IN A move analysts say could help restart stalled world trade negotiations, Canada has taken the US to the World Trade Organisation (WTO) over trade-distorting maize subsidies.
The case could have significant implications for SA. Industry players believe SA, as a major maize producer and exporter, would be eager to join Canada as a third party in the case.
The Canadian government said last week it had requested consultations with the US at the WTO on the almost $9bn in subsidies the US gives to maize growers every year. It is also challenging the total level of US agricultural support.
Global trade negotiations have stalled over the contentious issue of farm subsidies.
SA's chief trade negotiator at the WTO, Xavier Carim, said SA had never before joined such a case as a third party, though it was something the trade and industry department would consider.
"We only got word of this now and have not made a decision yet," Carim said.
He said adjudication was still a long way off as the matter would go through a consultative process first and between 60 and 90 days' notice would have to be given if Canada pressed ahead.
US maize subsidies have completely suppressed global maize prices and Canada said it was taking the action to push for a level playing field.
"Canada is concerned that these US subsidies continue to cause economic harm to our corn farmers," Canadian Agriculture Minister Chuck Strahl said last Tuesday.
Last year, the US produced 41% of the world's maize production and made 68% of global maize exports.
Farming industry analyses had shown, however, that US maize exports would cease without subsidies and that world prices would increase 7%, benefiting maize-producing countries by about $4bn a year, said Hilton Zunckel, a senior trade adviser with Floor Inc Attorneys.
Canada said it would try to resolve the matter through dialogue, but if that failed it would ask the WTO to appoint a dispute settlement panel to adjudicate.
The subsidy Canada wants to attack is a massive $9bn -- five times the value of SA's annual maize crop. Agricultural subsidies have been at the heart of world trade negotiations and were the main reason for the breakdown of the Doha round of trade talks at the end of July last year.
"If the case does not go their way, there will be immense political pressure on the US to reform subsidies," said Zunckel.
The case against maize subsidies will add to the general pressure on the US to reform its stance on agricultural subsidies and could bring that country to return to the negotiating table with concessions on subsidies.
Canada's request is well timed, with the US preparing to rewrite its Farm Bill this year. This is the legislation that creates its subsidy policy.
"The US has been providing subsidies to its agricultural producers that create unfair market advantages.
"We hope to see the US live up to its WTO obligations, particularly given that it has the opportunity to do so when it rewrites its Farm Bill this year," said Canadian International Trade Minister David Emerson.
Grain SA has welcomed the action being taken by Canada.
"Anything anyone tries to do to reduce agricultural subsidies is fantastic news and we will support that.
"It is high time that someone launches this kind of economic attack on the US and the EU (European Union)," said Nico Hawkins, a senior economist at Grain SA.
Grain SA is at odds with government over its elimination of maize tariffs over December. However, Hawkins said government and the private sector were on the same side over the issue of agricultural subsidies and that Grain SA would ask government to join as a third party if Canada's case against the US went to arbitration.
It had been anticipated that litigation would increase in the absence of progress on a meaningful reduction in agricultural subsidies, he said, noting that action would increase pressure on the US to reform its policies.Africa News
