Parts of the 2014 farm law “send a message to trading partners that U.S. agriculture is becoming more protectionist,” writes UC-Davis economics professor Colin Carter in Choices, the journal of agricultural economics. Carter mentions crop insurance as a subject “that could be successfully challenged by WTO members.” Dairy supports and country-of-origin meat labels “are especially noteworthy in conflicting with the international trade commitments of the United States,” he writes. The latest iteration of the labels “is perhaps even more onerous than the first,” says Carter. A WTO decision is expected soon on a complaint by Canada and Mexico that the labels are a trade barrier in disguise.
The new Margin Protection Program could be challenged as an implicit subsidy for dairy exports, says Carter, who compared it to a Canadian supply management scheme that was challenged successfully at WTO by the United States and New Zealand in 1999. “The U.S. biofuels policy has driven up the price of animal feed and now the farm bill has introduced a counteracting policy to subsidize dairy farmers when their price-cost margins are low. The net effect is that the corn ethanol lobby may have inadvertently subjected U.S. dairy exports to a potential international challenge,” Carter concludes.