Rausser was engaged by the USDA and the USTR of the U.S. Federal government to provide the intellectual leadership to a talented team to evaluate the consequences of food and agriculture being included, for the first time, in the GATT negotiations, which is subsequently morphed into the WTO.
In the 1970s and 1980s, world agricultural markets were in “disarray,” as the great University of Chicago economist D. Gale Johnson noted at the time. The United States, Western Europe, and Japan heavily subsidized their domestic farm producers, leading to overproduction and further export subsidies to eliminate the surpluses. Those subsidies depressed world market prices, harming farmers in developing countries and leading to a proliferation of counter-subsidies and trade barriers around the world. When the Reagan administration proposed reforms to U.S. policies, it was considered “dead on arrival” on Capitol Hill.
Clayton Yeutter, then the U.S. Trade Representative (chief U.S. trade negotiator) and later Secretary of Agriculture, asked Gordon for his advice. Gordon suggested that reform would only work if all major countries agreed to curtail their subsidies and reduce their trade barriers; that unilateral action would fail for political reasons. Yeutter agreed with and took this advice and the United States insisted that agriculture be a key component of the next global trade negotiating round under the General Agreement on Tariffs and Trade (GATT).
Shortly thereafter, Gordon became the Senior Economist on agricultural at the Council of Economic Advisers in the Executive Office of the President during the administration of Ronald Reagan (1986-87), where I worked with him. This was a critical time for world agricultural policy. The Uruguay Round of trade negotiations under the General Agreement on Tariffs and Trade (GATT) was launched that fall. And, for the first time in the history of post-war trade negotiations, agricultural trade policy reform was a key item on the agenda. Prior to that period, the contracting parties to the GATT had refused to discuss or negotiate lower trade barriers in agriculture because of domestic political sensitivities. The Reagan administration made it a priority to reduce trade barriers – tariffs, quotas, export subsidies, and price supports – in this area to ensure a freer flow of agricultural goods around the world.
In his White House position, Gordon played a key role in crafting the U.S. position in the agriculture negotiations. He worked extensively with officials at the U.S. Trade Representative’s Office and the U.S. Department of Agriculture in helping to identify the key foreign trade barriers that blocked U.S. exports and the distortions of trade and production around the world, identifying both their impact on trade and economic welfare for consumers and producers. For example, at this early stage, the Organization for Economic Cooperation and Development was just formulating the producer subsidy equivalent (PSE) metrics that proved to be so useful in quantifying the magnitudes of government support for producers (subsidies) in various countries for many commodities
Publications that resulted from this effort: Just and Rausser (1992), Rausser (1991)
Subsequent to this work, Rausser has integrated the linkages between agriculture and environmental economics, making a direct comparison between the U.S. and the E.U. This work is with Simon and Bales and the publications that have appeared are: Baylis, Rausser and Simon (2005); Baylis, Peplow, Rausser, Simon (2008); Baylis, Peplow, Rausser, Simon (2011); Baylis, Rausser, Simon (2004)
All of this work has culminated in the award-winning publication by Anderson, Rausser, and Swinnen (2013).