China, Taiwan Cleared To Enter WTO
The way was cleared for China to enter the World Trade Organization Monday when a WTO working party formally approved the agreement covering China's entry. Another WTO working party then approved a membership agreement with Taiwan on Tuesday.
Final approval of China’s and Taiwan's membership applications is scheduled for November, when WTO ministers are scheduled to meet in Doha, Qatar, to try to start a new round of world trade talks.
After receiving WTO approval, the Chinese government would then decide whether to formally accept the terms of its WTO membership.
The entry of the two nations into the WTO should be positive for most U.S. agricultural prices in the longer term, as it will open more markets to U.S. exports. The flow of market information out of China should also be improved.
In the near term, the corn market may feel more pressure as China is likely to continue corn export sales as dumps stocks before it formally enters the WTO. China won't be able to offer large export subsidies once that occurs.
Bush Farm Plan Calls For Spending Shift
The Bush administration's broad farm policy outline, released Wednesday by USDA Secretary Ann Veneman calls for a major shift in federal spending away from farm subsidies and into areas such as conservation and food safety.
In the 120-page report, entitled Food and Agricultural Policy: Taking Stock for the New Century, the administration said federal farm subsidies were causing "unintended (and unwanted) consequences" by encouraging overproduction of crops and driving up land rents, raising farm costs.
The report also noted that a large portion of federal farm subsidies go to large commercial farms, which only allows them to expand their operations and cut costs further.
The tenor of the report is not a huge surprise because similar views have been expressed previously by J.B. Penn, USDA undersecretary for farm and foreign agricultural services, who was designated as USDA’s point man on the development of new farm policy.
Editors note: Richard Brock, Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
To see more market perspectives, visit Brock's Web site at www.brockreport.com.