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WTO Starts Probe Into US Farm Subsidies

by 5m Editor
19 December 2007, at 4:40pm

WORLDWIDE — The World Trade Organisation opened an investigation this week into whether the United States is violating international commerce rules that limit subsidies to American farmers. It comes just three days after the US Senate approved a new US$286-billion farm bill.

The WTO set up a panel to rule in the dispute after Brazil and Canada demanded the investigation.

"We must ensure that WTO members are meeting their WTO obligations," Canada told the WTO dispute body.

Frustrated by US resistance to cutting back on subsidies, the two countries asked the WTO to condemn Washington for exceeding permitted levels of trade-distorting handouts to American producers of crops such as corn, cotton, rice, soybean and wheat.

The panel created Monday is expected to issue a first ruling sometime in 2008. The dispute system often takes years before reaching a final decision, but can force countries to change their legislation or face billions of dollars (euros) in retaliatory sanctions.

"There’s an important point to be made," said Francois Jubinville, spokesman for Trade Minister David Emerson. "During all these years Canadian farmers had to compete against American farmers that were heavily subsidized, which created unfair market conditions."

US trade official Juan Millan said Washington’s payments have always been below the limits.

"The United States has designed its farm programs to ensure compliance with the . . . negotiated limits on domestic support," he said. "We believe that a panel will agree."

Millan criticized Brazil and Canada for including payments that "have ceased to exist — in some cases more than five years ago."

The dispute over farm subsidies could become a landmark dispute for the WTO because Brazil’s complaint includes payments for ethanol production.

Source: The ChronicleHerald

5m Editor