WTO rules against US cotton supports, US bristles
(Adds further Brazil comments, Oxfam reaction, background)
By Missy Ryan and Raymond Colitt
WASHINGTON/BRASILIA, Oct 15 (Reuters) - A World Trade Organization panel, ruling in favor of Brazil in a landmark international challenge, has found that the United States has not done enough to reform its cotton subsidies, a U.S. official said on Monday.
"The Panel found that the changes made by the United States were insufficient to bring the challenged measures ... into conformity with U.S. WTO obligations," the trade official said, speaking on condition of anonymity.
News of the final compliance panel report, details of which have not yet been made public, was another coup for Brazil, whose 2002 challenge against U.S. cotton supports at the WTO court has been a watershed, emboldening nations displeased by generous U.S. farm supports and providing ammunition for those who would like to see affluent nations curtail the subsidies they say only impoverish farmers abroad. After an appeals ruling, the U.S. Congress in 2006 did dismantle some cotton support, but Brazil was not satisfied. It sees as particularly troubling, a Brazilian official in Washington explained, two price-triggered support programs commonly tapped by cotton farmers.
"The final ruling confirmed Brazil's view that the U.S. measures were insufficient to comply with the panel's original decision," Brazil's foreign ministry said in a statement.
"The full implementation of the (panel's) recommendations is a fundamental prerequisite for the credibility of the multilateral trade system," it added.
But Washington, which is considering an appeal, argues the subsidies are above board. "We are very disappointed with these results. We continue to believe that payments and export credit guarantees under our programs are now fully consistent with our WTO obligations," the trade official said.
Most economists believe that subsidies paid to cotton farmers in the United States, a major exporter, do depress world market prices to some extent.
According to the most recent U.S. estimates, the Untied States will export 27 million tonnes of cotton in the 2007/08 season, about 35 percent of total world trade. Brazil is expected to export 30.7 million tonnes.
Lower world cotton prices could create additional hardship for cotton farmers in fragile economies in West Africa, whose plight has become a cause celebre in the World Trade Organization's Doha round of trade talks.
"The U.S. cannot continue to ignore the WTO and the effects of cotton subsidies on global markets and, ultimately, the livelihoods of poor farmers in the developing world," said Isabel Mazzei, an official in Geneva with Oxfam International, an aid and advocacy group.
Oxfam argued in one recent report that eliminating all U.S. cotton subsidies would boost income for some African families by up to $114 a year, an increase of 6 percent.
The ruling also comes as U.S. lawmakers wrangle over the 2007 farm bill, which will set agriculture policy, including subsidies, for five years.
While it's unclear what the final law will do for cotton farmers, the House of Representatives stirred passions this summer when it passed its version of the bill and included some cotton industry incentives similar to those eliminated in 2006.
((Editing by Christian Wiessner; Reuters Messaging: missy.ryan.reuters.com@reuters.net; + 202-898-8376)) Keywords: USA BRAZIL/COTTON
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