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Unfriendly border: Canada consults WTO on U.S. corn payments

Agriculture.com Staff 01/09/2007 @ 12:40pm

Cattle and lumber may soon be joined by corn on the list of commodities creating conflict on the U.S. border with Canada.

Canadian officials announced Monday they will begin the process of inquiry into the alleged trade distortion created by U.S. corn subsidies with the World Trade Organization (WTO). The move -- which officials say was motivated solely by the strained competitiveness of Canadian corn farmers -- is expected to set off a chain of events that could take months or even years to reach a final conclusion.

"Canada is concerned that these U.S. subsidies continue to cause economic harm to our corn farmers," Canadian agriculture minister Chuck Strahl said Monday of U.S. corn payments. "That's why we took the action we did, in order to provide the best possible support for our producers by pushing for a level playing field so they can compete."

The timing of the WTO inquiry is critical to the U.S. government's ability to rectify the situation if the need for change is demonstrated by the WTO, added Canadian international trade minister David Emerson. "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," Emerson said Monday.

The move is technically a "consultation" with WTO, in which the global trade body will first allow both parties to "discuss the measures at issue with a view to resolving their dispute outside a formal adjudicative process," according to a Government of Canada press release. The process that WTO says typically involves "broken promises" in trade agreements will unfurl into a full investigation if initial talks falter.

"If parties fail to reach an agreement at this stage, Canada could request that a WTO dispute settlement panel be appointed to adjudicate the issue," according to the Canadian government release.

Canada has been a net importer of corn since 1993, largely relying upon U.S. corn that globally comprised 68% of the world's corn exports in 2006, according to Canadian officials. Canadian farmers produced 9.3 million tons of corn in 2006, according to the USDA Foreign Agricultural Service. U.S. production for the same year was 10.74 billion bushels.

In this week's WTO inquiry, Canadian officials allege U.S. supports exceed the nation's "WTO commitment levels for certain years.

"Consequently, for these years, Canada's position is that the United States is not in compliance with certain provisions of the WTO agreement on agriculture," according to Canadian officials.

While he opposes the actions taken by the Canadian government this week, American Farm Bureau Federation president Bob Stallman said Monday the inquiry doesn't affect U.S. farm policy goals. He added that his organization will stand behind the existing farm payment structure and the WTO consultation process, which will likely be a long one.

"It is unfortunate that Canada has decided to seek consultations with the United States through the World Trade Organization regarding the U.S. farm subsidy program. While the American Farm Bureau Federation is dismayed by Canada's actions, we will support our government throughout the consultations," Stallman said Monday. "The consultation phase is simply the beginning of a potentially long process, and we will not attempt to second-guess the outcome. This request for consultations has no bearing on our goals in domestic and international policy, which will be based on what is good for U.S. agriculture.

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