The Multinational Monitor

November 1990 - VOLUME 11 - NUMBER 11

G U E S T   C O L U M N

Trading Away the Family Farm

GATT and Agriculture

by Mark Ritchie

Most of the United States's largest newspapers have spent the first four years of the GATT negotiations simply presenting government news releases. As we enter the final stage of the Uruguay Round, many of these newspapers have turned their editorial pages over to the Bush administration, which is desperately trying to convince the American people to back its attempt to use GATT to impose its deregulation agenda on a global scale.

The most ironic of the editorials argue that we need GATT-imposed global deregulation to "save" the various sectors of our economy which have been ravaged by the last decade of domestic deregulation, including the savings and loans, banks, airlines, insurance companies and the farm economy. Much like the "barbers" of the 18th century who would lance blood repeatedly from sick people in an attempt to heal them, some editorial writers, most notably in the Washington Post, New York Times, and the Wall Street Journal, now recommend a second deregulatory "treatment," this time on a global scale, since the first bloodletting did not seem to work.

Corruption, economic devastation and degradation of the environment have been the three most important results of domestic deregulation. If we allow the multinational corporations to push global deregulation through during this round of GATT talks, we can fully expect the same disruptions and dangers, but on a worldwide and more comprehensive scale.

Anyone who has the nerve to point out the dangers in the current approach of the U.S. government will be viciously attacked. For example, European Community Commission President Jacques Delors was called the "Saddam Hussein" of the GATT talks because he dared to reject the U.S. farm proposal to GATT which he knew would be harmful to family farmers, both in Europe and the United States and in the Third World.

But the strongest criticisms have been reserved for U.S. citizens who challenge the logic or rationale of the U.S. farm proposals. Newspaper columnists close to the Bush administration have termed critics of the U.S. GATT proposals "traitors" and called for their jailing under the infamous Logan Act, which prohibits acts which would "defeat the measures of the United States."

What are these GATT talks really about?

Although its rhetoric about GATT centers on "reforming world trade," the Bush administration's primary goal in these trade talks is to alter the domestic economic policies that are normally controlled by the Congress. The Republican Party-controlled White House sees these GATT talks as a clever way to bypass the Democratic Party-controlled Congress to accomplish two specific goals.

First, it wants to use GATT to "lock in" the kinds of deregulatory changes made over the past decade, before Congress begins to abandon deregulation. As Washington columnist Jonathan Harsch once reported, "Good Republicans acknowledge that what they are doing now in the GATT talks should make it virtually impossible for even Jim Hightower [recently defeated Texas Secretary of Agriculture] to reverse the direction of U.S. farm policy."

Second, it wants to use the GATT talks to achieve further gains in its deregulatory agenda. For years the Reagan/Bush crowd has unsuccessfully tried to convince Congress to dismantle or destroy the cooperative rural electric system, dismantle the Farmers Home Administration and to eliminate all farm programs. They believe that the GATT talks provide a golden opportunity to try one more time to eliminate all farm programs, especially those serving small- and medium-sized family farmers. The original U.S. agricultural proposal made to GATT called for a 10 year phase-out of all farm programs, including those which support moves toward more sustainable agriculture.

Liberal support for Bush's GATT agenda

Some liberals have been lured to support the use of GATT to deregulate agriculture, believing Bush administration and agribusiness rhetoric that eliminating farm programs would somehow be good for the environment or the Third World. Nothing could be farther from the truth. Let's take a look at the farm program most viciously attacked by the multinational food giants and the Bush administration: the sugar program.

Like most government policies, the present U.S. government sugar program is far from perfect, but it is based on the three principles that are necessary for any progressive farm program; 1) market prices set to reflect farmers' costs of production, thereby eliminating the need for taxpayer-funded subsidies; 2) domestic supply management, based on quantitative limits; and 3) import controls. The giant candy companies, like Nestle and Mars, along with Pepsi and Coca-Cola have fought for years to destroy the sugar program, gaining the strong support of both the Reagan and the Bush administrations. The food companies are joined by the grain merchants and cereal giants in this demand, both of whom want to buy farm goods at the lowest possible prices, no matter what it costs the farmers to produce the crops. During the past few years, these food companies and their related PACs have made large cash contributions to hundreds of senators and congressional representatives, but they have not yet been able to convince Congress to destroy the program. GATT seems to be their only hope for success.

Their plan has been to get the U.S. government to include in its GATT agriculture proposal three measures that would make the entire sugar program illegal. First, they call for a phase-out of all farm programs that support internal prices above world prices. But since world sugar trade is only 10 percent of the world's sugar production, prices in the world market are generally "dumping" prices, reflecting the need of Europe and other surplus producers to get rid of their excess sugar at any price.

Lowering internal U.S. prices to these world prices might be good for Nestle and Coca-Cola, but it would be a disaster for the thousands of family farmers in Minnesota, North Dakota and around the country who produce sugar. The argument made by some consumer groups that lowering U.S. sugar prices would somehow lower the prices paid by consumers for a Snickers candy bar or a can of Pepsi-Cola is appealing but absurd. There's only a penny's worth of sugar in either product, much less than the cost of the can or wrapper.

