March 16, 2007

 

Canada ambivalent over US corn panel 
 

 

An official with Canada's trade department said last Wednesday (March 14) the federal government has yet to decide whether to ask the World Trade Organization for a panel to rule in its dispute with the US over crop subsidies.

 

In its complaint, Canada said the US violated several WTO agreements with its support for corn growers and export credit programs. Canada also claimed the US exceeded its farm subsidy ceiling of US$19.1 billion in 1999, 2000, 2001, 2004 and 2005.

 

Under the WTO process, governments are required to hold consultations for at least60 days as a first step in settling any dispute. After that period, the complaining country can request a panel.

 

Canada requested consultations on January 8 and a round of discussions was held early last month. The 60-day consultation period expired last week, putting Ottawa, and Ontario in a position to request a panel.

 

Ren David, a spokesperson for Foreign Affairs and International Trade Canada said the government is still deciding on its course of action.

 

Some observers have suggested that the Canadian complaint was mostly designed to influence debate in the US Congress over a new farm bill. Still, corn growers in Quebec, Ontario and Manitoba have long pressed Ottawa to take the case to WTO. With talk in Ottawa of a federal election this year, it seems unlikely that the minority Conservative government would be willing to disappoint these growers by not advancing the case.

 

If consultations fail to resolve the matter within 60 days, according to David, the complaining party can ask that a WTO dispute settlement panel be appointed to adjudicate the issue.

 

But a party can also wait and make its request for a WTO panel at a later date, he said.

 

US Trade Representative Susan Schwab indicated last month during Congressional testimony that she expects Canada to request a panel.

 

On the other hand, US Agriculture Secretary Mike Johanns has said the Bush Administration "will argue strenuously that the US' program on corn is in compliance with WTO rules."

 

Some of Canada's arguments mirror those raised successfully by Brazil in its US cotton challenge.

 

In a paper published last fall, professor Daniel Sumner at the University of California-Davis suggested that US programs for corn, wheat, rice and soybeans, as well as dairy were susceptible to the type of challenge subsequently brought by Canada.

 

Sumner argued in his study "Boxed In- Conflicts between US Farm Policies and WTO Obligations" said the subsidies conferred on numerous other commodities besides cotton are vulnerable to WTO challenge and the US "has been and will be in violation of its WTO commitments regarding the overall level of trade-distorting subsidies."

 

Separately last week, Eduardo Sojo, Mexico's economy minister, said his country will join the US corn case if Canada takes it to a WTO panel. Argentina, Australia, Brazil, the European Union, Guatemala, Nicaragua, Thailand and Uruguay have already been granted third-party rights in the case.