Menu

by Lynne Finnerty

The recent World Trade Organization (WTO) ruling against the U.S. cotton support program has some farmers wondering, "Why is the United States a member of the WTO?" and, "Why let the WTO tell us what to do?" The answer to the first question is that the WTO helps maintain markets for U.S. exports. The answer to the second question is that the WTO does not tell the United States or any other country what to do.

A WTO dispute panel or appellate body may determine if a country’s policies are consistent with its commitments as a WTO member, but the WTO has no authority to force a country to change its policies. If it did, the United States would not be a member.

What the WTO can do is let a country retaliate against WTO-inconsistent policies by charging higher import tariffs. The United States has taken advantage of this several times.

Before the WTO was created in 1994, other countries could discriminate against U.S. exports with almost no ramifications. Disputes could and did drag on for years.

For example, European countries in 1976 were charging higher tariffs on U.S. citrus than they charged on citrus from other countries. Under the General Agreement on Tariffs and Trade, the precursor to the WTO, the United States requested a panel to look into the matter. The Europeans blocked the request. It wasn’t until 1982 that a panel was finally created. The Europeans only agreed to it then because they thought they would win. They didn’t.

That and other disputes is what led the United States to play the lead role in writing the WTO agreements. Now, a member country may block the first panel request, but a panel is automatically created if the requesting country puts in a second request. That has helped open overseas markets for U.S. apples, soybeans, poultry, rice and other commodities.

The United States wins more cases than it loses, but it doesn’t always win. For example, the WTO recently determined that some U.S. support for cotton farmers is inconsistent with its WTO commitments. Farm Bureau said it was disappointed with the ruling but "the United States should move forward and comply."

Does that mean the United States would be letting the WTO tell it what to do? No, it simply means that the cost to U.S. farmers of changing the cotton program and resolving the matter is less than the cost of an ongoing trade dispute.

What farmers get out of U.S. membership in the WTO is a trade system based on rules – rules that help maintain markets for the third of U.S. farm production that is exported. As long as exports are important to American agriculture, WTO membership will be important as well.

Lynne Finnerty is editor of Farm Bureau News, a publication of the American Farm Bureau Federation.