WTO Members Focus on US Farmer Aid Effort

Questions about the Trump ag trade aid plan, including how long it will run and concerns about its potential to affect global commodity markets, were on display during a World Trade Organization (WTO) Committee on Agriculture meeting held this week.The plan unveiled this summer by USDA to aid U.S. ag producers was aimed providing up to $12 billion to address negative effects of new retaliatory tariffs. The program consists of three facets: The Market Facilitation Program (MFP) which provides payments to producers of commodities hit by the new duties; a Food Purchase and Distribution Program to buy up to $1.2 billion in commodities targeted by retaliation; and the Agricultural Trade Promotion Program (ATP) providing $200 million to help develop new markets for US ag products.USDA has announced the initial phase of MFP payments are expected to total $4.7 billion, with a potential second round to be announced in early December if needed.The primary concerns voiced by WTO members centered on the methodology used to craft the trade aid program, how long it will run and its compliance with U.S. WTO obligations.Australia questioned whether the U.S. accounted for producers who redirected exports to different markets because of new tariffs and whether it could confirm aid provided to such producers would not be used to subsidize those exports.The US responded that “trade diversion does not necessarily mean no damages" and sought to assure other members the aid program is short-term, directed only at mitigating the impact of retaliatory tariffs for 2018 crops and livestock and not intended to subsidize exports or become a public stockholding food program.China and New Zealand expressed concern that due to the aid program, the U.S. risks exceeding its aggregate measurement support (AMS) entitlement limit of $19.1 billion annually required under WTO's Agreement on Agriculture.WTO notifications on the supports are forthcoming, the U.S. noted, adding the programs and support provided by them will not lead the U.S. to exceed its AMS limit.