WORLD TRADE  
ORGANIZATION  WT/DS357/1 
G/L/812 
G/SCM/D73/1 G/AG/GEN/74 
11 January 2007 
 
(07-0146) 
 Original:   English 
 
 
 
UNITED STATES – SUBSIDIES AND  OTHER DOMESTIC SUPPORT 
FOR CORN AND OTHER AGRICULTURAL PRODUCTS 
 
Request for Consultations by Canada  
 
 
 The following communication, dated 8 January 2007, from the delegation of Canada to the 
delegation of the United States and to the Chairman of the Dispute Settlement Body, is circulated in 
accordance with Article 4.4 of the DSU. 
 
_______________ 
 
 
My authorities have asked me to request consultations with the Government of the 
United States pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing 
the Settlement of Disputes  (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994  
(GATT 1994 ), Articles 4, 7 and 30 of the Agreement on Subsidies and Countervailing Measures  
(SCM Agreement ) and Article 19 of the Agreement on Agriculture .   
  There are three parts to this request.  For each of the measures referred to in this request, the 
request also covers any amendments, replacement s, extensions or other related measures.  
 I. The measures at issue in the first part of  this request are subsidies and domestic support 
provided to US producers and/or exporters of corn  (the "US corn industry") as well as the programs, 
legislation, regulations and statutory instrume nts providing these subsidies and support.  The 
measures include the following subsidies and domes tic support provided to the US corn industry from 
marketing year
1 1996 onward:  
  – Subsidies and domestic support provided under the Farm Security and Rural 
Investment Act of 2002  (2002 Farm Bill) and programs under the 2002 Farm Bill, 
relating to marketing loan payments (including marketing assistance loans, marketing 
loan gains, loan deficiency payments, commodity certificates, commodity certificate 
exchange gains and commodity loan interest subsidies), direct payments, counter-cyclical payments, and any ot her provisions of the 2002 Farm Bill that provide direct 
or indirect support to the US corn industry; 
 
 – Subsidies and domestic support provided under the Federal Agriculture Improvement 
and Reform Act  of 1996  (FAIR Act) and programs under the FAIR Act, relating to 
marketing loan payments (including mark eting assistance loans, marketing loan 
gains, loan deficiency payments, commod ity certificates, commodity loan interest 
subsidies, commodity certificate exchange  gains), production flexibility contract 
                                                     
 
1 The "marketing" year for corn runs from 1 September through 31 August.  For example, marketing 
year 2005 began on 1 September 2005 and ended on 31 August 2006. WT/DS357/1, G/L/812,  
G/SCM/D73/1, G/AG/GEN/74 Page 2 
 
 
  payments and any other provisions of the FA IR Act that provide direct or indirect 
support to the US corn industry; 
  – Market loss assistance (MLA) payments to  the US corn industry provided under the 
Agriculture, Rural Development, Food and Drug Administration and Related 
Agencies Appropriation Act of 1998; Agriculture, Rural Development, Food and 
Drug Administration and Related Agencies Appropriation Act of 1999 ; the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 ; the 
Agriculture, Rural Development, Food and Drug Administration, and Related 
Agencies Appropriation Act of 2000 ; the Agriculture Risk Protection Act of 2000 ; and 
the Crop Year 2001 Agricultural Economic Assistance Act ; 
  – Export credit guarantees to facilitate the export of corn, provided under the 
Agricultural Trade Act of 1978 , and other measures such as the General Sales 
Manager (GSM-102) program and Supplie r Credit Guarantee Program (SCGP). 
 
Canada considers that the measures at issu e are inconsistent with the United States' 
obligations under Articles 5(c) and 6.3 (c) of the SCM Agreement . 
 
Under the measures at issue, the United States pr ovides subsidies to the US corn industry.  
These subsidies take the form of financial contributio ns by the US government or an income or price 
support in the sense of Article XVI of GATT 1994 , within the meaning of Article 1.1(a) of the 
SCM Agreement  and a benefit is thereby conferred within  the meaning of Article 1.1(b) of the 
SCM Agreement .  These subsidies are specific to US producers of primary agricultural products 
and/or to the US corn industry within the meaning of Articles 2.1 and 2.3 of the SCM Agreement .   
 
