"PERTS and PESTS: A Comparison of the Political Economy of Agricultural Policy in the U.S. and European Community in the Uruguay Round of Multilateral Trade Negotiations"

Ames, Glen C.W. (1991) "PERTS and PESTS: A Comparison of the Political Economy of Agricultural Policy in the U.S. and European Community in the Uruguay Round of Multilateral Trade Negotiations". In: UNSPECIFIED, Fairfax, Virginia. (Unpublished)

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Abstract

Rational farm policy generates a portfolio of programs that provide public goods such as new agricultural and environmental technology (PERTS) or redistribute and transfer wealth from one social group to another (PESTS). PERTS may reduce producers' welfare, because technology increases the supply of farm products, resulting in a decline of farm income. Farmers, acting as a coalition, may seek compensation through the enactment of PESTS, or wealth-transferring policies. By manipulation of both PERTS and PESTS in domestic and trade policy, governments maximize support from social groups. The U.S. proposal in the Uruguay Round of Multilateral Trade Negotiations directly attacks a multitude of PESTS in the trade policy arena. Producers' organizations on both sides of the Atlantic have challenged the U.S. proposal because of their potential welfare loss. However, governmental manipulation of PESTS during the Uruguay Round has not generated the anticipated support for reform. The multilateral trade negotiations are at risk due to the negotiators' inability to resolve conflicts over welfare-enhancing and welfare-transferring policies in the farm sector.

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