CHARLOTTETOWN (CP) - The United States and New Zealand are violating the World Trade Organization agriculture rules with billions of dollars in irrigation and export subsidies, a Canadian expert said Wednesday.
The WTO, the world body that regulates trade, has allowed the States to provide up to $19.1 billion US of subsidized support to farmers.
But Peter Clark, president of the Ottawa trade consultancy Grey, Clark, Shih and Associates, argues in his study - paid for by the Dairy Farmers of Canada - that the United States has gone far beyond that.
"We found their payments were about $5 (billion) or $6 billion US over the limit on a number of programs we looked at," he said in an interview.
"The irrigation subsidies are worth somewhere between $8 billion and $30 billion US annually depending on which benchmark you use to measure the subsidy."
The study said the irrigation funds go to 11 dry U.S. states.
"The benefits provided to U.S. producers through the approximately 130 irrigation projects are massive," the author writes in the study, which was released Wednesday during the Canadian Federation of Agriculture meeting in Charlottetown.
Clark also alleges New Zealand's dairy producers are operating in a protected market that allows them to export at lower prices.
"The lower prices offered . . . are made possible by profits realized from sales into more remunerative protected markets," he writes.
Canada's dairy industry has had its own difficulties with the WTO.
In December, the trade body rejected Canada's appeal against a ruling that the federal Commercial Export Milk program, which supplies milk to producers of dairy products, amounts to a banned export subsidy.
The dispute involves mainly cheeses from Quebec and Ontario that are worth more than $400 million annually.
Clark, a former trade negotiator, said "we'd like everybody to live by the same rules."
He told reporters the system is encouraging excess production in the States, which leads to low prices for hard-pressed Canadian farms.
"It's taking money out of the pockets of Canadian farmers because they get their returns from the market and American farmers get their returns from the government."
The study looked at a wide range of agricultural products including corn, soybeans, wheat, oats, cotton and oil seeds, as well as dairy and poultry.
Jean Gregoire, the president of the Dairy Farmers of Canada, said the report "confirms what many producers suspected: members of the trade organization didn't get what they expected from the negotiations.
"There are two ways to clarify the rules: litigation and negotiation. We expect the Canadian government to show leadership on this issue."
Clark said he's urging International Trade Minister Pierre Pettigrew to "take the time to get a good deal" in a WTO trade summit in Cancun, Mexico, scheduled to take place between Sept. 10 and 14.
Pettigrew has said agricultural subsidy reform is a major issue for Canada and must be "front and centre" in global trade talks.
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