MercoPress. South Atlantic News Agency

US faces fresh challenge on farm subsidies

Amid near deadlock in global talks over agricultural trade, the US on Wednesday faced a fresh challenge to its support for farmers as Uruguay promised to file a legal complaint against American rice subsidies at the World Trade Organisation.

The case will try to build on the precedent of successful cotton and sugar cases brought by Brazil to the WTO, which challenged subsidies paid by the US and European Union to their farmers and helped force them to reform handouts.

Guillermo Valles-Galmes, Uruguay's ambassador to the WTO, declined to give details of the case but confirmed that "the political decision has been taken to support the request from the [Uruguayan] private sector".

Uruguay, the world's seventh biggest rice exporter, will argue that US support for its rice farmers makes it harder for its own exports to compete. The US is the world's third largest rice exporter. With costs higher than many of its big competitors, its rice sector is one of the largest recipients of US farm subsidies, receiving about $1.5bn (?1.2bn, £871m) a year. Some of the payments to farmers are similar to those ruled illegal in the WTO cotton case.

Mr Valles denied suggestions that the case was timed to highlight the slow progress in the Doha round of global trade negotiations. Farm talks halted this week with many agricultural exporting countries blaming the EU and the US for blocking progress.

But Pedro de Camargo Neto, a Brazilian lawyer known as the father of the sugar and cotton cases, said it could have a beneficial effect. "Negotiation is better than litigation, but the fact that the US is not moving on domestic agricultural subsidies in the Doha round means that bringing a WTO case may help to push the talks along," he told the FT on Wednesday. Mr Camargo has been supporting Uruguayan farmers' demand for WTO litigation for more than a year.

Mr Camargo said he hoped that Brazil, which also has a rice industry though a smaller proportion of exports, Argentina and Mexico would join Uruguay's case against the US.

While it did not comment on Uruguay's proposed case yesterday, the US trade representative's office argues that negotiation where possible is better than litigation.

On Wednesday participants in farm talks under the Doha round continued to blame each other for the lack of progress. While declining to name countries and professing "no finger-pointing", a senior EU official hinted strongly at criticism of the US.

The official said that the EU's concessions on limiting agricultural export subsidies and compromising on the framework to be used in cutting farm tariffs had to be matched by other countries' reform of domestic farm support and "fake food aid" which, he said, was used to dump agricultural surpluses abroad.