Pres. Bush’s Budget and the WTO

Who says President Bush doesn’t respect the judgments of international tribunals? While President Bush’s “austerity” budget full of sweeping cuts is mostly a domestic story, two of his proposed cuts can be explained as an effort to bring the U.S. into compliance with WTO decisions.

First, and more obscurely, the budget calls for eliminating the so-called Byrd Amendment, a provision much hated by foreign companies because it transferred fees collected from foreign companies to their U.S. competitors. This provision had been declared a violation of WTO rules and President Bush’s budget proposal is intended to bring the U.S. into compliance with that decision (as a bonus, the plan would also save the U.S. Treasury about $1.6 billion). Interestingly, President Bush is the one who wants to comply with the WTO ruling while Senator Byrd (a Democrat) is the one who is proposing that the U.S. refuse to comply.

Second, the budget plans serious cuts to U.S. agricultural subsidies, which would likely have been the target of negative WTO rulings in the future and certainly a major obstacle to the next round of WTO negotiations. President Bush’s proposed cuts not only are drawing praise from abroad and from NGOs like Oxfam, but it also lays down the gauntlet for the E.U. to do the same.