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U.S. agriculture at risk for WTO legal challenge, group says

Agriculture.com Staff 11/14/2006 @ 8:42am

The Congressional Research Service (CRS) has highlighted the extreme vulnerability that U.S. commodity support programs have to WTO challenge.

"This should serve as a wake up call to producers across the country," says Dennis Nuxoll, American Farmland Trust (AFT) director of government relations. Responding to the recent Congressional Research Service (CRS) Report for Congress, "Potential Challenges to U.S. Farm Subsidies in the WTO”, Nuxoll adds, "The report's conclusions are striking. Current U.S. domestic and export support programs are extremely vulnerable to legal challenges under WTO rules.”

Available evidence suggests that major U.S. program crops receiving counter-cyclical payments and marketing loan provisions, like corn, soybeans, wheat, rice, cotton and more, are subject to dispute settlement challenges.

"Brazil's successful challenge of U.S. cotton program provisions, and the suspension of the Doha round of trade talks are some of the factors that led to this analysis by the CRS," Nuxoll says. "Very practically, what it means is future WTO cases could force Congress to either eliminate or change current programs to comply."

"Rather than allow WTO lawyers to dictate the terms of farm policy, farmers and ranchers need to take control of their future. The 2007 farm bill needs to include alternatives that ensure a viable safety net by including risk management tools that are not vulnerable to WTO attack. Alternatives are available that create a stronger safety net that will make American agriculture more competitive," says Nuxoll.

The CRS report concludes that a partial U.S. policy reform, such as the U.S. Doha-Round proposal to reduce U.S. amber box spending by 60%, would provide only a modest reduction in adverse effects in international markets. It would also result in making U.S. subsidy programs extremely vulnerable to WTO challenge, both for "covered" and "loan" commodities.

In addition, other U.S. foreign market development programs could be ruled as prohibited subsidies. "The most clear method for decreasing exposure to WTO challenges is through extensive decoupling -- i.e., removing the linkage between payments and producer or consumer behavior," the report reads.

"CRS has noted that there are several options for decoupling including fully decoupled direct payments, whole-farm revenue-insurance-type programs, and conservation or 'green' payments," says Nuxoll. "And these are some of the key recommendations included in AFT's Agenda 2007."

The Congressional Research Service (CRS) has highlighted the extreme vulnerability that U.S. commodity support programs have to WTO challenge.

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