Argentina, Brazil Join Canada’s WTO Complaint Against U.S. Corn Subsidies

01/22/2007 05:01:31 AM -- AP Alert - Agriculture -- DAVOS, Switzerland -- South American agricultural powers Argentina and Brazil have joined Canada in a complaint against the United States over what they claim are illegal government handouts to American corn growers, trade officials said Monday.

The request for consultations, filed by the two countries and Guatemala last week at the Geneva-based World Trade Organization, threatens a major commercial dispute in the Western Hemisphere at a time when global free trade talks remain stalled over agricultural tariffs and subsidies and the U.S. begins debating a new multibillion-dollar farm bill.

Under WTO rules, a three-month consultation period is required before a country can ask the trade body to launch a formal investigation. A WTO case can result in punitive sanctions being authorized, but panels take many months, and sometimes years, to reach a decision.

Canada lodged its complaint on Jan. 8, claiming that some US$9 billion (euro7 billion) paid out by the U.S. annually in export credit guarantees and other subsidies unfairly and illegally deflated international corn prices.

"This is not just about corn," said Clodoaldo Hugueney, Brazilian ambassador to the WTO. "Brazil is the world's largest ethanol exporter, so this is an important issue for us."

Hugueney said any country's large subsidy program concerns Brazil as a major agriculture exporter.

Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab, said he could not immediately comment on the move by Argentina, Brazil and Guatemala. The office, however, was critical of Canada's action earlier this month.

"Corn prices have increased significantly in both the United States and in Canada. In addition, U.S. corn exports to Canada have declined in the last year," Gretchen Hamel, a USTR spokeswoman, said at the time. "Given the dramatic improvement in the market over the past year, we're surprised that Canada believes that our corn programs are now causing harm in breach of WTO rules."

The WTO, in a case brought by Brazil, already has ruled that some cotton subsidies are illegal and the administration of U.S. President George W. Bush has been coming under pressure to reform a number of its farm support programs.

"Many of the issues in Canada's complaint we have also complained about concerning U.S. cotton programs," said Hugueney in a telephone interview from Geneva.

Canada's complaint over U.S. corn support also challenged whether the billions of dollars in overall farm subsidies paid out by the U.S. government comply with international commerce rules.

It argued that U.S. subsidy levels for a number of years on farm products including wheat, sugar and soybeans were illegal and urged Washington to address its concerns when drafting the farm bill that will set out American agricultural support programs for the next five years.

The U.S. says it has offered cuts as part of the WTO's global free trade talks, but others have called the pledges largely artificial, addressing only permitted levels of government subsidies and failing to cut what Washington actually gives to its farmers.

With the so-called Doha round of talks currently stalled, following an acrimonious collapse in July, it is unclear whether the new farm bill will change significantly from its current form.

The United States is the world's largest producer and exporter of corn, accounting for more than 40 percent of global production and nearly 60 percent of all exports in 2004-2005, according to the U.S. Grains Council.

Argentina, Brazil and Canada are the next biggest exporters in the Western Hemisphere, and all rank in the top 10 globally.

http://www.soyatech.com/bluebook/news/viewarticle.ldml?a=20070122-7