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WTO ruling appears to favor Brazil in cotton complaint

MEMPHIS, Tenn. – Details of the long-awaited ruling in Brazil’s WTO complaint against the U.S. cotton program are beginning to leak out, and it doesn’t appear to be good news for the U.S. cotton industry.

Reports in the Wall Street Journal and New York Times say a WTO panel has ruled mostly in favor of Brazil in the latter’s charges that U.S. cotton subsidies distort world trade in cotton. The panel’s preliminary ruling, which was made Monday, is not scheduled to be finalized until June 18.

National Cotton Council leaders expressed disappointment at the reports, but said the fight is not over.

“The press has reported certain aspects of the Panel's ruling that do not appear to be favorable for the U.S. cotton industry,” said Woody Anderson, NCC chairman and a cotton producer from Texas. “The U.S. Government is still carefully reviewing the entire report, but has indicated it has concerns with many aspects of the Panel's decision and will appeal the ruling if it becomes final.

“If the published reports are accurate, the decision is unfortunate and, we believe, incorrect,” he said. “The National Cotton Council will continue to work with the Office of the U.S. Trade Representative in order to ensure the WTO decision is in keeping with the intent of the Uruguay Round Agricultural Agreements.”

Brazilian and U.S. government officials reportedly agreed not to release details of the ruling until after its release in June.

Speaking at a press conference in Brasilia, Brazilian officials said they were gratified by the ruling. “This is a precedent; this is a war that must continue,” one was quoted as saying in press reports.

Brazil brought its complaint that the U.S. cotton program encourages excess production and pushes prices down in September 2002. The WTO panel, which heard arguments in the case on several occasions last year, was scheduled to issue a ruling in March, but delayed the decision until Monday.

The Wall Street Journal and New York Times, which have written lengthy articles accusing U.S. cotton farmers of impoverishing growers in developing countries, carried reports repeating much of the criticism.

“The ruling undermines the core logic of the 2002 farm bill, which was intended to dole out huge assistance to U.S. farmers without distorting production and thus opening the United States to international legal challenges,” the Journal article said.

“As the first successful challenge of a wealthy nation’s domestic agricultural subsidies, the Brazilian case could also force the United States, the countries of Europe and other well-to-do nations to act this summer and offer new compromises at global trade talks that have been blocked over this agricultural issue for more than a year,” said the Times article.

Both articles said U.S. farmers receive more than $19 billion in subsidies per year, an untrue statement. The U.S. government is limited to providing $19 billion per year in agricultural payments under World Trade Organization agreements, but actual payments have been far below that total in recent years.


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