WASHINGTON – The Environmental Law & Policy Center has released a report that reveals an opportunity in the midst of what it expects to be imminent cuts in commodity subsidies due to recent WTO panel rulings on the U.S. cotton program and the European Union’s sugar subsidies.

Two existing federal farm programs comply with WTO rules: the clean energy and conservation programs in the 2002 farm bill, according to the report’s author, Northwestern University Law Professor David Dana. Dana and the Environmental Law & Policy Center’s Howard Learner presented their findings at the National Press Club in Washington.

In May, a World Trade Organization dispute panel ruled that cotton subsidies for U.S. farmers were unfair to Brazilian cotton producers by encouraging over-production and depressing world market prices. In response, Dana and Learner say U.S. officials are considering rolling back subsidies for a range of crops such as soybeans, wheat and corn. Cutting subsidies.

“ELPC commissioned this report because the 2007 farm bill will be the playing field on which many pivotal decisions are made,” stated Learner, executive director of the Chicago-based Environmental Law & Policy Center.

Given the WTO ruling, farmers, agribusiness, and policymakers want to know what programs would pass muster under the WTO rules. A new report entitled WTO Legal Impacts on Commodity Subsidies, prepared in response to the WTO ruling, answers this question. It concludes that two existing federal farm programs comply with WTO rules:

• Conservation programs, such as those in Title II of the farm bill, that encourage farmers to either manage land in an environmentally protective manner or retire land from production (for example, the farm bill’s Conservation Security program); and
• Clean energy development programs, such as those in the new Title IX Energy Title of the farm bill, that encourage farmers to invest in renewable energy production and energy efficiency improvements.

In a detailed legal analysis, the report finds that these programs are legal under current and even future WTO rules and trade agreements because they:

• Have clear environmental or conservation objectives;
• Do not distort international trade through direct price supports; and
• Meet certain program-specific criteria (for example, three- year minimum land set-aside.

To further insulate these programs from WTO attack, however, the report recommends that:

• Congress should confirm, in legislation, that these programs serve clear environmental and conservation purposes;
• The government should document the environmental benefits of the programs.

“Many farmers care deeply about clean energy and conservation,” says Learner, “but even if they don’t, today’s report shows there is a new income-maximizing strategy that will involve shifting farm bill funding in the direction of these programs because they aren’t threatened by the WTO. Ultimately, it could mean more greenbacks for farmers and more funds for a greener environment.”

e-mail: rsmith@primediabusiness.com