President Reagan moved ahead Monday on his commitment to phase out agricultural export subsidies and other government programs that distort world trade in farm products, calling on all nations to join in the program. It is a good and useful initiative, with potentially historic consequences.
The plan can work only if all major producers join, for so long as a single major exporter continues with subsidies, the world market cannot be free. That principle was recognized at Punta del Este, Uruguay, earlier this year when representatives of 73 nations agreed to make farm trade a major element of the new round of world trade talks, and it was affirmed even more explicitly in May by the 24 industrial nations making up the Organization for Economic Cooperation and Development. But at the June summit meeting in Venice the 10 key nations represented there could agree only in principle, and bowed to efforts led by West Germany to strip their resolution of any reference to a deadline.
In other words, Reagan faces an extremely difficult task, particularly in winning support from the European Economic Community. It is the United States and the European Community, each bestowing $26 billion or more in annual subsidies on their farmers, that have done the most to distort both world production and the global market. In neither the EEC nor the United States has the subsidy program succeeded in making farmers who are most in need the primary beneficiaries. In neither part of the world do farmers represent a significant percentage of the population. But in selective nations--including the United States, West Germany and France--the farmers have enormous political leverage that frustrates change.
Economic pressures for fundamental change are building, however. The European Community now spends the majority of its budget on its farmers at the very time when it desperately needs funds for research and development in new industrial technologies. The United States also is looking more closely at budget priorities. The rethinking is further spurred by the mounting surpluses of farm products that stand as witness to a failed policy even as the market distortions punish poor nations dependent on commodity exports.
“We’re cautiously optimistic,” Clayton Yeutter, the U.S. trade representative, commented.He could at least point to the strong support of Australia and Canada, major grain exporters. Reagan’s leadership makes the hope for free farm markets by the end of the century more realistic.