the European Economic Community to its farmers.
The attack on the international development banks is particularly unfair. Only 35% of the World Bank loans last year went for agriculture--equal to about one-tenth of U.S. and European Community subsidies. About one-third of the World Bank farm loans went for tropical agricultural products like coffee, not competing with Kansas or Oklahoma. At least 60% of the loans for cereals went for domestic food production, not for exports that could compete with U.S. products. The bank has wisely refused to deny poor nations help to feed themselves and to earn some sorely needed money from food exports.
With or without the development banks, American farmers are facing a new era of global competition. There are two obvious priorities: to give vigorous support to President Reagan’s initiative to begin the process of stripping away, throughout the world, the subsidies that impoverish everyone, and to continue the commitment of resources required to develop the poor nations to share an expanding global economy both as customers and as competitors.
