Foreign Agricultural Service - Major Events

Major Events

Trade tensions with the European Economic Community (EEC) boiled over in 1962 with the first Chicken War, a trade dispute arising from the EEC's application of protective tariffs on poultry meat imported from the United States in retaliation for President Kennedy's imposition of a ceiling on textile imports and raising of tariffs on carpets, glass and bicycles. FAS negotiators and analysts, including future Administrator Rolland "Bud" Anderson, supported talks that resulted in the EEC paying $26 million in damages, though in Anderson's words, "We won the battle but lost the war as U.S. exports of these products to Europe soon became insignificant." This "Chicken War" proved to be a precursor to numerous other, similar trade disputes, including the "Poultry War" with Russia of 2002, during which Russia retaliated against the U.S. raising steel tariffs by barring imports of U.S. poultry meat, and the dispute over the European Union's ban on imports of U.S. beef produced from cattle treated with growth promotants.

In 1972 a short grain crop in the USSR resulted in the Soviet Union quietly concluding grain purchasing contracts from a relatively small number of the secretive private multinational grain traders who dominated world trade in cereals. Because crop surveys in mid-spring had given the impression of a normal crop, FAS's agricultural attaché in Moscow chose not to follow up with additional crop observation travel, and thus missed a severe drought that set in after the last trip. As a result of this lapse, international grain traders and exporting nations were unaware of the Soviets' dire need for massive grain imports. By the time the scope of Soviet purchases became known, the USSR had locked in supplies at low, subsidized prices, leaving other importers and consumers scrambling for what was left at significantly higher prices. This event, known as the "Great Grain Robbery", led to creation in the Foreign Agricultural Service of a satellite imagery unit for remote sensing of foreign crop conditions, negotiation of a long-term grain agreement (LTA) with the Soviet Union, and imposition of an export sales reporting requirement for U.S. grain exporters. It also impressed on FAS the need for "boots-on-the-ground" observation of crop conditions in critical countries.

In the 1980s, the European Economic Community emerged as a competitor for export sales, particularly of grain. EEC export restitutions (subsidies) undercut U.S. sales, with the result that farm-state Members of Congress, led by Senator Bob Dole of Kansas, pushed through new legislation authorizing broader subsidization of commercial export sales. This Export Enhancement Program (or EEP, though it was originally called "BICEP" by Senator Dole) was used primarily to counter EEC subsidies in important markets. Use of EEP opened the United States to criticism from less developed countries on the grounds that export subsidies undercut their own farmers by depressing global commodity prices. By the mid-1990s EEP was largely abandoned in favor of negotiating for a multilateral ban on agricultural export subsidies; it was last used, for a single sale, during the Clinton Administration. With founding of the World Trade Organization in January 1995, trade-distorting domestic agricultural supports were capped in all member states and absolute import quotas were banned, but negotiations on eliminating export subsidies continue still.