Canada launches WTO case over US subsidies
Canada has launched a dispute at the World Trade Organisation over the use of "trade-distorting" agricultural subsidies by the US.
The dispute singles out payments to American corn farmers but also challenges the total level of US agricultural subsidies.
The case filed in Geneva on Monday appeared to be the most significant legal challenge to the structure of US agricultural subsidies since a landmark WTO ruling in 2005 condemned "trade-distorting" aid to American cotton farmers.
In its 2005 ruling the WTO agreed with Brazil that US cotton subsidies depressed world prices, hurting cotton producers in Brazil and around the world.
The fresh case brought by Ottawa builds on this precedent and singles out corn subsidies as hurting producers and distorting prices, according to a copy of the filing obtained by the Financial Times.
Chuck Strahl, Canadian agriculture minister, said: "Canada is concerned that these US subsidies continue to cause economic harm to our corn farmers."
The timing of the challenge is aimed at influencing the formation of a new farm bill in the US Congress, where there is resistance to reform from Senators and Representatives from farm states.
David Emerson, Canadian minister of international trade, said: "We hope to see the US live up to its WTO obligations, particularly given that it has the opportunity to do so when it rewrites the farm bill this year."
The legal challenge underscores a separate appeal to the farm lobby by the Bush administration to accept reform of crop subsidies to make them WTO compliant.
Mike Johanns, US agriculture secretary, told a gathering of US farm groups on Monday that it was in their own interests to come into line with WTO rules.
The Bush administration has long feared that Brazil's victory on cotton would invite legal challenges to supports for a range of farm commodities such as rice and soyabeans.
US trade negotiators are understood to be seeking protection from such challenges as part of last-ditch negotiations to reach a deal on the Doha round of world trade talks.
The Doha talks stalled in July over agricultural tariffs and subsidies, including the use of trade-distorting counter-cyclical payments in which government support rises as the price of farm commodities falls.
Efforts to revive a deal centre round US agreement to cuts in crop subsidies in return for expanded market access for its agricultural exports from foreign trading partners, principally the European Union.
The additional so-called peace clause being sought by US negotiators would also protect any agricultural programmes from future legal challenge.
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