MEXICO CONDEMNS INCREASE IN U.S. AGRICULTURAL SUBSIDIES.

The Mexican government and other US trade partners have protested the US decision to boost agricultural subsidies in the recently approved farm legislation. The six-year farm bill was drafted by Congress and signed by US President George W. Bush in mid-May.

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Critics in Europe accused the US of going against its commitment at the meeting of the World Trade Organization (WTO) in Doha, Qatar, to refrain from unfair trade practices. That meeting was held in November 2001. The US decision was condemned at all levels, including by prominent multilateral financial organizations such as the International Monetary Fund (IMF), the WTO, the World Bank, and the Organization for Economic Cooperation and Development (OECD).

In Mexico, agriculture organizations, federal legislators, and President Vicente Fox's administration strongly condemned the subsidies as a violation of free-trade principles established under the WTO and the North American Free Trade Agreement (NAFTA).

"The new law contradicts Washington's global agricultural trade objectives and needlessly damages Mexican interests," said the Secretaria de Economia (SE).

The Fox administration and the Mexican Congress say the subsidies will create further disadvantages for Mexican producers, who were already struggling to compete with lower-priced imports of US grain and other products.

"[These subsidies] disrupt markets and are a cause of great concern for us and other countries," Fox said during a tour of Europe in mid-May.

The outrage was even stronger in the Congress, where some legislators warned of serious damage to Mexican producers.

"If we add all the supports that our government provides through programs such as PROCAMPO, this translates to about 3,000 pesos or US$300 for each producer in Mexico," said Sen. Demetrio Sodi de la Tijera of the center-left Partido de la Revolucion Democratica (PRD). "The US subsidies, in contrast, translate to about US$9,000 per producer."

Sodi said the subsidies come on top of other advantages that US producers have over Mexican counterparts, such as access to better technology. "These new subsidies leave very little possibility for our farmers to compete," said Sodi.