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Unprecedented farm subsidies in the U.S. have the whole world crying foul

On May 13, President George W. Bush signed a farm bill that will put $190 billion in the pockets of American farmers over the next 10 years. That’s an increase in subsidies of approximately 75 per cent.

"Farming is the first industry of America – the industry that feeds us. The industry that clothes us and the industry that increasingly provides more of our energy," he told America. "The success of America’s farmers and ranchers is essential to the success of the American economy."

Because the same can be said of every single functional economy on the planet – and because subsidies go against everything free global trade stands for – the bill has been blasted by the European Union, African nations, Asian nations, Australia and Canada. Not only do the subsidies make it impossible to compete with American products on the world market, they also continue to undervalue the goods that are traded, which keeps prices low.

The subsidies are also hypocritical. In the past year the U.S. has slapped tariffs on European steel imports and Canadian softwood lumber on the grounds that both commodities are subsidized.

On one hand, the United States has touted the global free trade as the answer to hunger, poverty and terrorism, urging countries to reform their governments and open up their markets to the rest of the world.

On the other hand, they penalize countries who have an advantage in the U.S. market by slapping tariffs on goods that compete with American-made goods.

Is it a case of one hand not knowing what the other is doing – unlikely, given that the hands belong to President Bush – or an attempt to capture the world market on absolutely everything by getting rid of the competition at home and abroad?

More likely it’s the result of a new government eager to please its constituents, coupled with some genuine good intentions to help American farmers, steel and softwood lumber producers by every means possible, whether those means are conflicting or not.

Some Capitol Hill watchers have also suggested that the Bush government is intent in attaining majority in the Senate, which is currently split 50-50 between Democrats and Republicans. Rural votes from happy, well-paid farmers could help make that happen this November.

And besides, it’s the U.S. we’re talking about – what are we going to do about it?

Both Australia and the European Union are taking the matter up with the World Trade Organization, which is essentially powerless to make the U.S. co-operate with any discussions or enforce any ruling.

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