U.S., EU propose to cut aid to farmers Buried in the reporting on the US proposal, for a 60% reduction in US subsidies in exchange for an 83% higher reduction in tariffs and subsidies by the EU and Japan (which have higher trade barriers to start with), is something even more significant.
The U.S. proposal also calls for the elimination of all agricultural subsidies and tariffs by 2023.
Eighteen years is a long time, but a 60% plus reduction now and progressive reductions toward complete elimination over that time period is huge. This is falls in the “whatever it takes” category.
This isn’t just a free trade issue, though the trade implications alone are important enough to make it worth doing. There’s a significant budget savings and improvement in domestic economic efficiency involved here, too. According to the Heritage Foundation, “Just $4 billion per year would guarantee every full-time farmer in America a minimum income of 185 percent of the federal poverty level ($34,873 for a family of four in 2004). However, farm subsidies are more corporate welfare than poverty relief, so Washington instead spends $12 billion to $30 billion annually subsidizing large farms and agribusinesses that are much wealthier than the taxpayers footing the bill.” (Put another way, Gulf Coast rebuilding is going to cost $200/billion over 5-10 years. This alone would offset somewhere between 50 and 150% of the cost.) Farm subsidies aren’t about helping poor farmers, they are one more form of corporate welfare. According to the Cato Institute, “Over 80 percent of the subsidies enrich farmers with a net worth of more than half a million dollars.”