The Coronavirus Food Assistance Program known as CFAP is coming under fire from several members of the World Trade Organization (WTO). The CFAP criticism is putting the program under increased scrutiny as concerns have been raised about the potential for market distortion. The U.S. Department of Agriculture (USDA) has so far distributed $4 billion to farmers affected by the COVID-19 pandemic. A total of $16 billion has been allocated for the program.
The CFAP criticism is compounded by previous aid programs for American farmers and ranchers that were initiated in response to the trade complications with China over the past few years. Canada, the European Union, Australia, Brazil, China, and New Zealand have all raised various concerns about the U.S. farm assistance programs violating international rules. The amount that was agreed upon in 1994 was $19.1 billion in farm subsidies per year. The USDA has maintained that the farming assistance that has been provided does not violate the World Trade Organization Agriculture Agreement.
Some of the federal assistance that has been offered to the agricultural sector is exempt from consideration under the international agreement. Funding for programs designed to address environmental issues, increase diversity and provide direct food assistance such as USDA’s Farmers to Families Food Box Program may not count toward the $19.1 billion cap. Other components of CFAP could likely fall within the funding parameters of the agreement. There could be even further CFAP criticism if another round of funding is made available as some lawmakers have been pushing for.
While federal officials have reported that subsidies have been within the agreed-upon limitations, multiple industry analysts have indicated that the U.S. is likely exceeding the parameters established in the WTO agreement. However, any potential reprimand from the WTO would likely take years before it would be administered. The process for determining if the U.S. indeed violated the agreement will also be a lengthy and complicated matter.
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