July 12 (Bloomberg) -- Brazil lodged its broadest attack against U.S. farm spending with a complaint at the World Trade Organization that may signal the start of a raft of litigation as hopes for an international accord dissolve.

U.S. payments since 2001 supporting wheat, rice, oats, hogs, sheep, beef and dairy prices, plus gasoline rebates, tax breaks and export credits may have exceeded the combined $19.1 billion annual spending allowed under the U.S.'s pledges to the trade arbiter, Brazil said.

The complaint follows the collapse of WTO talks to draft a global agreement cutting rich nations' farm subsidies and tariffs on commodities. On June 21, Brazil walked out of negotiations with the European Union and the U.S., calling for lower U.S. spending than a $17 billion offer.

``This complaint attacks the entire U.S. farming policy,'' said Donizeti Beraldo, head of trade and international affairs at Brazil's National Agriculture Confederation, which represents more than a million farmers. ``If the U.S. fails to advance on talks, they will be at risk of more complaints,'' Beraldo said in an interview from Brasilia today.

Spending Ceiling

The U.S. stayed below the $19.1 billion a year spending ceiling until 2001. Since then, the U.S. hasn't provided spending figures to the WTO, Brazil says.

``Available public information indicates that the domestic support that the U.S. provided exceeded its commitment levels,'' Brazil's WTO ambassador, Clodoaldo Hugueney, wrote to his U.S. counterpart, Peter Allgeier.

U.S. Agriculture Secretary Mike Johanns said U.S. farm programs provide a ``safety net'' for farmers and are in agreement with trade rules. U.S. officials will do ``everything we can'' to defend the country's farm policy, he said.

U.S. aid to farmers hurts poor and developing nations that can't match the subsidies, Brazilian Agriculture Minister Reinhold Stephanes said.

Developing countries such as Brazil ``don't have the means to give as much in subsidies,'' Stephanes said today in an interview in Brasilia. ``They have to be efficient and sell at lower prices.''

Brazil will continue to seek a global trade accord to cut tariffs and subsidies, Stephanes said.

Successful Complaints

Brazil has already led successful WTO complaints against U.S. cotton programs worth about $4 billion a year.

``U.S. agriculture programs have been vulnerable for some time, and a number of countries were holding off,'' said Brendan McGivern, a trade lawyer who specializes in WTO disputes at White & Case in Geneva. ``This is a signal from the Brazilians that they don't expect much from the negotiations.''

Last month, Canada asked the WTO to settle a claim that the U.S. is exceeding the same $19.1 billion annual cap on farm subsidies. Canada is seeking to pressure U.S. lawmakers to reduce the aid when they rewrite the farm bill that includes most of the payouts.

``It's clear they're not going to get the reforms they want through the negotiations because the political will isn't there, so all they have left is the legal route,'' said Carin Smaller, who follows the WTO talks for the Institute for Agriculture and Trade Policy, a Minneapolis-based group allied with small farmers.

Brazil's case appears to closely track Canada's, Gretchen Hamel, a spokeswoman for the U.S. Trade Representative's office in Washington, said in an e-mail.

`Unfounded' Claims

``These claims were unfounded when they were made by Canada, and they are just as unfounded when they are made by Brazil,'' Hamel wrote. ``We reject Brazil's (and Canada's) contention and will defend that position vigorously.''

The U.S. has supported farmers within its allowed limits and ``is somewhat puzzled by Brazil's repeat challenge to U.S. export credit guarantee programs'' that was already addressed in its cotton complaint, Hamel said.

Brazil's complaint, dated yesterday and seen by Bloomberg News, is a request for consultations, which must last at least two months in an effort to resolve the dispute. If consultations fail, Brazil can ask the WTO to rule.

Failed Negotiations

``This is one of the consequences after negotiations failed,'' said Rubens Barbosa, a former Brazilian ambassador in London, said in a telephone interview. ``Other countries will follow suit.''

Brazil is also trying to influence the U.S. Congress, which is moving ahead with an extension of current U.S. farm subsidies this month, said Gary Hufbauer, a fellow at the Peterson Institute for International Economics in Washington.

``They would like to get some attention in Congress, even as the WTO process is stalled,'' Hufbauer said.

The chairman of the U.S. House Agriculture Committee, which next week will begin drafting a new farm bill, called Brazil's complaint ``ridiculous'' and said it wouldn't affect U.S. farm policy.

``They are being a bit disingenuous there,'' said Democratic Representative Collin Peterson of Minnesota. Brazil has ``one of the most competitive modern agricultural systems in the world,'' and needs to focus more on opening its own markets than on filing complaints, he said.

To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net

Last Updated: July 12, 2007 18:17 EDT