The WTO opened an investigation on Monday into whether the US is violating international commerce rules that limit subsidies to US farmers, three days after the US Senate approved a new US$286 billion farm bill.
The WTO set up a panel to rule in the dispute after Brazil and Canada demanded the investigation.
"We must ensure that WTO members are meeting their WTO obligations," Canada told the WTO dispute body.
Frustrated by US resistance to cutting back on subsidies, the two countries asked the WTO to condemn Washington for exceeding permitted levels of trade-distorting handouts to US producers of crops such as corn, cotton, rice, soybean and wheat.
The panel created on Monday is expected to issue a first ruling sometime next year.
The dispute system often takes years before reaching a final decision, but can force countries to change their legislation or face billions of dollars in retaliatory sanctions.
US trade official Juan Millan said Washington's payments have always been below the limits.
"The United States has designed its farm programs to ensure compliance with the existing negotiated limits on domestic support," he said. "We believe that a panel will agree."
Millan criticized Brazil and Canada for including payments that "have ceased to exist -- in some cases more than five years ago."
The two countries brought their cases to the WTO after failing repeatedly to secure US subsidy cuts as part of the WTO's Doha round of trade talks, which aims to add billions of dollars to the global economy, but has repeatedly stalled since its inception in Qatar's capital in 2001.
The Latin American country has already won a series of WTO rulings over US cotton programs. A compliance panel found in October that the US has failed to scrap a number of illegal payments -- a decision that could open the door to higher Brazilian taxes and other penalties on US exports.
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