These measures cause adverse effects in the form of serious prejudice and threat of serious 
prejudice to the interests of Canada.  The operation of the statutory provisions of the 2002 Farm Bill, the FAIR Act and the other statutes referred to a bove that mandate payments of marketing loans, 
counter-cyclical payments and direct payments (inc luding production flexibility contract payments) 
and MLA payments to the US corn industry, and the mandatory payments under those provisions, as 
well as the export credit guarantees, cause significan t price depression and price suppression for corn 
in the Canadian market for marketing years 1996-2006, and threaten to cause significant price depression and price suppression for corn in the Cana dian market, in violation of Articles 5(c) and 
6.3(c) of the SCM Agreement.   
II. The measures at issue in the second part of th is request are support in respect of corn and 
other agricultural products not scheduled in Section II of Part IV of the Schedule of the United States, 
provided to US exporters of those products through export credit guarantee programs under the 
Agricultural Trade Act  of 1978  and other measures such as the GSM-102 program and SCGP as well 
as the programs, legislation, regulations and statutory instruments providing the support.   
 
Canada considers that the measures at issu e are inconsistent with the United States' 
obligations under Articles 3.1(a) and 3.2 of the SCM Agreement  and Articles 3.3, 8, 9.1 and 10.1 of 
the Agreement on Agriculture . 
 
Through these programs, the United States makes av ailable to its exporters premium rates and 
other terms more favourable than those which th e market would otherwise provide.  The premium 
rates under these programs are also inadequate to c over the long-term operating costs and losses of the 
programs.  These  programs therefore provide subsidies con tingent upon export performance contrary 
to Article 3.1(a) and 3.2 of the SCM Agreement .  These measures also violate Articles 3.3, 8, 9.1 and 
10.1 of the Agreement on Agriculture .  WT/DS357/1, G/L/812,  
 G/SCM/D73/1, G/AG/GEN/74  Page 3 
 
 
   
III. The measures at issue in the third part of th is request are the domestic support that is properly 
subject to the provisions of Article 6 of the Agreement on Agriculture , provided by the United States 
in favour of agricultural producers, as well as the programs, legislation, re gulations and statutory 
instruments providing this support.  Canada cons iders that the United States provides support in 
excess of the commitment levels specified in Section I of Part IV of its Schedule.  The measures include the following:   
– Production Flexibility Contract (PFC) payments pursuant to the FAIR Act; 
 
– Direct Payments pursuant to the 2002 Farm Bill; 
 
– MLA payments pursuant to the  Agriculture, Rural Development, Food and Drug 
Administration and Related Agencies Appropriation Act of 1999 ; the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act of 1999 ; the 
Agriculture, Rural Development, Food and Drug Administration, and Related 
Agencies Appropriation Act of 2000 ; the Agriculture Risk Protection Act of 2000 ; and 
the Crop Year 2001 Agricultural Economic Assistance Act ; 
 
– Counter-Cyclical Payments pursuant to the 2002 Farm Bill. 
 
Canada considers that the measures at issu e are inconsistent with the United States' 
obligations under Article 3.2 of the Agreement on Agriculture . 
 
PFC payments and Direct Payments do not fully conform with paragraph 6(b) of Annex 2 to 
the Agreement on Agriculture .  Accordingly, PFC payments should be included in the Aggregate 
Measurement of Support (AMS) of the United States for each of wheat, corn, grain sorghum, barley, 
oats, upland cotton, and rice, and Direct Payments sh ould be included in the AMS of the United States 
for each of wheat, corn, grain sorghum, barley, oats, upland cotton, rice, soybeans, and other oilseeds.  
 
