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Challenges erroneous findings USTR appeals WTO cotton ruling

National Cotton Council leaders are praising the U.S. Trade Representative Office's filing of an appeal against the latest ruling in the WTO case brought by Brazil against the U.S. cotton program.

A USTR spokesman said the appeal maintains the United States has brought its programs into full compliance with the recommendations in the original cotton case and challenges the WTO's “erroneous findings” on U.S. support payments and export credit guarantees.

“We appreciate the action of the Trade Representative's office, and we look forward to working with them to reverse the compliance panel's ruling against U.S. cotton,” said Larry McClendon, the NCC's newly elected chairman.

“It is difficult to understand how the United States could be deemed to be depressing world prices of cotton when world prices are rising, U.S. production is declining and expenditures under the cotton loan program have fallen to zero for 2007 and are expected to continue to be small or non-existent.”

USTR officials said they hoped the appeal, filed Feb. 12, would vindicate the actions of the Bush administration and Congress in moving to respond to the ruling of the first two WTO panels in the Brazil cotton case.

“We are appealing because the changes made by the United States have brought its programs into full compliance with the WTO's recommendations and rulings in the original cotton case,” said a USTR spokesman. “We were very disappointed with the compliance panel's findings. The appeal challenges the erroneous findings on both U.S. support payments and export credit guarantees.”

McClendon, a ginner from Marianna, Ark., noted that as U.S. production has declined, production and exports from Brazil and India have increased to take its place in the world market and China's domestic production also has increased — benefiting from trade barriers that keep internal prices high.

“I have trouble with countries blaming the United States for depressing world market prices, while at the same time, they are expanding their production and exports,” McClendon said.

He said the U.S. cotton industry also hopes this appeal will lead to better clarity in the WTO panel decisions. “We have seen three panels state that the U.S. cotton program was causing significant price suppression,” he noted, “but not one of those rulings has remotely quantified what they thought was ‘significant.’

“We have no workable standard — even after three panel decisions although the U.S. cotton industry has asked for more information. We believe that the U.S. cotton program has never had any more than a minimal impact on world cotton prices.”

“Given the opportunity presented in the Doha negotiations, we have emphasized all along the importance of delivering reform in agricultural trade through negotiations rather than litigation,” said Gretchen Hamel, the USTR spokesman. “We therefore hope that WTO members, including developing countries like Brazil, will see the benefit of working together to deliver real progress in the Doha negotiations.”

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