The US Congress has just passed a new Farm Bill that continues the system of high subsidies even when food prices and farm profits are at record highs. It will incense the rest of the world.

Last week, both Houses in the United States Congress passed a Farm Bill that continues the present system of high agricultural subsidies, rewarding big farmers that have already gotten richer because of the recent hike in food prices.

This is a real pity, even a scandal, because the US farm subsidies are the main cause (together with the subsidies in Europe and Japan) of the greatest distortion in world trade.

The subsidies enable high-cost farmers and food companies to sell their products at below the cost of production and unfairly beat off the products of farmers in developing countries that don't have the same kind of money to subsidise.

Many developing countries have been importing artificially cheapened imported rice, wheat, corn, and chicken from the US and Europe. Their own small farmers have been displaced by these subsidised imports - one reason why agriculture has fallen in many developing countries, making them vulnerable to the present crisis of food shortages and high prices.

Alas, the farm lobbies are so powerful that the members of Congress would rather preserve the status quo and keep the welfare system going rather than displease the farm interests especially in an election year.

And so we have the 2008 US Farm Bill, passed by the Senate and the House of Representatives by more than a two-thirds majority, enough to over-ride a veto that President George Bush has threatened to exercise.

Because it facilitates the continuation and in some ways the worsening of the high subsidies, the Bill will send the wrong signals to the trading partners of the US and further sour the mood at the World Trade Organisation whose members are already facing an uphill battle to finish the Doha negotiations.

So far, the strongest critics of the Bill have been Bush himself and his senior agriculture officials. The Bill increases the subsidy rates for over a dozen crops, and also introduces four new crops to the subsidies.

It also continues direct payments to farms irrespective of the price of the crops. With the new Farm Bill having such features, it is going to be difficult for US negotiators to persuade other WTO members to make sacrifices or concessions so that the US President or Congress will find it worthwhile to sign on to a Doha deal.

Khor is director of the Third World Network.