List of References
CBO, 2002, “Cost Estimates of H.R. 2646, Farm Security and Rural Investment Act of 2002, relative to CBO’s March 2002 Baseline,” unpublished estimates, May.
Francois, J. and L. Baughman, 2001, “Estimated Economic Effects of Proposed Import Relief Remedies for Steel,” December (Washington, D.C.: The Consuming Industries Trade Action Coalition). Available at http://www.citac-trade.org.
Hufbauer, G. and B. Goodrich, 2002, “Time for a Grand Bargain in Steel?” IIE International Economics Policy Briefs. (Washington, D.C.: Institute for International Economics) No. 02-1, January.
Leibowitz, L., 2001, “Safety Valve or Flash Point? The Worsening Conflict between U.S. Trade Laws and WTO Rules,” Center for Trade Policy Studies—Trade Policy Analysis (Washington, D.C.: Cato Institute) No. 17, November 6.
MacDonagh-Dumler, C., 2001, “Recent Changes in U.S. Agricultural Support Policies and their Impact on Other Countries” in United States—Selected Issues, IMF Staff Country Report No. 01/145.
Morehart, M., J. Ryan, and R. Green, 2001, “Farm Income and Finance: the Importance of Government Payments,” Agricultural Outlook Forum 2001 (Washington, D.C.: ERS, USDA), February 22.
WTO, 2001, “Declaration on the TRIPS Agreement and Public Health,” World Trade Organization—Doha WTO Ministerial 2001, WT/MIN(01)/DEC/2, 20 November.
WTO, 2002a, “European Commission Notification Under Article 12.1(A) of the Agreement on Safeguards,” World Trade Organization—Committee on Safeguards, G/SG/N/6/EEC/1, April 2.
WTO, 2002b, “European Commission Immediate Notification under Article 12.5 of the Agreement on Safeguards,” World Trade Organization,—Committee on Safeguards, G/C/10, May 15.
Prepared by Chris MacDonagh-Dumler (WHD), Yongzheng Yang (PDR), and Geoffrey Bannister (PDR).
TPA, or “fast-track,” allows the U.S. President to negotiate trade deals that Congress may either reject or accept, but cannot change. Without TPA, partner countries may be hesitant to negotiate trade agreements with the United States, since the U.S. Congress could seek to alter the negotiated agreement.
The analysis in this section accounts for only the original exemptions when the duties were announced in March 2002. The Administration has invited firms to submit requests for exclusion, and it has received over 1,200 applications, of which 224 had been approved by end-June 2002.
Specifically, the United States lost a case to Australia and New Zealand on the “injury test” used by the ITC under U.S. law. (See WTO (2002c), WTO cases: WT/DS 177 and WT/DS178.) However, WTO decisions are not based on U.S.-style “common” law where precedent helps shape die implementation and judicial interpretation of the law so die impact of such decisions on future WTO cases may be limited.
Global Losses are estimated to be around $1 billion. The model used was the Golbal Trade Analysis project(GTAP), using 1997 policy and data baselines. See Hertel (1997) for a description.
In 1997 dollars. Following a surge of imports in 1998, U.S. trade policy sharply limited steel imports. As a result, the model uses import data that are broadly similar to 1997, except for China and Brazil, implying that the losses China-and gains to Brazil-are significantly understated.
The range of estimates assumes tariffs could be as low as 9.2 percent for the “Joint Remedy” or as high as 20.7 percent for the remedy proposed by Commissioners Devaney and Bragg. Both cases exclude steel imports from Canada and Mexico.
See WTO (2002b). These duties are part of the duties that were authorized when the United States failed to meet deadlines imposed by the WTO to change its tax law as part of the FSC dispute with the EU. However, the EU has also agreed to delay implementation pending the outcome of negotiations with the United States. The final decision is expected in mid-July 2002.
There are a number of methods for calculating the level of subsidies. These data are from the GTAP database, which measures the effect of subsidies on the value added to production. As a result, the totals do not equal the budgetary expenditure on subsidies. In addition, subsidies spent to support prices are measured indirectly as tariffs, so the tariff rates in Table 2 may be higher than as reported by the authorities for 1997.
Effective tariff rates in the GTAP database include applied tariffs and the effect of price supports (which by encouraging domestic production, discourage import consumption). These rates, however, exclude preferential access programs (such as GSP) that impose low or no duties on developing country imports. As a result, the effective tariff rates may be overstated somewhat.
This exercise updates the GTAP database with subsidies from the 2002 Farm Bill, where FY 2003 is assumed to be a representative year. Fortuitously, subsidies in 1997 were about Vi of this level, and because most of the U.S.’s effective tariff rate is comprised of market price supports, this first scenario measures the approximate effect of the 2002 Farm Bill.
This result is similar to previous staff estimates and other research that suggests that recent emergency payments through 2000 elevated land prices by at least 25 percent. See MacDonagh-Dumler (2001) and Morehart, Ryan, and Green (2001).
The Production Flexibility Contracts in the FAIR Act were an example of “decoupled” income support programs that do not appear to significantly distort producer behavior because they are based on historical (and not current) production. Simulations by the OECD that compared the impact of agricultural policies show such historically based payments had the smallest impact on prices, output, and welfare. At the same time, they were just as effective in providing income support to agricultural producers as other more traditional and more distortionary programs. See OECD (2001).