I want to further elaborate on the
agricultural subsidy story, in order to clarify motivations. While I do completely support Bush's decision to cut into agricultural subsidies, one must analyze why Bush suddenly came to this decision. It certainly represents a change of heart.
More inside...
At first glance, one might see the reduction of subsidies as a Bush strategy to help reduce the federal deficit and at the same time eliminate donations to an uncompetitive industry. This seems in step with the need to cut into the monster federal budget, and it is agreeable to Bush's free-market ideology. But then I was reminded by someone of the WTO's
ruling against US cotton subsidies in April of 2004. Several cotton-producing West African countries had complained in Geneva against US subsidies, stating that the subsidies kept them out of the US market (by subsidizing an industry, that industry is able to sell its goods at cut-rate prices, undercutting any foreign competition). Brazil championed their cause, filed a suit in the WTO, and won. Essentially the WTO ruled that the US subsidization of the cotton industry was illegal according to global trade rules. The US then
decided to appeal in November of last year, with U.S. Trade Representative Robert B. Zoellick stating the decision would have "no immediate impact on U.S. farm programs." It seems Zoellick might have to eat those words.
Bush's new stance on subsidies (keep in mind every US president has been in favor of the subsidies) shows that the WTO ruling did in fact have some effect upon US decision-making. Subsidies are not a noisy issue that the adminstration has had to deal with - in fact the liberal-left rarely brings them up. And cutting the subsidies will only disillusion the administration's own conservative base - afterall, farmers tend to the right. Thus it can be deduced that the WTO ruling, which most analysts here in the US at the time dismissed as unconsequential, has indeed had an impact domestically.
That being said, Bush very well could have ignored the WTO's ruling and gone through the years long appeal process and then in the end submitted the US to penalties. Why is Bush deciding to play nice with the WTO on the issue? The likely answer is: intellectual property rights. The US has been fiercly fighting to protect intellectual property via the TRIPS (Trade-Related aspects of Intellectual Property Rights) agreement of the WTO. Much of this focus has been on preventing generic pharmaceuticals from freely flowing in the global market (a hugely contentious issue in fighting the AIDS panedmic). Bush's subsidy reform may give him some bargaining chips in order to keep the restrictions on generic pharmaceuticals in place. One should watch with a close eye what the US and WTO does with any future intellectual property reform - specifically in the pharmaceutical arena.