SUING OVER SUBSIDIES: The World Trade Organization’s “peace clause,” which prevented lawsuits over trade subsidies, expired December 31. KickAAS (Kick All Agricultural Subsidies) is on the case; and here’s a piece from The Economist.

…There are certainly a lot of subsidies to shoot at. The OECD, a club of rich nations, reckons that the agricultural subsidies of its members cost consumers and taxpayers about $230 billion in 2001 alone. The European Union, the United States and Japan were to blame for about 80% of those transfers. The typical milk producer in the OECD makes half its money from selling milk, and the other half from milking its government. Rice and sugar producers do the same. …

Brazil …is already challenging America’s cotton subsidies, arguing that they violate a term in the peace clause that caps subsidies at 1992 levels. Now the clause has expired, other targets will present themselves and other countries may join the fight. WTO members will be able to challenge any subsidy reserved for a specific industry (a sugar subsidy, for example) that can be shown to cause “serious prejudice” to their interests.

Such prejudice is easy enough to prove. Richard Steinberg of the University of California, Los Angeles, and Timothy Josling of Stanford University have read the statutes and crunched the numbers. They show that America’s extensive subsidies to its barley producers, for example, helped keep foreigners out of American markets. Its subsidies to corn producers helped to displace rival producers from third-country markets, such as Mexico, Canada and the Philippines. Meanwhile, by subsidising exports, the EU is depressing world butter prices by as much as a fifth, according to one economic model.

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