WTO launches probe of U.S. farm support

Mon Dec 17, 2007 2:25pm EST
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By Jonathan Lynn

GENEVA (Reuters) - The World Trade Organisation (WTO) launched an investigation on Monday into multi-billion dollar U.S. farm subsidies that Brazil and Canada say break international trading rules.

The size of U.S. farm subsidies is a major battleground in the WTO's six-year-old Doha round talks on opening world trade.

Monday's WTO probe of U.S. agricultural support for wheat, corn, rice and other crops comes three days after the U.S. Senate passed a $286 billion farm bill, following a similar bill from the House of Representatives in July.

The White House has threatened to veto the bills, saying they failed to overhaul crop subsidy rules.

The Canadian and Brazilian complaints to the WTO relate to whether U.S. support topped Washington's limit of $19.1 billion a year since 1999, except 2003, for the most trade-distorting support.

"Canada estimates that during these years the United States exceeded its WTO commitment levels by billions of dollars each year," the Canadian government said in a statement to the WTO.

Subsidies distort trade by allowing producers to sell their goods more cheaply than those in other countries, who risk going out of business because they cannot compete.

While the WTO's 151 members agree that some forms of farm support are acceptable to help secure food supplies, preserve the countryside and give farmers stability, international trade rules limit the type and size of assistance states can give.   Continued...

<p>A farmer holds baby corn as he inspects the crop at his family farm in Rancho Santa Fe, California October 5, 2007. The World Trade Organization (WTO) launched an investigation on Monday into Washington's multi-billion-dollar farm subsidies that Brazil and Canada say break international trading rules. REUTERS/Mike Blake</p>