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Canada’s Request for WTO Consultations on US Farm Subsidies

Posted by admin on January 11th, 2007

IPC Member Michael Gifford has contributed the following article commenting on the recent request by the Canadian government for consultations with the United States on its corn subsidies.

Canada’s recent request for formal WTO consultations on certain US agricultural subsidies underscores yet again the vulnerability of the main US domestic farm programs to international challenge. In this particular case, Canada is raising at least three distinct issues:

-first, the US corn program has caused serious prejudice to Canadian corn producers;
-second, US export credit programs constitute illegal export subsidies;
-and third, the US has exceeded its WTO commitments regarding the most trade-distorting forms of domestic support.

The complaints regarding the corn program and export credits mirror those which were successfully challenged by Brazil in the WTO cotton case, whereas the complaints regarding total trade-distorting support highlight a new source of vulnerability for the main US farm support programs. However, the real significance of the Canadian action is not so much related to its legal merits as it is to the signal that it sends to the US Congress that a de facto extension of the 2002 Farm Bill when it expires this year is not a sustainable option. The experience of the EU in reforming its Common Agricultural Policy illustrates that it is possible to change even the most politically sensitive farm programs so as to reduce their negative trade impacts. How much Congress decides to spend on supporting the rural sector is solely a US domestic political decision. How Congress decides to support has international consequences.

Farm Bills are supposed to provide predictability and stability for US agriculture. The 2007 Farm Bill will not do this unless it is consistent with and reinforces the international trend towards eliminating trade-distorting support and replacing it with policies which have little or no effects on trade. The ideal scenario is for Congress to draft a Farm Bill in the light of an ambitious Doha Round result-a result which will require all countries to make a commensurate contribution.

Michael Gifford served as Canada’s chief agricultural trade negotiator, and principal agricultural trade policy advisor to the ministers of agriculture and trade.
Also reported in:

The Financial Times, "Canada Launches WTO Case on US Subsidies."
The Edmonton Journal, "Cut US Farm Aid."
Los Angeles Times, "WTO Case Filed Against US Corn Subsidies."


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