Geneva: The World Trade Organization (WTO) launched an investigation on Monday into the multi-billion dollar US farm subsidies that Brazil and Canada say break international trading rules.
The size of US farm subsidies is a major battleground in the WTO’s six-year-old Doha Round talks on opening world trade.
Monday’s WTO probe of US agricultural support for wheat, corn, rice and other crops comes three days after the US Senate passed a $286 billion (Rs11.32 trillion) farm Bill, following a similar Bill from the House of Representatives in July. The White House has threatened to veto the bills, saying they failed to overhaul crop subsidy rules.
The Canadian and Brazilian complaints to WTO relate to whether the US support topped the limit of $19.1 billion a year since 1999, except 2003, for the most trade-distorting support.
Subsidies distort trade by allowing producers to sell their goods more cheaply than those in other countries.
While the WTO’s 151 members agree that some forms of farm support are acceptable to help secure food supplies, preserve the countryside and give farmers stability, international trade rules limit the type and size of assistance states can give.
Washington, DC said it was disappointed at the Canadian and Brazilian move, because its farm programmes were designed to comply with WTO rules.
In October, Washington, DC issued figures for 2002-2005 showing that overall trade-distorting support averaged $15.9 billion a year in the period.
The most trade-distorting forms, known in WTO parlance as “amber box,” averaged $10.3 billion. But “green box” support, which has minimal impact on trade and so does not come under WTO limits, rose in the period to $71.8 billion from $58.3 billion. Ottawa and Brasilia said some supports were wrongly accounted for in that category.
The US “green box” figures include some direct payments of a type the WTO said should be classified as trade-distorting in a 2004 ruling in a Brazilian case against US cotton subsidies.
The chairman of the agriculture negotiations in the WTO’s Doha Round talks has suggested that the US cut its overall trade-distorting support to between $13 billion and $16.4 billion, a range Washington, DC has said it could accept, with “amber box” support falling to a maximum of $7.6 billion.
Missy Ryan in Washington, DC contributed to this story.