U.S. to WTO: direct payments are green box.

The U.S. last week notified the WTO of its farm subsidy spending over 2002 through 2005, putting direct payments in the "green box"--non-trade distorting. That was despite the WTO panel in the Brazil cotton case saying the restriction on fruit and vegetable plantings on program acres meant direct payments weren't "green."

That raises the question of why USDA recommended ending the fruit and vegetable restriction via their farm bill plan and cited the Brazil case as the reason. "One of our principles in our farm bill plan was our programs need to withstand challenges," USDA official Floyd Gaibler told us. "We expected to see a challenge and it is being made now by Brazil and Canada." Removing that restriction would "take the matter off the table" and "undercut" Brazil and Canada's case, he added. So far, the fruit and vegetable restriction isn't gone, and odds are low it will disappear.