Publication

The Economic and Environmental Impacts of Agricultural Subsidies

An Assessment of the 2002 US Farm Bill and Doha Round

Description

International trade policies and government intervention through subsidies and indirect forms of support influence agricultural production choices such as type of crop or livestock, mode (technology and inputs), and quantity. Such trends can result in global effects in trade level, industry structure, and production location, which in turn may affect the state of the environment. Recently, the adoption of the US Farm Bill and the launch of negotiations on agriculture in the Doha Round has brought the issue of agricultural subsidies to the forefront of trade policy discussions.

Agricultural trade liberalization is one of the most sensitive of all trade issues since agriculture has been integrated in the multilateral trade regime during the Uruguay Round negotiations. The Uruguay Round agreement on Agriculture (URAA) brought world agricultural production and trade under a rules-based regime that not only governs market access, but also domestic support and export subsidies in the form of subsidies in the agricultural sector. This new regime has resulted in a reengineering of domestic support systems in the 1990s. As a new round of negotiations is opening at the World Trade Organization (WTO), negotiations on agriculture are once again addressing the issue of domestic support in agriculture.

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