Trade will dominate farm agenda next four years

WASHINGTON -- President Bush will begin a second term barely a year after the United States had its first case of mad cow disease and as Japan and other countries maintain bans on U.S. beef.

But even before the embargoes, Americans began importing more food than they export, raising a broad front of trade issues that will dominate U.S. farm policy the next four years.

Only one cow, a Canadian-born Holstein, was confirmed to have been infected. But it only took one to prompt Japan and more than three dozen other countries to refuse U.S. beef, harming export sales and the farm economy they support. The administration's primary agriculture mission since then has been to get those bans lifted.

A lot more than beef is at issue, however. Two years before last December's mad cow case, a surplus of farm exports over imports -- which had been the nation's bulwark against even larger overall trade deficits -- disappeared. At the same time, Congress was passing an election-year farm bill with the most generous government subsidies ever awarded to growers.

Those two developments will drive newly revived talks on trade liberalization by World Trade Organization members.

"This next term will be a really big term for whoever is the secretary of agriculture, because these issues come to a head in the WTO talks, which will probably wrap up in 2007, and that's about the same timing of the new farm bill," said Gary Hufbauer, a trade specialist at the Institute for International Economics, a Washington think tank.

Agriculture Secretary Ann Veneman has said she would like to stay on the job, and Bush hasn't indicated any dissatisfaction or desire for her to leave.

"I think he's made clear he will be making decisions on personnel in the coming weeks," Veneman told reporters this week. "In the meantime, we continue to do our jobs as well as we possibly can."

Besides finalizing deals to resume U.S. beef exports to Japan and Taiwan, officials are working on reopening U.S. borders for Canadian beef, which was banned in May 2003 after a single case of mad cow was confirmed there. Restrictions have been eased, but not completely.

Trade will drive debate on Capitol Hill, where international disputes over subsidies for U.S. producers could prompt lawmakers to make changes to programs in the 2002 farm bill, although it's more likely the changes would come when Congress begins writing the new farm bill in 2006. Lawmakers expect to begin hearings on the new bill next year.

Third World countries are demanding in the upcoming WTO talks that the United States and Europe end their subsidies, not just those that support farmers but also government help with selling exports.

"We're committed only to the extent that other countries do it as well, and that's a very important limitation," Hufbauer said.

That's going to be a hard sell to Congress, where lawmakers are hearing from their farmers about how rising imports of fruits and vegetables under recent trade agreements with Mexico, Caribbean nations and some South American countries are eating into their U.S. market.

For only the second time in history until then, the United States in 2002 imported more agricultural products than it exported. A $70 million deficit that year widened to $800 million in 2003, according to the Commerce Department, and is expected to be into the billions of dollars when 2004 figures come out in February.

Another trade-related issue is the administration's determination to repeal a measure in the 2002 farm law to require that foods in supermarkets be labeled with their countries of origin. Those labels must be on meat and produce beginning in September 2006. The strongest champion of the labels was Senate Minority Leader Tom Daschle, D-S.D., who was defeated for re-election Nov. 2.

Meantime, a second-term Bush administration will issue new dietary guidelines and an updated food pyramid early in 2005. The guidelines affect other programs, such as school lunch menus.

The administration will also grapple with food safety, particularly establishing in the wake of the mad cow case a national system for tracking livestock and poultry from birth through the production chain.

Commonly known as mad cow disease, bovine spongiform encephalopathy attacks an animal's nervous system. People who eat food contaminated with BSE can contract a rare disease that is nearly always fatal, variant Creutzfeldt-Jakob disease.

Producers, worried mostly about keeping their records confidential, object to a government-run identification system. They argue instead that the industry should run a voluntary ID clearinghouse to which federal and state officials would have limited access.

Veneman, however, has said an animal ID system must have full participation to be effective. To protect producers' information, she proposes to exempt the records from being disclosed under the federal Freedom of Information Act; she sent draft legislation to Congress last month.

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