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Brazil’s gains in WTO ruling may be long time coming

WASHINGTON – Brazil’s apparent success in persuading members of a WTO panel that the U.S. cotton program injured its producers could be a long time bearing fruit and could actually work against world trade reforms, U.S. officials warned.

Testifying before the House Agriculture Committee Wednesday, Ambassador Robert Zoellick said his Office of the U.S. Trade Representative almost certainly will appeal the ruling, a process that “could last months or possibly a year or years.”

Zoellick also said the ruling, details of which have been leaking out since it was transmitted to the Brazilian and U.S. governments Monday, also could undermine ongoing efforts to reform world agricultural trade in the Doha Round negotiations within the World Trade Organization.

“There is no immediate impact for farmers and ranchers around the country,” said Zoellick in an apparent reference to newspaper headlines that have said the WTO ruling would mean the end of U.S. farm programs. “This is a marathon, not a sprint.”

While U.S. and Brazilian officials have agreed not to disclose details of the ruling, sources have said the three judges – one from Australia, one from Chile and one from Poland – on the WTO dispute panel found largely in Brazil’s favor.

Brazil, which filed the complaint in September 2002, has said that the U.S. cotton program, and in particular, Step 2 of the farm law’s Three-Step Competitiveness program encouraged U.S. farmers to increase their production, resulting in lower cotton prices worldwide.

However, U.S. cotton program defenders have been quick to point out the claim is not true.

“Brazil claims that our policies caused low prices, but the fact of the matter is that low world prices from 1999-2001 caused supports such as marketing loan gains to kick in,” said Rep. Randy Neugebauer, R-Texas-19, said in a statement.

“Our commodity programs are fully consistent with commitments made in the last WTO agreement, and an analysis done by cotton economists at Texas Tech University in Lubbock shows that world prices would not significantly increase with elimination of our cotton programs.”

Zoellick said he believes the WTO ruling, if not corrected, sets a bad precedent for the future of the WTO’s agricultural trade negotiations.

“If other countries decide to stand back and litigate their way, as opposed to negotiating a new agreement, I think it will be a very complicated and nonproductive approach for everyone.”


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