US loses WTO Brazil cotton appeal

The US government is estimated to have paid its cotton farmers $2bn to $4bn in subsidies in most recent years.

 

 

Last month, US politicians voted to overturn a veto by George Bush, the US president, and approve a farm bill worth $290bn that will maintain many of the cotton payments for the next five years.

 

 

US cotton subsidies have become one of the most contentious issues in the WTO’s Doha round of talks, which seek to open up world trade.

 

Brazil filed the complaint with the WTO in 2002, alleging that by subsidising farmers the US had distorted the price of cotton and made it harder for developing nations such as Brazil to compete.

 

The panel said the US “acts inconsistently with its obligations” as its subsidies for cotton producers are a “significant price suppression” that constitutes “serious prejudice” to Brazil.

 

The ruling is the first successful challenge to a wealthy nation’s domestic agricultural subsidies.

 

However, US trade officials said they were disappointed with the WTO panel’s ruling and rejected Brazil’s complaint that the payments distort the global cotton market.

 

“We believe that the changes made by the United States brought the challenged payments and guarantees into full compliance with the WTO’s recommendations and rulings in the original cotton dispute,” Sean Spicer, spokesman for the US trade representative, said.

 

“There is no basis to say that US payments are today having any impact on cotton prices.”