Center for American Progress

Doha Deal and New Farm Policy: Bold Action Required

Doha Deal and New Farm Policy: Bold Action Required

Completing the New Trade Accord and Drafting a New Farm Bill Requires an Investment in Innovation and Rural America's Competitiveness

Jake Caldwell on why the Doha Round will require the federal government to think creatively on agriculture and renewable energy policy.

The sudden burst of enthusiasm among the world’s leading trading powers to complete the long-stalled Doha Round of multilateral trade negotiations within the next several months is welcome news. Equally encouraging are signs that the Bush administration’s 2007 Farm Bill, which is expected to be unveiled shortly, will contain laudable recommendations, including a boost to biofuels research and a potential increase in the number of farmers eligible for benefits.

Nonetheless, numerous questions remain as to whether the Bush administration is truly committed to doing the hard work in the 2007 Farm Bill and in the final push of the Doha Round. The administration needs to transform its rhetoric into reality to produce real change down on the farm and in world trade. Without creative and sustained leadership by the United States at home and abroad, we will miss a unique opportunity to move both our nation’s farm and trade policy forward together and complete a final trade and development pact that all members of the World Trade Organization can sign.

The United States has the ability in the next few months to make key policy making decisions at home that could well spur our trading partners to make similar efforts. Agricultural tariffs and subsidies are the main sticking points to a final trade accord–obstacles that the Bush administration, in league with congressional leaders on both sides of the political aisle, can overcome with creativity and nerve.

Georgetown University Law Center professor Dan Tarullo, a Senior Fellow at the Center for American Progress, made the point recently in his paper, The Case for Reviving the Doha Round, that these are back-to-basics trade negotiations that are focused mostly on tariffs and trade-distorting subsidies, not controversial domestic economic and regulatory policies that have characterized the Uruguay Round and many bilateral agreements. The Doha Round’s modest ambition is a virtue.

The Doha Round emphasis on agricultural policies and trade allows Washington to negotiate increased international market access for competitive U.S. farmers in return for limits on our agricultural subsidy programs that are beneficial for both domestic and international development reasons. Budgetary pressures will likely reduce the inflation-adjusted value of the programs in any case. Additionally, these programs need to be better targeted to family farmers, and to promoting sound environmental and energy policies including, the next generation of cellulosic biofuels–liquid fuels sustainably produced from energy crops such as switchgrass and agricultural wastes such as corn stalks and rice hulls.

And that’s where U.S. creativity comes into the picture. Consider a vision of the world where renewable energy extracted sustainably from crops and agricultural wastes across the planet fuels a new farm economy that simultaneously produces food and fuel amid economically robust and environmentally sound rural landscapes. This new way of thinking about agriculture and rural communities worldwide offers a way past our world’s unsustainable reliance on fossil fuels and our inability to build a global trading community that enriches farmers worldwide. Once embraced, this new vision offers humanity a viable approach to help reverse the dire effects of climate change.

The tools needed to craft this new rural economy, detailed in my report released this month, Fueling a New Farm Economy, are within the grasp of the 110th Congress, which this year must reauthorize our nation’s farm legislation in the 2007 Farm Bill. Congress this year has the chance to enact creative renewable energy legislation that could break the deadlock in the Doha Round by implementing agricultural policies that create a clean and prosperous countryside in the United States and around the world.

How so? Well, for starters, the United States can reinvest a modest portion of its current funding for agricultural commodity programs toward the further development of new renewable energy sources. Specifically, Congress could:

  • Reward all U.S. farmers for environmental stewardship on their working lands, including growing dedicated energy crops, by implementing a targeted “green payment” program and encouraging reinvestment of current commodity-based subsidies. Other WTO-member nations must make similar farm tariff and subsidy reductions in their agricultural sectors.
  • Reward farmers for agricultural practices that combat climate change by reducing greenhouse gases and storing carbon while enhancing soil quality.
  • Increase funds in the new farm bill for existing renewable energy programs.
  • Encourage farmer-owned-and-operated biorefineries and local-owned biofuel plant cooperatives.

The U.S. government could then signal our nation’s commitment to renewable energy (and the new kind of agricultural trading system this will engender) by supporting the development of the next generation of biofuels. Specifically, Congress should:

  • Move beyond corn as a biofuel feedstock to provide new tax credits and loan guarantees for this next generation of biofuels.
  • Boost the Renewable Fuel Standard to allow demand for biofuels to keep pace with production capacity while ensuring the standard achieves measurable reductions in greenhouse gases.
  • Reduce gradually the current 54-cent-per-gallon U.S. tariff on imported biofuels to expand the global market in biofuels and take steps towards meeting the Doha Round’s overarching trade and development goals.
  • Reform current federal support for biofuels so as to ensure the renewable fuel industry is more market responsive.
  • Extend current Renewable Energy Tax Credits for wind and biofuel production.
  • Create new tax and production incentives for private sector investments in biofuels infrastructure.
  • Encourage the use of energy crops grown in a sustainable manner with incentives that reward biofuel producers for efforts to maximize greenhouse gas reduction methods and conserve water and land resources.
  • Support “development-friendly” agricultural support for the world’s poorest nations with specific capacity-building and “Aid for Trade” programs involving infrastructure, energy, and other sectors.

Finally, the U.S. Congress must ensure that new biofuels take the domestic marketplace by storm over the next several decades by passing legislation to encourage the long-term development of biofuels products, infrastructure and services. Specifically, Congress should:

  • Create a nationwide network of service stations selling E85 fuel, a blend of 85 percent ethanol and 15 percent gasoline.
  • Promote the sale of Flexible Fuel Vehicles that run on E85 fuel.
  • Encourage public awareness of biofuel alternatives in the marketplace through a federal biofuels certification and labeling program.
  • Boost research and development in advanced biofuels and biobased technologies through a variety of legislative funding avenues.

If all or most of these policy recommendations presented are acted upon by Congress and matched by our trading partners abroad then it is not hard at all to envision, three decades from now, a far wealthier global agricultural sector contributing strongly to a far cleaner global environment and a far more innovative and diversified energy future.

Jump-starting the Doha negotiations to achieve an agreement that advances global economic and development aims would boost U.S. economic leadership at a critical time in our nation’s history. Other countries must do their part, but it would be a serious mistake to pass up the opportunity to seek agreement. As Dan Tarullo makes clear in “The Case for Reviving the Doha Round,” to seize this opportunity, we need:

  • The president to become personally involved in restarting the Doha negotiations.
  • The Bush administration to seek genuine cooperation with the Democratic leadership of the Congress.
  • The U.S. to take the lead in expanding trade opportunities to the world’s poorest countries.

Only then will we know if the Doha Round can be successfully negotiated and approved, and whether we can move both trade and a new farm bill forward together. That effort is well worth making. It is an effort that must transcend political parties and national boundaries. It is an outcome that is within reach.

For further details on the agriculture, alternative energy and trade policy recommendations of the Center for American Progress please see the following reports:

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