By Timothy A. Wise
CAMBRIDGE, MA., Dec 11 2023 – The dispute mounted by the U.S. government over Mexico’s policies to restrict the use of genetically modified corn is the latest example of the misuse of a trade agreement to impede social programs in Mexico and other countries. The U.S. government has been doing this for years.
It’s all about boosting exports. U.S. agricultural policies favor and encourage the overproduction of crops such as corn, soybeans and wheat. They depress prices, with supply regularly exceeding demand. It serves the interests of agribusiness, which benefits from high demand for its seeds, agrochemicals, and machinery, and low prices for livestock feed, for its ethanol factories, and for its highly processed food.
But farmers suffer from low crop prices and high input costs, kept high by corporate concentration. As the graph shows, between 1980 and 2020, U.S. farmers suffered losses in sales in 33 of the 40 years. The bottom line represents their profits without subsidies, in the negative in every year save the 2007-2013 period of the so-called “food crisis.”
(Source: FarmDoc Daily, December 9, 2022.)
The top line represents their earnings with subsidies. Even with subsidies, in many years, most still lose. But the subsidies themselves do not cause this overproduction. Rather, they are a response to losses which maintains the system for agribusiness.
For a time in the 1950s and 1960s, the U.S. had a policy of supply management to reduce overproduction and achieve a balance between supply and demand to keep prices at a more appropriate level for producers. Not anymore, and the resulting expansion of production requires the U.S. to open international markets to sell the excess, usually at prices below production costs. This is known as “agricultural dumping.”
Timothy A. Wise
The U.S. has for years used NAFTA and now the U.S.-Canada-Mexico Agreement (USMCA) to try to weaken or end a successful supply-management program in Canadian dairy. Canada recently won a dispute with the U.S., but U.S. officials promise to keep trying to open the Canadian dairy market for U.S. farmers, who are suffering a wave of overproduction.
U.S. dairy exports to Mexico under the USMCA have driven down milk prices there. Milk is one of the Mexican government’s priority products to recover a margin of self-sufficiency, but that is very difficult with dumping-level prices.
In May of this year, I published a report on U.S. dumping, particularly for Mexico’s priority products – corn, wheat, rice, beans, and milk. In each case, we see a dramatic expansion in exports under NAFTA/USMCA and a drop in domestic prices under competition from dumped imports, while domestic production stagnates or falls.
In wheat, for example, imports rose by 68% after NAFTA took effect in 1993, and prices to Mexican producers fall by more than 60%. Domestic production suffered. Before NAFTA, Mexico produced 80% of the wheat it consumed. Now it imports more than 60% from the U.S.
In corn, after NAFTA, exports surged by more than 400% in the first few years at prices 19% below production costs. That produced a drop in Mexican farm prices of 66%. Mexico has maintained its production of white and native corn, but so far has failed to stimulate the dramatic expansion sought by the government. Much of this is due to U.S. agricultural dumping.
Now the U.S. government is using the USMCA to undermine the Mexican government’s policies in the GM corn dispute. A presidential decree barely restricts U.S. exports, prohibiting GM corn in tortillas to protect human health. But the U.S. still seeks to impose its industrialized agricultural regime and its narrow view of science over Mexico’s precautionary science and food sovereignty.
Mexico has dramatically moderated its policies to reduce impacts on international trade. Even the USMCA itself recognizes the right to take precautionary measures, based on science and with transparent processes. And by taking the “least trade distorting” actions.
What measures can Mexico take that are less trade-distorting than its current actions? It does not restrict imports, only the use of GM corn in the tortilla chain. The borders are open to any non-transgenic corn, even from the U.S.
But more to the point, why doesn’t Mexico deserve the right to take precautionary measures to advance public health and protect the diversity of its precious corn?
The U.S. has a long history of misusing trade agreements to undermine anti-hunger programs. Since 2013 at the World Trade Organization the U.S. government has pursued a dispute against India over its national food security program, which was established through the efforts of a national movement for the right to food. India is the hungriest country in the world with hundreds of millions of people lacking sufficient food.
The program guarantees a minimum distribution of basic foodstuffs to the poor, free of charge, through public distribution centers. The government collects rice, wheat, and other crops from small and medium-scale producers at fixed and fair prices, somewhat higher than free market prices. Purchases go for distribution to the poor. It has been a great success, reducing poverty and food insecurity both for the farmers because of the fair prices and for the hundreds of millions of poor people who receive the benefit.
Using outdated rules under the WTO agreements, the U.S. filed a formal dispute arguing that the guaranteed prices offered by the government to Indian farmers violate the agreement. It said India is harming exporters who do not receive the same price, that its above-market prices represent an excessive subsidy to farmers.
Imagine the hypocrisy! The U.S., even with its billions of dollars of subsidies to farmers, most of whom are not going hungry, accuses India of providing excessive subsidies to its small-scale farmers, who are poor. This is a guaranteed price, not a direct subsidy, and it is part of the largest anti-hunger initiative in the world. So far, the dispute remains unresolved. Fortunately, the program continues to expand in India.
Mexico has every right to defend its policy of restricting GM corn in the tortilla chain. Hopefully the arbitration panel will recognize the hypocrisy and cynicism of the U.S. in trying to apply the USMCA rules to an initiative that barely affects its exports. Mexico gets to decide if it wants tortillas free of GM corn.
This article summarizes the author’s presentation November 30, 2023 at the International Conference on Food Self-Sufficiency and Agroecology held in Oaxaca City, Mexico.
IPS UN Bureau
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