WTO tells US to act on illegal cotton subsidies
Tuesday, 25 December 2007
Frances Williams
THE US must do more to eliminate billions of dollars in illegal subsidies to its cotton farmers, a World Trade Organisation panel has ruled in the latest assault on lavish US farm support.
The ruling, which confirmed a confidential interim judgment by the panel last July, said the US had not done enough to scrap payouts to cotton producers condemned by the WTO in 2005 in a landmark verdict following a complaint by Brazil.
The US said it was considering whether to appeal. "We are very disappointed with the compliance panel's findings," said the US trade representative's office. "We continue to believe that support payments and export credit guarantees under our programmes are fully consistent with our WTO obligations."
Critics say cotton subsidies amounting to $3bn-$4bn annually unfairly boost US exports and depress prices on world markets, hurting millions of growers in poor African countries as well as in Brazil and elsewhere. Reform of the subsidies is sensitive in the US as the country is in the throes of an election campaign.
Unless an eventual US appeal against the panel' verdict is successful, which trade experts think unlikely, Brazil will be able to seek WTO authorisation to retaliate against US trade valued at $1.0bn (€694m, £496m) or more a year.
The panel report came a day after Brazil and Canada secured a WTO investigation of US farm subsidies for other commodities, which they claim breach permitted limits.
In response to the 2005 WTO cotton verdict, the US scrapped or amended programmes considered to constitute illegal export subsidies. However, the panel said the US had not gone far enough in reforming export credit guarantees and had failed to tackle two other trade-distorting subsidies: marketing loans and countercyclical payments that compensated farmers for low prices.
Washington is under pressure in the Doha round of global trade talks to slash overall subsidies and to go even further and faster on reducing support for US cotton farmers, a demand it has resisted. The USTR said agricultural reforms should be discussed in the world trade negotiations rather than being pushed through litigation.
The US Senate last week approved its version of a farm bill that envisages spending in support of agriculture of $286bn over five years, including extra help for cotton mills. The House of Representatives has passed a similar measure.
.........................................................
Under syndication arrangement with FE
THE US must do more to eliminate billions of dollars in illegal subsidies to its cotton farmers, a World Trade Organisation panel has ruled in the latest assault on lavish US farm support.
The ruling, which confirmed a confidential interim judgment by the panel last July, said the US had not done enough to scrap payouts to cotton producers condemned by the WTO in 2005 in a landmark verdict following a complaint by Brazil.
The US said it was considering whether to appeal. "We are very disappointed with the compliance panel's findings," said the US trade representative's office. "We continue to believe that support payments and export credit guarantees under our programmes are fully consistent with our WTO obligations."
Critics say cotton subsidies amounting to $3bn-$4bn annually unfairly boost US exports and depress prices on world markets, hurting millions of growers in poor African countries as well as in Brazil and elsewhere. Reform of the subsidies is sensitive in the US as the country is in the throes of an election campaign.
Unless an eventual US appeal against the panel' verdict is successful, which trade experts think unlikely, Brazil will be able to seek WTO authorisation to retaliate against US trade valued at $1.0bn (€694m, £496m) or more a year.
The panel report came a day after Brazil and Canada secured a WTO investigation of US farm subsidies for other commodities, which they claim breach permitted limits.
In response to the 2005 WTO cotton verdict, the US scrapped or amended programmes considered to constitute illegal export subsidies. However, the panel said the US had not gone far enough in reforming export credit guarantees and had failed to tackle two other trade-distorting subsidies: marketing loans and countercyclical payments that compensated farmers for low prices.
Washington is under pressure in the Doha round of global trade talks to slash overall subsidies and to go even further and faster on reducing support for US cotton farmers, a demand it has resisted. The USTR said agricultural reforms should be discussed in the world trade negotiations rather than being pushed through litigation.
The US Senate last week approved its version of a farm bill that envisages spending in support of agriculture of $286bn over five years, including extra help for cotton mills. The House of Representatives has passed a similar measure.
.........................................................
Under syndication arrangement with FE