In addition, MLA payments should be included in the AMS of the United States for each of 
wheat, corn, grain sorghum, barley, oats, upland cotton, and rice, and Counter-Cyclical Payments 
should be included in the AMS of the United States  for each of wheat, corn, grain sorghum, barley, 
oats, upland cotton, rice, soybeans, and other oilseeds.  
According to Article 3.2 of the Agreement on Agriculture  the United States is allowed to 
provide support in favour of domestic agricultural producers not in excess of the levels specified in 
Section I of Part IV of its Schedule.  These levels are US $19, 899.264 million in 1999 and 
US $19,103.294 million in each subsequent year.   
When the annual payments under the foregoing programs are included in the AMS of the 
United States for the respective products indicated  in the preceding paragraphs, the Current Total 
AMS of the United States exceeds the levels spec ified in each of 1999, 2000, 2001, 2004, and 2005. 
Through the improper exclusion of domestic suppor t, the United States therefore provides support in 
favour of domestic producers in excess of the commitme nt levels specified in Section I of Part IV of 
its Schedule, contrary to Article 3.2 of the Agreement on Agriculture . 
 
In respect of Parts I and II of this request for consultations, Articles 4.2 and 7.2 of the 
SCM Agreement  together require that Canada include a stat ement of available evidence with regard to 
(a) the existence and nature of the subsidies in question and (b) the serious prejudice caused to the 
interests of Canada.  The Annex to this request contai ns Canada's statement of available evidence.     
 WT/DS357/1, G/L/812,  
G/SCM/D73/1, G/AG/GEN/74 Page 4 
 
 
  Canada reserves the right to raise additional cl aims and legal matters regarding the measures 
at issue during the course of consultations.    
I look forward to receiving your reply to this request and to selecting a mutually acceptable 
date on which consultatio ns may take place.   
  WT/DS357/1, G/L/812,  
 G/SCM/D73/1, G/AG/GEN/74  Page 5 
 
 
  ANNEX
 
 
Statement of Available Evidence  
  
Canada's request for consultations dated 8 January 2007 identifies the s ubsidies that are part of this 
request for consultations.  The evidence set out below is evidence presently available to Canada 
regarding the existence and nature of those subsidi es, and the serious prejudice caused to the interests 
of Canada.  Canada reserves the right to supplemen t or alter this list in the future, as required. 
 
The evidence presently available to Canada includ es, in addition to the relevant legislation, 
regulations and statutory instruments, the following:  
United States Department of Agriculture (USDA): 
 
USDA Commodity Estimates Book:  FY 2007 Mid-Session Review http://www.fsa.usda.gov/Interne t/FSA_File/comm_ est_book_2006.pdf
 
 History of Budgetary Expenditures of the Commodity Credit Corporation, Fiscal Year 1990-2000 Actual, April 9, 2001. USDA Farm Service Agency, Budget Division, Book 3. 
http://www.fsa.usda.gov/In ternet/FSA_File/book3.pdf
 
 History of Budgetary Expenditures of the Comm odity Credit Corporation, Fiscal Years 2001-2003 
Actual, January 30, 2004. USDA Farm Service Agency, Budget Division, Book 4. http://www.fsa.usda.gov/In ternet/FSA_File/book4.pdf
 
 
Farm and Commodity Policy Briefing Room http://www.ers.usda.gov/Briefing/FarmPolicy/
 
 The 2002 Farm Bill: Provisions and Economic Implications 
http://www.ers.usda.gov/Features/farmbill/
  
 
The 2002 Farm Act: Provisions and Implications for Commodity Markets.  USDA ERS Agriculture Information Bulletin Number 778. November 2002. http://www.ers.usda.gov/Publications/AIB778/
  
 
Comparison and Summary of 1996 and 2002 Fa rm Bills – Title 1: Commodity Programs 
http://www.ers.usda.gov/Features/Farmbill/titles/titleIcommodities.htm   
 Farm and Commodity Policy: 1996-2001 Commodit y Provisions – Emergency and Supplemental 
Assistance http://www.ers.usda.gov/Briefing/ FarmPolicy/1996emerge.htm#2
  
