A Bush administration-backed bill to give massive subsidies to U.S. farmers will have a devastating effect on many Latin American countries, especially on financially strapped agricultural exporters such as Argentina.

The $180 billion U.S. farm bill, which was approved by the U.S. House last week and the Senate Wednesday, makes a mockery of U.S. claims to be the world champion of free trade. It is election-year politicking at its worst, and the rest of the world is noticing.

The 15-member European Union and Latin American countries are up in arms over the proposed 70 percent increase in subsidies to grain, cotton, dairy and several other agricultural products. They say and most economists agree it will result in a U.S. oversupply that will depress world commodity prices, and badly hurt developing countries that depend on them for much of their export income.

“It’s a disaster,” says Jerry Kiely, a Washington-based agricultural official with the European Union, which by some standards subsidizes its farmers even more than the United States. “The United States has been lecturing us for years about our agricultural policies, and we all agreed to move away from subsidies. Now, they are going back to outdated policies of the ’80s.”

The bill, which President Bush has vowed to sign into law, will boost U.S. government subsidies to farmers by an additional $73 billion over existing subsidies over the next 10 years.

There is little question that this is election-year legislation, which the Bush administration is supporting dropping its previous reservations in hopes of winning the congressional races in Arkansas, Georgia, South Dakota, Iowa and Minnesota in the November elections. To be re-elected in 2004, Bush will also need to retain the votes he got in 2000 across the Plains and the South.

But economists agree that what may be good for Bush will have a serious impact on Latin American countries that compete with the United States for third-country markets, or that export to the United States.

Argentina depends on agricultural exports for 52 percent of its total export income; Bolivia depends on those exports for 39 percent; Brazil for 33 percent; Chile for 15 percent; Colombia for 37 percent; Ecuador for 67 percent; Peru for 24 percent; Uruguay for 55 percent; Mexico for 10 percent; Haiti for 30 percent; the Dominican Republic for 45 percent; Honduras for 77 percent; and Guatemala for 64 percent, according to Inter-American Development Bank figures.

Brazil’s National Confederation of Agriculture estimates that the new U.S. farm subsidies will cost the country $9.6 billion over the next four years in lost exports to third markets. This will amount to a 10 percent annual drop in Brazil’s annual agricultural exports, it says.

“The impact on the Brazilian agricultural sector will be severe,” says Rubens Barbosa, Brazil’s ambassador to the United States. “The problem with this U.S. legislation is that it will affect our exports of cotton, corn, sugar, soybeans and other products to European and Asian markets.”

Few countries will be harder hit than Argentina, however.

The country, already going through its worst economic crisis in more than 100 years, relies on exports of soybeans, milk products and other agricultural goods for about $13 billion a year. According to Argentina’s agriculture ministry officials, the new U.S. farm bill will cost the country about $1.5 billion in lost exports.

That’s a lot of money for a bankrupt country that defaulted on its foreign debts earlier this year, and that therefore has temporarily lost access to international loans. Under current circumstances, Argentina has virtually no other hope of revamping its economy than increasing its exports.

“This obviously makes life much more difficult for us,” says Argentina’s ambassador to the United States, Diego Guelar. “Without sources of financing or credit, it complicates our situation further.”

Furthermore, U.S. farm subsidies, coming after a controversial Bush administration decision to protect the U.S. steel industry from foreign competition, is triggering a chorus of complaints that the United States is preaching to others the kind of free-trade measures it seems to be increasingly less prone to adopt at home.

“This will badly hurt Latin American exports,” says Guillermo Perry, chief Latin American economist with the World Bank, noting that the U.S. trade legislation comes at a time when Latin America is in its third year of economic troubles. “But the worst thing is that it sends a bad signal about the U.S. commitment to free trade, globally and in our hemisphere.”

My own conclusion: Bush and the U.S. Senate can still avert a worsening crisis in Latin America if they speed up congressional approval of a “fast track” bill to speed up new U.S. free trade agreements. If they don’t move on that front within the next two weeks, as originally scheduled, get ready for more turbulence south of the border.