May 31, 2018 / 5:55 PM / 19 days ago

Canada to U.S.: Explain that $30 billion farm spending war chest

CHICAGO/GENEVA (Reuters) - Canada wants the United States to explain why its lawmakers have made an additional $30 billion available to support U.S. farmers hit by trade woes, and how Washington might distribute the money, according to a document published by the World Trade Organization on Thursday.

A Canadian flag flutters in front of the Detroit skyline, dominated by General Motors headquarters (R), is seen from Windsor, Onatario, Canada January 14, 2018. REUTERS/Jonathan Ernst

The questions come amid growing trade tensions between the United States and its top export markets. Earlier on Thursday, the Trump administration outraged allies by moving ahead with tariffs on aluminum and steel imports from Canada, Mexico and the European Union.

Canada’s questions also point to more potential trouble brewing at the World Trade Organization, where the United States has vetoed new judges for disputes. Analysts say Canada is seeking clarity on what steps the White House might take to protect farmers whose support helped Donald Trump win the 2016 U.S. presidential election.

The U.S. Department of Agriculture, the White House and Canadian officials could not immediately be reached for comment.

Canada submitted the request to the WTO’s agriculture committee, where negotiators meet several times a year to examine each other’s farm support programs and challenge eye-catching spending by their rivals.

Canada’s written question asked the United States to explain the U.S. Bipartisan Budget Act of 2018, in which Congress lifted certain restrictions on the U.S. Agriculture Secretary’s authority to use Commodity Credit Corporation (CCC) funds.

The CCC has broad authority to make loans and direct payments to U.S. growers when prices for corn, soybeans, wheat and other agricultural goods are low. The White House is looking at ways to use CCC funds to offset farm income losses in a trade war with China or others, according to media reports.

“Canada understands that the CCC can borrow up to $30 billion from the Treasury Department at any one time to stabilize farm income such as assisting farmers through loans, purchases, payments and other operations,” Canada said.

“Could the U.S. please provide the reasoning for lifting restrictions on the USDA’s authority to use CCC funds, and name the programs that will be eligible for these new funds?”

Canada also wants to know if Washington can use CCC funds to buy domestic surpluses, such as dairy products, or corn and soybeans.

Canada’s formal request for information does not necessarily imply a dispute is brewing. But WTO committee questions are often a sign of friction. If no satisfactory answer is supplied, pressure for a negotiated solution – and the risk of a full-blown dispute – is likely to rise.

Reporting by P.J. Huffstutter in Chicago and Tom Miles in Geneva; Editing by Matthew Lewis

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