January 23, 2007

 

Argentina and Brazil join Canada in complain against US corn subsidies 

 

 

South American agricultural powers Argentina and Brazil have joined Canada in a complaint against the US over what they claim are illegal government handouts to US corn growers, trade officials said Monday (Jan 22).

 

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 US 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 authorised, but panels take many months, and sometimes years, to reach a decision.

 

Canada lodged its complaint Jan 8, claiming some US$9 billion paid out by the US 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 programme concerns Brazil as a major agriculture exporter.

 

Sean Spicer, a spokesman for US Trade Representative (USTR) Susan Schwab, said he couldn't 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 US and in Canada. In addition, US 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 programmes 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 US President George W. Bush has been coming under pressure to reform a number of its farm support programmes.

 

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

 

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

 

It argued US 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 US agricultural support programs for the next five years.

 

The US 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.