 
1996 FAIR Act Frames Farm Policy for 7 Years http://www.ers.usda.gov/publications/agoutlook/aosupp.pdf
 
 Provisions of the Federal Agriculture Improvement and Reform Act of 1996 
http://www.ers.usda.gov/publications/aib729/
  
 US Farm Program Benefits: Links to Pl anting Decisions and Agricultural Markets 
http://www.ers.usda.gov/publicati ons/agoutlook/oct2000/ao275e.pdf
 
 WT/DS357/1, G/L/812,  
G/SCM/D73/1, G/AG/GEN/74 Page 6 
 
 
  Fact Sheet: Feed Grains – Summary of 2002-2007 Program. July 2003. 
http://165.221.16.19/pas/publica tions/facts/feedgrains03.pdf
 
 Farm and Commodity Policy:  Program Provisions 
http://www.ers.usda.gov/Briefing/FarmPolicy/ProgramProvisions.htm
 
 Direct Payments http://www.ers.usda.gov/Briefing/FarmPolicy/DirectPayments.htm
  
 
Counter Cyclical Income Support Payments 
http://www.ers.usda.gov/Briefing/FarmPolicy/CounterCyclicalPay.htm  
 Marketing Assistance Loan and Loan Deficiency Payment Programs http://www.ers.usda.gov/Briefing/FarmPolicy/2002malp.htm
 
 
Nonrecourse Marketing Assistance Loans and Loan Deficiency Payments Fact Sheet, June 2003 
http://www.fsa.usda.gov/Inte rnet/FSA_File/nonrec03.pdf   
 Commodity Certificates Fact Sheet, July 2000 http://www.fsa.usda.gov/FSA/printapp?fileName =pf_20000701_comop_en_certs .html&newsType=pr
factsheet  
 Commodity Costs and Returns: US and Regional Cost and Return Data http://www.ers.usda.gov/Data/CostsAndReturns/testpick.htm
 
 
Corn Briefing Room 
http://www.ers.usda.gov/Briefing/Corn/  
 Corn: Policy http://www.ers.usda.gov/Briefing/Corn/policy.htm
 
 
Corn: Market Outlook 
http://www.ers.usda.gov/Briefing/Corn/marketoutlook.htm  
 Feed Outlook – Various issues. http://usda.mannlib.cornell.edu/MannUsd a/viewDocumentInfo.do?documentID=1273
  
 
Feed Yearbook – Various issues. http://usda.mannlib.cornell.edu/MannUsda/vie wDocumentInfo.do;jsessionid=0AB948D9EAA3F1212
F7A4CE0465BFD0B?documentID=1274   
 Feed Grains Database 
http://www.ers.usda.gov/data/feedgrains/
 
 Grain: World Markets and Trade. Foreign Agricu ltural Service Circular Series. Various issues. 
http://www.fas.usda.gov/grain/circular/2006/09-06/grain0906.pdf
 
 
USDA Agricultural Baseline Projection Tables, Released February 2006 
http://usda.mannlib.cornell.edu/MannUsda/viewSta ticPage.do?url=http://usda.mannlib.cornell.edu/us
da/ers/94005/./2006/index.html  
 Production, Supply & Distribution online, Custom Query  WT/DS357/1, G/L/812,  
 G/SCM/D73/1, G/AG/GEN/74  Page 7 
 
 
  http://www.fas.usda.gov/psdonline/psdquery.aspx
 
 National Agricultural Statistical Service – Acreage. Various issues. http://usda.mannlib.cornell.edu/MannUsd a/viewDocumentInfo.do?documentID=1000
  
 
National Agricultural Statistical Service – Agricultural Prices. Various issues. 
http://usda.mannlib.cornell.edu/MannUsd a/viewDocumentInfo.do?documentID=1002   
 World Supply and Demand Estimates 
http://www.usda.gov/oce/commodity/wasde/
  
