Agriculture Policy & Farm Bill Briefing Book
Congressional Research Service

Redistributed as a service of the National Library for the Environment

Agricultural Trade and Foreign Food Aid

Geoffrey S. Becker

Depressed farm prices and sluggish exports, which recently have characterized the U.S. farm economy, make trade liberalization an important agricultural issue. Many producers look to overseas markets and trade negotiations to improve access to those markets as a source of enhanced economic well being for U.S. agriculture. At the same time, some producers are concerned about the influx of imports of products that compete with U.S. domestic production and that may adversely impact their own prices and incomes. Global competition for food and agricultural products is also affected by some countries' use of export subsidies and other forms of export competition (e.g., export credits, state trading enterprises, food aid).

Negotiations now underway in the World Trade Organization (WTO) could lead to a strengthening of the multilateral rules and disciplines for agricultural trade established by the 1994 Uruguay Round Agreement on Agriculture (URAA). The URAA provided for reduced agricultural import barriers and for curbs on trade distorting domestic support and export subsidies. Now, the United States and its trading partners are negotiating the extent to which there should be further changes in rules for market access, export subsidies, and trade distorting domestic farm support. Bilateral and regional trade negotiations will also affect conditions of competition for U.S. agricultural products.

The Bush Administration is seeking fast track authority (which it is calling trade promotion authority) in the 107th Congress to enable it to effectively conclude these trade negotiations. This authority has been used by Presidents to negotiate past agreements and submit them to Congress for expedited consideration. As debate intensifies, efforts will be made to demonstrate how these past agreements have benefitted the agricultural sector overall. And, as in the past, agricultural groups are likely to press for language in a fast track bill that recognizes their industry's "special status" and/or makes special concessions to them.

Agricultural trade negotiations also will be taking place as Congress considers legislation to modify or replace existing farm law - the 1996 FAIR Act. Consequently, Congress will be faced with the problem of designing a domestic farm policy that is consistent with both existing and potential multilateral farm trade rules. Other important considerations are the extent to which, or if, other countries' willingness to reduce export subsidies should be matched by changes in U.S. export credit or food aid programs, which also are up for renewal as part of the farm bill.

Debate over the funding for, and objectives of, farm export and food aid programs, is also likely during consideration of the annual USDA appropriations. Deliberations are expected to intensify after the Administration submits its detailed FY2002 budget in April.

In Congress

Hearings on the next omnibus farm bill are already under way in the House and Senate Agriculture Committees, although the trade and aid programs have not been an early focus. In addition, these panels and others with jurisdiction over trade issues are expected to take up legislation on fast track (trade promotion) negotiating authority, and consider various trade agreements that have or will be negotiated.

The Trade and Development Act of 2000 (P.L. 106-200) includes a list of explicit U.S. objectives for agriculture in World Trade Organization (WTO) negotiations. Similar objectives might be considered in new fast track legislation. Several fast track (trade promotion authority) bills already have been introduced in the 107th Congress, including S. 136, S. 333, and H.R. 627. Also during the 106th Congress, the President requested and Congress enacted legislation (P.L. 106-286) to accord China permanent normal trade relations (NTR) status. This legislation, which extends to China the same low tariffs applied to other member countries of the WTO, will help ensure that the United States can take advantage of market openings for agriculture and other sectors when China enters the WTO. However, because China is not expected to enter the WTO until later this year at the earliest, it appears more likely that the 107th Congress will confront the issue of temporarily extending NTR status to China for another year, which must now occur in accordance with the Jackson-Vanik Amendment to the Trade Act of 1974 (P.L. 93-618, section 401). (For more information, see China's Accession to the WTO.)

CRS Products

CRS Report 98-254(pdf), Agricultural Negotiations in the World Trade Organization.
CRS Report RL30612(pdf), Farm Support Programs and World Trade Commitments.
CRS Report RL30789(pdf), Agricultural Trade in the 106th Congress: A Review of Issues.
CRS Issue Brief IB10077, Agricultural Trade Issues in the 107th Congress.
CRS Issue Brief IB98006, Agricultural Export and Food Aid Programs.

Page last updated March 27, 2001.

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