January 8, 2007
No. 2
The Honourable David Emerson, Minister of International Trade, and the Honourable
Chuck Strahl, Minister of Agriculture and Agri-Food and Minister for the Canadian
Wheat Board, today announced that the Government of Canada has requested
consultations with the United States at the World Trade Organization (WTO) on
subsidies provided to U.S. corn growers, as well as on the total level of U.S. trade-distorting agricultural support.
“The United States has been providing subsidies to its agricultural producers that create
unfair market advantages,” said Minister 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.”
“Canada is concerned that these U.S. subsidies continue to cause economic harm to
our corn farmers,” said Minister Strahl. “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 that they can compete.”
The United States is the world’s largest producer and exporter of corn. In 2005/2006,
the U.S. accounted for 41 percent of global corn production and 68 percent of all corn
exports. Over the last two years, U.S. corn subsidies have averaged almost
US$9 billion per year. Since 1993, Canada has consistently been a net importer of
corn, with the United States as the main supplier.
The Government of Canada will work toward resolving this issue through dialogue with
the United States. If consultations fail to resolve the matter, Canada has the option of
requesting that a WTO dispute settlement panel be appointed to adjudicate the issue.
Reducing unfair subsidies will help contribute to a more equitable trading environment
for agricultural products. Canada will also continue to work toward addressing
trade-distorting domestic support in the WTO Doha negotiations on agriculture.
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A backgrounder is attached.
For further information, media representatives may contact:
Jennifer Chiu
Press Secretary
Office of the Minister of International Trade and Minister for the Pacific Gateway and
the Vancouver-Whistler Olympics
613-992-7332
Trade Media Relations Office
Foreign Affairs and International Trade Canada
613-996-2000
http://www.international.gc.ca
Jeff Howard
Press Secretary
Office of the Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat
Board
613-759-1059
Media Relations
Agriculture and Agri-Food Canada
613-759-7972
Backgrounder
Current U.S. domestic support programs have caused, and continue to cause,
economic harm to Canadian farmers. In particular, support to U.S. corn producers over
the last two marketing years (2004/05 and 2005/06) has averaged almost US$9 billion
per year and has resulted in a significant distortion of corn prices in Canada.
While world corn prices declined significantly from 2003 through to 2006, U.S. corn
production actually increased from 256 million tons in 2003/04 to a record 300 million
tons in 2004/05, and then decreased slightly to 282 million tons in 2005/06.
The Government of Canada is of the view that existing U.S. corn subsidy programs
cause serious prejudice to Canadian corn growers through their effects on prices in the
Canadian market. The United States also maintains export credit guarantees that serve
to subsidize the exportation of certain U.S. agricultural products. Canada’s position is
that these programs are inconsistent with the United States’ WTO obligations.
Moreover, the Government of Canada believes that total U.S. trade-distorting domestic
support, specifically, the Total Aggregate Measurement of Support (Total AMS),
exceeds the United States’ corresponding 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. The United
States’ Total AMS consists of subsidies to a number of agricultural products, including,
but not limited to, corn, wheat, soybeans and sugar.
The majority of U.S. support programs affecting the production and exportation of
agricultural products, including corn, emanate from U.S. Farm Bill programming.
Canada believes that many of these Farm Bill programs, which include price-based
support programs, are trade-distorting and need reform.
The U.S. Congress will soon begin to draft a new Farm Bill, which will be the foundation
of U.S. domestic support programs for the next five years. As such, it has the unique
opportunity to ensure that the United States is in full compliance with its WTO
obligations and can contribute to a more level playing field for international trade in
agriculture.
Consultations represent the first stage in the WTO dispute settlement process. This
phase allows parties to discuss the measures at issue with a view to resolving their
dispute outside a formal adjudicative process. 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.
Further information about the WTO dispute settlement process can be obtained from
the WTO website at http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm.
