AUSTRALIA CRITICAL OF US FARM BILL

UNCLAS SECTION 01 OF 02 CANBERRA 000544 SIPDIS STATE PLEASE PASS USTR; STATE FOR EEB, ANP E.O. 12958: N/A TAGS: EAGR ETRD AS SUBJECT: AUSTRALIA CRITICAL OF US FARM BILL ¶1. Summary: (U) The Australian Government has been openly critical of the just-passed US Farm Bill. Following the final passage of the Farm Bill, Trade Minister Simon Crean and Agriculture Minister Tony Burke issued a joint press statement on May 23 which criticized the action by Congress for continuing trade-distorting farm subsidies. (Press statement in para 5 below.) End Summary. ¶2. (SBU) Crean trade adviser Sophie Ward told embassy that the ministers' main concern was in getting to a successful conclusion of the Doha round. She reiterated what Burke called a "missed opportunity" for reform of the US agricultural sector - especially now, at a time when farmers are enjoying high prices. Ward stressed that Crean welcomed President Bush's commitment to trade liberalization, but also expressed concern about the WTO consistency of the Farm Bill,s implementation. ¶3. (U) In press comments, Crean said the bill "entrenches the welfare approach to farm policy in the United States," and called it "short-sighted, reactive, and a lost opportunity." Burke and Crean both expressed concern about its impact on Australian agricultural producers. Burke singled out the proposed levy on imported dairy products, which he feared would hurt Australian cheese exports to the US. ¶4. (SBU) Comment: The passage of the Farm Bill was not a surprise to Australians, who as major agricultural exporters follow American farm politics closely. It has generated a spate of negative press coverage which in addition to identifying possible "losers" in Australia (cheese and meat producers for example) generally repeat the theme that this Bill is a step backwards, could be a sign of further American trade protectionism, and will hurt both Australian producers and the prospects for success in Doha. The GOA is rarely quite so blunt in criticizing US actions. However, in their comments, Crean and Burke have been careful to note President Bush's opposition to the Bill; Australian politicians understand this was a Congressional move not supported by the Administration. This will almost certainly be raised during the upcoming FTA joint committee review on June 2. End comment. ¶5. (U) Here is the text of the joint press statement from Trade Minister Simon Crean and Agriculture Minister Tony Burke, May 23, 2008: United States Congress overrides President Bush on Farm Bill Veto The Rudd Government today expressed its disappointment at Congress' decision to pass the United States Farm Bill, by overriding a veto by President Bush. President Bush vetoed the Bill on May 21, describing it as "inconsistent" with the US objectives in the Doha Round of multilateral trade negotiations. The US Congress has now moved to override the President's veto. Minister for Trade Simon Crean and Minister for Agriculture, Fisheries and Forestry Tony Burke said the Bill would guarantee US taxpayer-funded farm subsidies for the next five years. It would continue a trend of trade-distorting programs underpinning the US agriculture sector, which has an adverse impact on Australian agricultural exporters. The Bill proposes making subsidies more readily available to QThe Bill proposes making subsidies more readily available to US farmers for commodities such as wheat, barley and sugar and guarantees payments to crop growers, should prices fall below increased thresholds, despite crop prices being at record high levels. It also imposes discriminatory charges against our dairy exporters. Trade Minister Simon Crean said he was frustrated with the way the Congress had looked at the domestic politics rather than looking at the bigger picture. "But I'm pleased by the President's commitment to the cause CANBERRA 00000544 002 OF 002 of liberalization," he said. "Through his veto he has clearly signaled that he wants to keep the pressure on global reform, which augurs well for Doha." "Reducing trade-distorting farm subsidies would benefit producers and consumers around the world," Mr Crean said. Agriculture, Fisheries and Forestry Minister Tony Burke said the Rudd Government worked hard to seek a level playing field for Australian producers. "At a time when the world food shortage is front-of-mind, it is disappointing that some of the wealthiest nations are increasing their use of trade-distorting subsidies," Mr Burke said. "We are particularly concerned about the proposed levy on imported dairy products, which would promote US consumption of liquid milk products, as opposed to cheese which is imported from Australia. "The Australian agriculture sector has shown great innovation in boosting efficiency and productivity without relying on taxpayer-funded assistance." The US Congress has guaranteed increased direct payments to farmers, at a time when net farm incomes are projected to increase by US$28 billion next year. "This is a missed opportunity by Congress to reform US agricultural policies, particularly given the current high crop prices and good producer returns," Mr Burke said. End text. MCCALLUM