The United States could soon find itself called before the World Trade Organization to defend the more controversial aspects of its 2002 farm bill, says a Canadian trade official.
The trigger for challenges could be a failure to make agricultural progress during a crucial meeting of WTO ministers in Mexico in September.
Chief agriculture negotiator Steve Verheul told a Parliament Hill meeting May 8 that a number of countries, including Canada, are beginning to collect evidence that could be used to sustain a WTO challenge to aspects of the U.S. farm bill, which extended farm subsidies and added layers of protection to sensitive American farm sectors.
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Brazil already has filed a complaint about U.S. cotton policy.
“We are supporting them in that,” Verheul told the House of Commons agriculture committee during a hearing on the implications for the farm bill on Canada. “We also are starting to build potential groundwork for some cases. Canada, along with a number of other countries, is reviewing all the issues.”
He said there are a number of potential challenges to farm bill provisions.
It is possible the U.S. is not properly reporting all its trade or production distorting spending, preferring to disguise spending on irrigation as non-distorting.
It is possible that support payments the American government is claiming as “green” and non-distorting really are “amber” and subject to discipline under WTO rules, he said.
If all U.S. spending was properly claimed, it might put the Americans close to their “amber” spending limit of $19.1 billion US, said the Canadian negotiator. “That (the level of U.S. spending) clearly is something we keep a close eye on.”
If countryÐof-origin labelling rules become mandatory in 2004, they will be challenged.
“We will want to be ready to move when we can,” Verheul told MPs.
Bloc Québécois MP Louis Plamondon complained that Americans are “magicians at hiding subsidies.”
Canadian Alliance MPs complained that the Canadian government is being too slow and timid in challenging the Americans.
But Verheul said cases cannot be launched until evidence is available to prove they are damaging trade or exceeding WTO subsidy limits.
Mandatory COOL rules are not yet in effect and the latest year for which WTO has been notified on U.S. spending levels is 1999.
It means hard evidence is not yet available on the impacts of the latest farm bill. “We’ll be ready to act when it is,” he said.
Michael Keenan, director general of research and analysis for Agriculture Canada, told MPs that the actual impact might be less than many fear.
“The U.S. farm bill will have a modest positive effect on U.S. production and a modest negative effect on world prices,” he predicted.
However, he said the bill is damaging because it could tempt other countries to move in the same protectionist and subsidizing direction. “It sets a very bad precedent for world agricultural policy.”
