Washington and Brussels risk being hauled before the World Trade Organisation (WTO) over billions of dollars in illegal farm subsidies unless they agree to deep reform in current talks, Oxfam warned on Wednesday.
In a report covering 11 commodities, the relief agency estimated the United States and European Union spent $13 billion a year between them in unfair help to farmers and said the figure would be much higher if other crops were included.
Unlawful payments by them to growers and manufacturers of goods ranging from maize and sorghum to rice, tomatoes and canned fruit hurt 38 developing countries, including Brazil, Mexico, Mozambique and Malawi.
"The choice lies with the United States and the European Union," Oxfam said. "Either they face manifold legal actions that will force reform on a piecemeal basis, or they negotiate reform upfront in the Doha Round."
Reform of farm trade is a pillar of the WTO's struggling Doha round of free trade talks, which face what could be make-or-break negotiations in Hong Kong next month.
The European Union is under pressure to open up its agricultural market to imports, while both the EU and the United States are being pressed for more concessions on subsidies.
The two economic superpowers have already been condemned by the WTO for illegal subsidies, Brussels over sugar and Washington over cotton, and Oxfam said these two cases were a sample of what was to come.
"Unless the EU and the United States live up to their promises at the WTO, they will leave developing countries no option but the dock," said Phil Bloomer, head of Oxfam's Make Trade Fair campaign.
The EU disputed Oxfam's findings, saying they did not take account of reforms already made or planned by Brussels.
"I don't feel the Oxfam report reflects reality as it is now or gives credit where credit is due," EU Agriculture spokesman Michael Mann said.
Mann cited plans to phase out tobacco subsidies by 2010 and reform proposals due in 2006 on wine and food and vegetables. He said the sugar case could not be extrapolated to other markets.
Of the subsidies highlighted in the report, the EU was responsible for $4.2 billion and the United States for $9.3 billion, most of which went to agribusiness and wealthy landowners rather than small-scale farmers, Oxfam said.