Following on the footsteps of an earlier Canadian complaint, Brazil has asked the World Trade Organization (WTO) to open up consultations between it and the United States over the latter's farms subsidies. The request for consultations, announced by Brazil on 11 July, comes on the heels of a 9 June request by Canada that a WTO dispute resolution panel be formed in a similar dispute.

Both Canada and Brazil have alleged that the United States has exceeded the US$ 19.1 billion a year it is allowed to hand out in so-called "amber box" agricultural subsidies under WTO rules. In particular, Brazil and Canada claim that the United States exceeded the limit every year between 1999 and 2005, with the exception of 2003. The limit was not breached in 2006 due to high agriculture prices which resulted in lower US subsidies. (For information on the Canadian complaint and a discussion of WTO agricultural subsidies categories see the July 2007 issue of Subsidy Watch available here.)

The latest Brazilian move comes as the United States and Brazil have locked horns in negotiations aimed at concluding the Doha Round of WTO talks. The stumbling blocks for those negotiations have been the dual issues of farms subsidies in developed countries and access to developing-country markets. Negotiations on these two issues between the G-4 - the United States, the EU, India and Brazil - fell apart last month, resulting in the group itself being disbanded.

In 2005, Brazil won a long-running dispute against the United States over the latter's subsidies to cotton farmers. Brazil alleges that the United States has been slow to dismantle cotton subsidies in accordance with the WTO ruling. Currently, a WTO Compliance Panel is examining whether the United States has sufficiently changed its subsidies to cotton farmers to comply with the ruling.

The United States recently labeled as "unacceptable" a proposal by WTO Agriculture Committee Chairmen Crawford Falconer calling for the country to cut cotton subsidies by 82%, according to the July 20th issue Inside US Trade.

Under WTO rules, a 60-day consultation period will now take place, after which Brazil can request that a panel be formed to look into the allegations. Earlier in the month the Canadian request for a panel was blocked by the United States, a move that is allowed once per request under WTO rules. Canadian officials have since suggested that Canada will wait to re-file its request in order to facilitate a possible alignment of the two cases should Brazil eventually request a panel after its consultation period.