WTO case filed over U.S. corn subsidies

Canada has lodged a complaint against the U.S. over what it claims are illegal handouts to corn growers, and is challenging whether the billions of dollars in overall farm subsidies by the U.S. government complies with international commerce rules.

The request for consultations, filed Monday with the World Trade Organization, could open a new trade dispute between two countries that only recently resolved a long and at times bitter confrontation over softwood lumber.

Under WTO rules, a three-month consultation period is required before a country can ask the trade body to launch a formal investigation.

A WTO case can result in punitive sanctions being authorized, but panels take many months, and sometimes years, to reach a decision.

“The United States has been providing subsidies to its agricultural producers that create unfair market advantages,” Trade Minister David Emerson said. “We hope to see the U.S. live up to its WTO obligations, particularly given that it has the opportunity to do so when it rewrites its farm bill this year.”

Gretchen Hamel, a spokeswoman for U.S. Trade Representative Susan Schwab, said Washington was still studying Canada’s request in detail and could not comment on the claim that its overall farm subsidy levels constituted an infringement of WTO rules.

She said, however, that U.S. support programs for corn were not harming Canadian producers and were legal.

“Corn prices have increased significantly in both the United States and in Canada. In addition, U.S. corn exports to Canada have declined in the last year,” Hamel said. “Given the dramatic improvement in the market over the past year, we’re surprised that Canada believes that our corn programs are now causing harm in breach of WTO rules.”

Canada argues that the U.S. has exceeded the permitted level of trade-distorting subsidies for a number of years on farm products including wheat, sugar and soybeans. It urged Washington to address its concerns when it soon begins to draft a new farm bill, which will set out American agricultural support programs for the next five years.

The U.S. says it has offered cuts as part of the WTO’s global free trade talks, but others have called the pledges largely artificial, addressing only maximum levels of government subsidies and not those actually distributed to U.S. farmers.

With the so-called Doha round of talks currently suspended -- following an acrimonious collapse in July over agricultural trade -- it is unclear whether Congress will honor its previous offers in the new farm bill.

The specific complaint on corn concerns some $9 billion paid out by the U.S. annually in export credit guarantees and other subsidies that Ottawa says unfairly and illegally deflate prices.