 Agricultural Outlook Forum 2005: Grains and Oilseed s Outlook for 2005. Prepared by Members of 
the Wheat, Feed Grains, and Oilseeds Intera gency Commodity Estimates Committees. USDA. 
http://agecon.lib.umn.edu/cgi-bin/pd f_view.pl?paperid=17007&ftype=.pdf
  
 
USDA Export Credit Guarantee Programs http://www.fas.usda.gov/excredits/ecgp.asp
  
 Eligible Commodities Under the GSM-102 and SCGP Programs http://www.fas.usda.gov/excredits/gsmcommodities.html
  
 
GSM 102 Guarantee Fee Rate Schedule http://www.fas.usda.gov/excredits/gsm102fees.html
  
 Monthly Summary of Export Credit Guarantee Program Activity 
http://www.fas.usda.gov/excredits/Monthly/ecg.html
  
 
Other US Government Sources: 
 
Potential Challenges to US Farm Subsidies in the WTO: A Brief Overview. Congressional Research 
Service (CRS) Report for Congress. October 25, 2006. 
http://fpc.state.gov/documents/organization/76911.pdf   
  Potential Challenges to US Farm Subsidies in the WTO. CRS Report for Congress. October 25, 2006.  
http://www.agweb.com/images/content/CRS1.pdf
 
 
Agricultural Trade Liberalization. Congressional Budget Office (CBO). Economic and Budget Issue 
Brief. November 20, 2006. http://www.cbo.gov/ftpdocs/ 76xx/doc7690/11-20-AgTrade.pdf
  
 Emergency Funding for Agriculture: A Brief History of Supplemental Appropriations, FY1989-
FY2006. CRS Report for Congress.  Updated July 3, 2006. 
http://ncseonline.org/NLE/CRS reports/06Aug/RL31095.pdf
  
 Budget of the United States Government.  Office of Management and Budget. 
http://www.whitehouse.gov/omb/budget/fy2007/
 
 
Other sources, including analytical studies:  
 
Boxed in: Conflicts between US farm policies and WTO obligations. Daniel A. Sumner. CATO 
Institute. December 5, 2005. http://www.freetrade.org/node/23
  WT/DS357/1, G/L/812,  
G/SCM/D73/1, G/AG/GEN/74 Page 8 
 
 
    
Statement of Professor Sumner. Canadian International Trade Tribunal. NQ-2005-001. Grain Corn From the United States. Public Exhibit A-6.  
CCP Reply Brief. Effects of US Corn Subsidi es on the Corn Industry in Canada: Responses to 
Comments and Analysis, Daniel A. Sumner. Canadi an International Trade Tribunal. NQ-2005-001.  
Public Exhibit A-18.  When the Peace Ends: The Vulnerability of EC and US Agricultural Subsidies to WTO Legal 
Challenge.  Richard H. Steinberg and Timothy E. Josling. Journal of International Economic Law  
6(2), 369-417. Oxford University Press.  US Agriculture Without Farm Support. Australia n Bureau of Research and Agricultural Economics 
(ABARE) Research Report 06.10. September 2006.  
http://www.abare.gov.au/publications _html/trade/trade_06/us_ag.pdf
  
 
Truth or Consequences: Why the EU and the USA Mu st Reform Their Subsidies, Or Pay the Price. 
Oxfam Briefing Paper. Oxfam In ternational. November 2005. 
http://www.oxfam.org/en/files/bp81_truth_or_consequences/download   
 
United States – Subsidies on Upland Cotton , Panel Report (WT/DS267/R) and Report of the 
Appellate Body (WT/DS267/AB/R).  Chicago Board of Trade Corn Pricing Data http://www.cbot.com/
 
 
Canada: Grains and Oilseeds Outlook. Agriculture and Agri-Food Canada, Market Analysis Division 
http://www.agr.gc.ca/mad-dam/index_e. php?s1=pubs&s2=go-co&page=go-co-hist   
 Weekly Price Summary. Agriculture and Agri-Food Canada, Market Analysis Division http://www.agr.gc.ca/mad-dam/inde x_e.php?s1=pubs&s2= pri&page=intro
  
 
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