Canada joins Brazil in challenging U.S. farm programs

Although the United States recently claimed that our farm subsidy programs meet existing trade commitments, Canada yesterday joined Brazil in claiming that U.S. farm programs violate those commitments. From the press release:

“Canada believes that the United States has breached its international obligations by providing agricultural subsidies that exceed the levels allowed by the WTO,” said Minister Emerson. “This panel request complements our efforts in the Doha negotiations to further discipline and reduce trade-distorting agricultural subsidies.”

“The government expects the United States to live up to its WTO commitments,” said Minister Ritz. “By requesting this panel, we are trying to level the playing field for Canadian farmers who have to compete against the large distorting agricultural subsidies provided by the U.S.”

It is Canada’s view that when trade-distorting domestic support is properly accounted for under the WTO Agreement on Agriculture, the United States exceeded its WTO commitment in 1999, 2000, 2001, 2002, 2004 and 2005.

Canada’s concerns are shared by Brazil. Brazil is also announcing today that it is requesting a WTO dispute settlement panel on U.S. agricultural subsidies. Canada and Brazil have been working together to coordinate their challenges. Given the similarities, it is expected that their cases will be heard by a single panel.

The United States has agreed to report to the WTO the amount of its farm subsidies that is "trade-distorting." For example, a trade-distorting subsidy encourages farmers here to produce more than they otherwise would produce, which can lower the world price for a commodity and harm the interests of farmers in other countries. The United States has traditionally excluded some farm programs from these reports to the WTO. For example, our "direct payments" are several billion dollars worth of government checks to farmers who produced a crop at some previous point in history, regardless of whether they currently produce that crop.

Brazil and Canada have pointed out that these "direct payments" are still trade-distorting, because U.S. rules prevent our farmers from growing fruits and vegetables if they receive these direct payments. One upshot of the new Canadian complaint may be to increase pressure on the United States to stop restricting fruit and vegetable production. An end to these restrictions could save the United States grief in trade negotiations and at the same time make fruits and vegetables more affordable, especially for low-income Americans.

Here is the AP report about Canada's announcement. I first read the news at FarmPolicy.