CANADA REQUESTS PANEL IN US FARM SUBSIDY DISPUTE

Canada on 8 June requested the creation of a WTO dispute panel to examine its claim that the US government has in recent years paid out farm subsidies in excess of its legal spending limits.

Ottawa initiated the case in January, requesting consultations with the US on the issue (see BRIDGES Weekly, 17 January 2007, http://www.ictsd.org/weekly/07-01-17/story2.htm). It now says that the consultations have failed to resolve the disagreement.

At issue are US subsidies to support a range of crops, principally corn, wheat, soybeans, pulses, and sugar. Canada claims that in 1999, 2000, 2001, 2002, 2004, and 2005, Washington provided trade-distorting 'amber box' support to farmers that exceeded its binding WTO limit of USD 19.1 billion annually. Furthermore, it claims that some export credit guarantees provided by the US government have the effect of illegally subsidising the export of products including corn and soybean.

Notably, Ottawa refrained from asking the panel to determine whether billions of dollars in US subsidies to the corn industry had distorted world prices and helped them undercut farmers in Canada - although it reserved the right to do so in the future. In its original complaint, Canada had claimed that US corn subsidies had caused 'serious prejudice' to the interest of Canadian producers, in violation of the WTO Agreement on Subsidies and Countervailing Measures.

Canadian officials acknowledge that their case aims to reinforce pressure on Washington to cut trade-distorting farm subsidies, both as part of the Doha Round negotiations and as Congress writes new legislation this year mapping out future agricultural spending. "The drafting of the next farm bill over the coming weeks and months is an opportunity for the US to ensure that its subsidy programmes comply with its WTO obligations," said Canadian Agriculture Minister Chuck Strahl.

US officials expressed disappointment with Canada's decision to pursue a panel. "The United States is in full compliance with our WTO commitments," said Gretchen Hamel, a spokesperson for the US trade representative's office. "Canada's claims are without foundation and, if a panel is established, we will demonstrate this."

Canada's case closely mirrors Brazil's successful WTO suit against US support for cotton growers in 2005.

The US will be able to block Canada's request for a panel once, but WTO rules prevent it from doing so a second time.

ICTSD reporting.

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WTO REPORTS SLIGHT INCREASE IN ANTI-DUMPING INVESTIGATIONS

The number of anti-dumping investigations initiated by WTO Members increased slightly during the second half of 2006, with China retaining its position as the leading target of new inquiries, according to new data released by the WTO on 11 June.

The anti-dumping probes investigate claims that companies based in the targeted country are selling their goods in foreign markets at prices lower than what they charge at home. A total of 103 investigations were launched in the second half of last year, up from 96 for the same period in 2005.

While the WTO does not forbid such practices, it allows Members to impose anti-dumping measures - which usually take the form of an extra import duty - if they can prove that the product is being 'dumped'. Moreover, the importing nation must prove that the dumping practice is causing 'material injury' to its domestic producers.

China was the subject of 36 investigations between July and December 2006, up from 33 during the same period the year before. Indonesia, the subject of seven, was the second-most targeted country, followed by Japan, South Korea, Taiwan, and Brazil.

The EU, which launched 17 new investigations, initiated the greatest number of new probes, followed by India, Argentina, Brazil, Malaysia, and China.

Just over a quarter of the new investigations were initiated by developed countries, a slight increase from the second half of 2005.

Products from the chemicals sector were the most frequent target, followed by pulp and paper products and base metals.

Anti-dumping measures have been the subject of controversy in the past, as some countries, led by Brazil, Hong Kong, and Korea, have argued that the policies are used to justify protectionist import duties that inhibit healthy competition (see BRIDGES Weekly, 16 February 2005, http://www.ictsd.org/weekly/05-02-16/WTOinbrief.htm).

ICTSD reporting; "WTO Secretariat reports increase in new anti-dumping investigations, and continued decline in new final anti-dumping measures," WTO PRESS RELEASE, 11 June 2007; "Asia faces most anti-dumping probes: WTO," THE PENINSULA ONLINE, 12 June 2007; "WTO: Anti-dumping investigations rise in final half of 2006," INDUSTRY WEEK, 12 June 2007.