It is clear that although GATT can be used to drive down the price of sugar, this would not reduce the cost of most consumer goods. It could mean, however, that cheaper sugar would become an even more common additive in processed foods. But is this really what most consumers want?

The second goal of the food multinationals in the GATT talks is to make domestic supply management programs illegal or unworkable. The candy companies are joined by the farm chemical giants in making this demand. When farmers reduce their production in order to balance supplies with demand, they end up buying less fertilizer and pesticides. In fact, quantity-based supply management programs advocated by progressive farm groups protect the environment by ensuring that farmers benefit economically not by growing the largest possible crops, but by using the smallest amount of purchased inputs, such as chemicals.

The third element of the GATT-attack on the sugar program is the attempt to make import controls illegal. In the very first GATT negotiations, special provisions for agriculture were included that made it legal for nations to impose import controls, as long as they were operating domestic farm programs that included supply management.

Some Third World governments have complained that import controls in the United States limit their ability to sell crops on the U.S. market. Other Third World governments, however, have supported the need for import controls as absolutely critical to any country which is trying to balance supply with demand. They understand that if the United States ends up with a surplus of any crop, the government will dump this surplus on the world market and destroy world prices. Low world prices not only ruin the income of food exporting nations, they also make it impossible for small farmers in Third World countries to sell their crops for a profit in their own domestic markets, thereby damaging the long-term food production capacity of many poor Third World countries.

While it may be of some economic benefit to Mars candy company to import more cheap sugar, many groups, like the National Council of Churches Rural Crisis Team, have pointed out the enormous damage to small farmers and peasants that would result. In the Third World, sugar is usually grown on huge corporate-owned plantations, often created by driving away or killing the poor peasants who traditionally grew or gathered their own crops on these lands. These plantations use extremely low-paid labor. The peasants who are displaced to create sugar plantations sometimes find that their only option is to begin cropping on the hillsides of the mountains, causing extreme environmental damage.

The sugar companies have been joined in their efforts to use GATT to make import controls illegal by the fast food restaurants, who want to see GATT do away with the strict import controls on hamburger and other meats. Some environmental organizations, like the Environmental Project on Central America, have expressed alarm knowing that any change in GATT which allows for unlimited U.S. imports of sugar or beef will mean an acceleration of ecological destruction in Central and South America, as rainforests are cleared for both cattle ranches and sugar plantations.

Towards a positive GATT outcome

The most unfortunate part of the attempt by the corporations to use GATT to undermine U.S. farm programs is that it gives GATT and the whole multilateral system a bad reputation, just when we need to be strengthening global cooperative efforts. There are serious economic and environmental problems that must be addressed by multi-country efforts, and GATT could play a positive role, rather than serving the global deregulatory interests of a few greedy multinational corporations.

A wide range of concerned groups, including the National Toxics Campaign, the American Agriculture Movement and the Oil Chemical and Atomic Workers Union, have formed a national Fair Trade Campaign to oppose the most negative provisions of the U.S. GATT farm proposal, and to demand that GATT begin to play a positive role in addressing the serious problems of worldwide hunger and environmental degradation.

A progressive agenda for GATT must reject the most radical deregulation elements of the current U.S. proposal. The two most dangerous of these are the plans to replace all U.S. farm programs with welfare-type government payments, called decoupling, and the plan to eliminate all U.S. import controls, called tariffication. Another dangerous plan put forward by the United States, euphemistically called "harmonization," would lower the pesticide standards applied to imported foods.

As important as stopping these bad proposals is the need to promote a positive agenda at GATT. A progressive GATT would affirm the right of all nations to determine their own food security and safety policies. It would strengthen and enforce the GATT rules which prohibit export dumping and regulate import controls to ensure that they protect family farms in all countries, including the United States. And, finally, it would require all nations to share equitably the responsibilities of maintaining international food reserves, including the costs of storage and the burden of reducing overstocks when worldwide surpluses rise to price depressing levels.

It is important to remember that GATT is not the only forum for trade negotiations, and that trade is not the only issue that confronts us on an international level. In the near future we will be confronted with a proposed U.S. free trade agreement with Mexico, a United Nations Conference on Environment and Development, and other equally far-reaching debates, proposals and potential agreements. All of these will have an enormous impact on farmers, workers, consumers and the environment in the United States.

In the 1970s the slogan of "think global, act local" guided much of our thinking about the inter-connections. In the 1990s, we need to expand on this, developing the capacity to "think local and act global." If we are working to stop a toxic waste dump or to save our family farm, we will need to be able to influence events in Geneva, Tokyo, and Rio de Janeiro.

Mark Ritchie is the Executive Director of the Institute for Agriculture and Trade Policy, and serves as the national coordinator for the Fair Trade Campaign.

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