PDF _ RL34351 - Brazil's and Canada's WTO Cases Against U.S. Agricultural Support
1-Feb-2008; Randy Schnepf; 17 p.

Abstract: On December 17, 2007, the World Trade Organization’s (WTO’s) Dispute Settlement Body (DSB) established a single panel to consider charges against U.S. farm programs brought in two separate but similar cases: DS357, brought by Canada, and DS365, brought by Brazil. Both cases make two charges against U.S. farm programs — first, that the United States has exceeded its annual WTO commitment levels for total aggregate measurement of support (AMS) for agriculture in each of the years 1999, 2000, 2001, 2002, 2004, and 2005, and second, that the U.S. export credit guarantee program for agricultural commodities operates as a WTO-illegal export subsidy.

Both charges stem, in large part, from a previous negative ruling against U.S. farm programs in a case (DS267) brought by Brazil against the U.S. cotton program. In that case, a WTO panel ruled (the ruling subsequently was upheld by a WTO Appellate Body), first, that direct payments made under U.S. farm programs do not qualify for green box exemption status because of a restriction prohibiting the planting of fruits, vegetables, or wild rice on payment acres; and second, that the U.S. export credit guarantee program operates as a prohibited export subsidy program because the financial benefits returned by these programs failed to cover their longrun operating costs. As a result, export credit guarantees are subject to previously scheduled export subsidy commitments. For more information, see CRS Report RS22187, Brazil’s WTO Case Against the U.S. Cotton Program: A Brief Overview, by Randy Schnepf.

Canada and Brazil claim that, since they fail to qualify for inclusion in the green box, U.S. direct payments should be added to its AMS when calculating total domestic support. In addition, they also charge that the United States has improperly notified several of its farm support programs as exempt from the AMS limit, while several other programs were improperly excluded from U.S. notifications. Canada and Brazil claim that when all of the outlays from these allegedly misnotified programs are included, then the U.S. AMS total exceeds its WTO commitment level.

The panel hearing the case is not likely to conclude its work until late 2008. Should any eventual changes in U.S. farm policy be needed to comply with a WTO ruling against the United States, it would likely involve action by Congress to produce new legislation.

This report provides background and details, as well as the current status of the two WTO dispute settlement cases. In addition, it discusses the role of Congress in responding to developments. This report will be updated as events warrant.

 [read report]

Topics: Agriculture, International, Legislative

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