Trade subsidies cost U.S. taxpayers billions, hurt poor nations
Trade subsidies and other forms of corporate welfare cost U.S. taxpayers billions of dollars every year. So the paltry $62,000 grant from the Agriculture Department to the Distilled Spirits Council is a barely a drop in the bucket. But it still raises the question, "Why should U.S. taxpayers subsidize the sale of whisky, rum and vodka in overseas markets?"
There are mor than 100 corporate subsidy programs that account for $65 billion of federal spending a year. The small grant to U.S. whiskey producers announced in late July came through the Agriculture Department because whiskey is made from grain, and thus agricultural. Similar grants of over $100 million subsidize the overseas sales efforts of U.S. soybean, peanut and paper industries. Subsidies for marketing go to such struggling companies as Pillsbury, Dole and Gallo.
The so-called Market Access Program (MAP) spends $30 billion a year subsidizing overseas sales efforts of giant corporations including Archer Daniels Midland, Boeing, General Motors and Citibank. These Fortune 500 companies, and even highly profitable giants such Microsoft and GE, benefit from corporate welfare that operates under the radar of public attention.
Most members of Congress see nothing wrong in giving away billions of dollars in taxpayers' funds to these companies, including many that are generous campaign supporters of the very same politicians granting them the subsidies. A few reform-minded lawmakers try to roll back corporate give-aways, but their efforts go nowhere. The cozy and long-term relationship between Congress and special interests in agriculture, technology and other areas of big business is deep-seated and an important component of lawmakers' campaign fund-raising strategies. Change will not come easily.
Political cover for Congress to finally act to roll back some subsidies might be coming from the World Trade Organization. A recent WTO agreement is seen as the first step toward dismantling the more than $300 billion that the wealthiest nations of the world spend annually in subsidizing their domestic agriculture industries - at the expense of the world's poorest nations.
A growing number of the world's developing nations have begun to speak out about their objections to the ongoing agriculture subsidies in America, Europe and Japan that keep cheaper foreign farm products out of those markets.
The U.S. cotton subsidy program has already been ruled illegal by the WTO. Sugar is another highly protected U.S. agricultural industry, and it is no coincidence that the U.S. sugar industry has been a generous financial supporters of both Republicans and Democrats.
If the United States wants to expand its opportunities in international markets, it will have to roll back subsidies and protections for domestic industries. The same changes will have to occur in Europe and Japan, where domestic industries, particularly agricultural, have been protected for decades.
But if the WTO is to succeed in expanding global trade and helping poorer nations develop, thus bringing hope and prosperity to their citizens, the rich nations of the world will have to roll back their own barriers to free trade, including taxpayer-funded subsidies and tariffs.
However politically difficult, cutting U.S. subsidies will have the added benefit of trimming record federal budget deficits. With international pressure mounting and domestic fiscal pressures rising, it is time for bold, multilateral efforts to end trade-distorting subsidies.- J.L.W.III
