In a landmark decision, the World Trade Organization has ruled against American cotton subsidies in a case brought by Brazil, officials from the two countries said on Friday, according to the World Bank press review.
The decision could eventually lead the United States to reduce subsidies for its entire farm sector and encourage other countries to challenge such aid in wealthy nations, analysts said.
The WTO report, which was not made public, upheld a preliminary ruling in April that supported Brazils claim that the more than 3 billion US dollar (18 milliarder DKR) in subsidies the United States pays its cotton farmers distorts global prices and violates international trade rules.
In Washington, Bush administration officials criticized the decision, arguing that the best way to address distortions in world agriculture trade was through negotiations, not litigation. The officials also said the United States would appeal, a process that could drag on for months, and possibly more than a year.
The WTO ruling is not expected to be made public until late August. An arbitration panel will then decide what damages are due and to what extent Brazil can retaliate if the United States does not comply with the ruling.
In another recent case involving steel, President Bush chose to lift subsidies rather than face penalties. In its complaint, Brazil, the worlds fifth-largest cotton producer, used data from the United States Department of Agriculture to argue that the subsidies led to increased American cotton output, robbing Brazil of potential export markets and undermining the livelihoods of its farmers.
The Financial Times notes, that Fridays decision could put similar challenges before the WTO and add to pressure on the US and other developed countries within the Doha round world trade negotiations to dismantle massive farm aid. The ruling “puts bargaining momentum firmly behind developing countries, especially those from Africa and Brazil calling for reform of US cotton subsidies”, said Oxfam, the UK-based aid organization.
The chinese newsagency, Xinhua, notes, that the Brazilian Foreign Ministry voiced satisfaction on Friday over the WTO ruling that subsidies granted to cotton producers by the United States violate the rules of international trade. A speedy fulfillment of the ruling will “be an unequivocal sign of their commitment to ending distortions in international trade and to the respect of obligations established in multilateral trade,” it said.
Brazil said that the WTO resolution will not only benefit the Brazilian cotton industry, but also strengthen the cases of African cotton producing countries, which are among the poorest in the world.
Other developing countries also cheered the decision, saying millions of poor farmers around the world will now have a chance to get a fair price for their cotton.- Cotton is one of the areas where Africa is most competitive, said Samuel Amehou, ambassador to the WTO for the West African nation of Benin.
– We are able to grow cotton for one-fifth the cost of the United States, but we cannot get fair market price for our cotton, added he.
Kilde: www.worldbank.org
