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Last Updated: Tuesday, 18 December 2007, 12:50 GMT
WTO to probe US farm subsidies
Wheat farming in the US
The row is the latest to overshadow the Doha Round trade talks
Canada and Brazil have complained to the World Trade Organization (WTO) about multi-billion dollar US farm subsidies they say break trade rules.

The WTO has begun an investigation into US support for soya, wheat, corn, rice and other crops.

It comes after the US Senate passed a $286bn farm bill, following a similar bill from the House of Representatives.

The US has been accused of unfairly helping its farmers, but the US says its farm programmes meet WTO rules.

The issue has been a major topic of debate in the WTO's six-year-old Doha Round trade talks.

'WTO obligations'

The Canadian and Brazilian complaints are over whether US support has topped Washington's agreed WTO levels of support.

The pair claim that in six of the past eight years the US has breached the $19.1bn it is allowed to spend on the most trade-distorting forms of subsidies, such as those linked to distributing goods.

"We must ensure that WTO members are meeting their WTO obligations," Canada told the WTO's dispute body.

The United States has designed its farm programmes to ensure compliance with the existed negotiated limits on domestic support
Juan Millan, US trade negotiator

Washington said it was disappointed at the move, and that its farm programmes were designed to comply with WTO rules.

It also said many of the issues being raised had already been addressed.

US trade official Juan Millan said the US's payments have always been below the WTO limits.

"The United States has designed its farm programmes to ensure compliance with the existed negotiated limits on domestic support," he said.

Talks locked

The Doha Round world trade talks have been blocked in their efforts to reach agreement by two major stumbling blocks - the large agricultural subsidies given to farmers in Europe, the US and Japan, and restrictive industrial tariffs in emerging markets such as China, India and Brazil.

Farm subsidies allow producers to sell their goods more cheaply than those in other countries, thus distorting competition.

The WTO allows some agricultural support to help secure food supplies, preserve the countryside and give farmers stability, but trade rules limit the type and size of assistance states can give.

The global trade body criticised Washington earlier this year, as it upheld a 2004 ruling in favour of Brazil, which had argued that US cotton subsidies were unfair.

During the period of the Doha trade talks, domestic opposition in the US to cuts in subsidies for farmers has grown.



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