Canada targets U.S. farm subsidies

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GENEVA - Brazil and Canada will ask a World Trade Organization panel to decide if Washington is violating international trade laws with the billions of dollars it gives to American farmers.

The Canadian government announced Thursday that it would seek a formal WTO investigation of the subsidies received by U.S. producers of crops such as corn, cotton, rice, soybean and wheat. The case complements efforts over the last six years to persuade Washington to reduce subsidies as part of a new global commerce pact, it said.

"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.," said Gerry Ritz, Canada's agriculture minister.

Critics of the subsidies say they drive down prices, making it impossible for small farms to compete in international markets and more difficult for poorer countries to develop their economies by selling agricultural produce abroad. Richer WTO members such as Australia, Canada and the 27-nation European Union also have demanded subsidy limits amid pressure from domestic producers fearful of being crowded out of their own markets.

The debate over farm subsidies has been perhaps the biggest sticking point in the WTO's Doha round of trade talks, which has repeatedly stalled since its inception in Qatar's capital in 2001.

Meetings in Geneva have made little progress since the United States agreed two months ago to limit the payments to a level between $13 billion and $16.4 billion annually as part of an overall agreement. While the pledge was seen as constructive, countries such as Brazil demanded more.

Brazil and Canada claim that in six of the past eight years, the U.S. has exceeded the $19.1 billion that it is permitted under WTO rules to spend on the most trade-distorting forms of subsidies - those linked to distribution, export credits, marketing assistance loans and price guarantees.

Washington insists that its payments have always been well below the limits.

Washington spent $11 billion on trade-distorting subsidies last year, but the Bush administration wants flexibility in case world agricultural prices fall and American farmers need greater assistance. It blames the impasse in the Doha talks on Brazil and other emerging countries for refusing to open up their manufacturing markets.

Any U.S. concessions will have a tough time getting the approval of Congress, which is still negotiating a five-year, $286 billion farm bill that would leave subsidy programs for major crops largely unchanged. The Bush administration has threatened to veto it.

Jagdish Bhagwati, an economist at the Council of Foreign Relations in New York, believes the U.S. could be forced to make rash changes by WTO legal panels if it fails to negotiate an agreement through the Doha round.

"The U.S. needs to take notice that everything is going to be challenged," Bhagwati said in a recent interview.

Brazil and Canada will make their request to the WTO on Nov. 19, according to a WTO agenda released Friday.

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