WTO Maize Case Evaporates

In disappointing news this week Canadian Trade Minister David Emerson has decided not to pursue the WTO Corn dispute into a substantive action.

The Government of Canada initiated a trade dispute in the WTO against United States maize subsidies on 8 January 2007. The Canadian complaint contends that US$9 billion provided to US maize farmers each year is depressing the global maize price to the detriment of other maize producing and exporting countries. After the initial consultations, the US Trade Representative (USTR) indicated in February that the US fully expected Canada will file a formal challenge in the World Trade Organization against the US maize subsidies. As a producer and exporter of maize South African continues to have a definite vested interest in the course of such an action, and private sector players in the maize value chain were looking at the possibilities of having SA join the dispute settlement proceedings officially.

This is disappointing in some ways, indeed, but may be related to the fact that US corn subsidy payments have dropped off sharply very recently due to a high demand for maize from the biofuel sector in the US which has spiked maize futures prices. The coming US maize crop is expected to be the largest in post world war 2 times.

On the WTO front, SA is in no way precluded from engaging with fellow developing country partners in the proceedings, notably Argentina and Mexico, and proceeding with its own WTO maize process on the grounds previously raised by Canada. This may be an interesting alternative, will certainly have an influence on the WTO negotiations in indicating that even if developed countries withdraw, Africa feels strongly enough aggrieved by agricultural subsidies to take over the process within a developing country contingent.