Deputy Secretary of Agriculture Charles F. Conner

Much of the attention on the 2007 farm bill, currently stalled in Congress, is focused on the bill's domestic effects. But because U.S. agricultural subsidies, regulations, and spending programs have significant effects on global markets, the farm bill has also been the subject of international scrutiny and a source of problems at the Doha round. On January 30, analysts in the public and private sectors and academia discussed the outlook for U.S. agricultural policy and the future of free trade.

In his keynote address, Deputy Secretary of Agriculture Charles F. Conner said that the Bush administration has "serious concerns" about both the House and Senate versions of the farm bill. Conner indicated that unless changes are made during the congressional reconciliation process, he and other Bush advisers will recommend a veto of the bill because they "object very strongly to the tax increases in both versions." Both bills also raise "trade-distorting target prices and loan rates on our major crops." He hopes the farm bill will instead be a "vehicle for reform."

Conner equated passing either bill as it stands with "painting a bull's-eye on the American farmer's back" at a time of record exports and income in the agriculture sector. U.S. agricultural exports, he said, totaled $82 billion in fiscal year 2007, setting a record "for the fourth year in a row." Agricultural exports are projected to be $91 billion in fiscal year 2008. Conner also highlighted the importance to the United States of free trade agreements in a burgeoning global market in which "rapid economic growth in developing countries is creating millions of new middle-class consumers who are buying" agricultural products the United States is producing and exporting.

Looking at the North American Free Trade Agreement (NAFTA) as an example, Conner pointed out that U.S. exports to Canada and Mexico have increased from $10 billion to $25 billion per year since NAFTA took effect in 1994. U.S. experience with the two-year-old Central American Free Trade Agreement (CAFTA) has "been very positive." A free trade agreement with Peru, which the Senate approved in December, will "immediately add $700 million of new sales to our market." And President Bush recently encouraged Congress to approve pending free trade agreements with Colombia, Panama, and South Korea.

But while free trade agreements like NAFTA and CAFTA are beneficial in their own right, multilateral approaches like Doha have the greatest potential for leveling the playing field and enhancing market access for all participants. Conner stressed the importance of Doha's success to the Bush administration, saying that the president "has made advancing free and fair trade one of the central goals that he wants to achieve before he leaves office."

For a video and podcast of this event, visit www.aei.org/event1640/.