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Brazil files new request on U.S. compliance

Brazilian officials have filed a second request for a new World Trade Organization panel to investigate U.S. compliance with an earlier WTO dispute panel ruling against the USDA cotton program.

The Bush administration blocked the first request, which was filed earlier this month, but will be unable to prevent the formation of a review panel now that the government of Brazil has filed the second petition. The filing occurred in advance of a WTO meeting in Geneva Sept. 28.

Brazil says the United States has failed to follow its timetable for implementing changes in the Step 2 competitiveness provision and its export credit guarantee programs. U.S. officials have responded that they have complied within the timeframe given by the WTO.

Congress eliminated the Step 2 program, which is estimated to have provided $320 million to U.S. cotton merchants and mills in the 2005-06 marketing year, effective Aug. 1. The National Cotton Council had objected to terminating the program in September 2005 when Brazil claims it should have ended.

NCC leaders objected to ending the Step 2 program before the current marketing year had ended.

“We do not believe this litigation is necessary given the significant steps the United States has taken to implement the WTO recommendations and rulings,” said Gretchen Hamel, spokesman for the U.S. Trade Representative's office.

When it first threatened retaliation last year, Brazil said it reserved the right to impose trade sanctions of $3 billion against the United States. Later, it said it would seek only $1 billion.

If the latest panel finds for Brazil, most of the retaliation would be against imports of goods and services since the United States exports few agricultural products to Brazil.

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