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2014 Media Kit

WTO: US subsidies for cotton farmers unfair

By: | at 08:00 PM | International Trade  

Cotton subsidies for US farmers are unfair to producers in Brazil, the World Trade Organization said in a landmark decision that could prompt developing countries to mount new trade cases against agricultural subsidies for other crops. The WTO’s final report on the trade case upheld a preliminary ruling that US cotton subsidies cause artificially low international prices and are hurting Brazilian farmers, said Clodoaldo Hugueney, a top economic official with Brazil’s Foreign Ministry. “We are very satisfied and content. The document confirmed our expectations,” Hugueney said. The decision will have no immediate impact on US farm programs because the US will appeal the decision in a process expected to last months or years, said Neena Moorjani, a spokeswoman for US Trade Representative Robert Zoellick. “We believe US farm programs were designed to be and are fully consistent with our WTO obligations,” she said. “We have serious concerns with aspects of the final panel report.” Critics of subsidies predicted the case, if upheld on appeal, would give cotton producers from Brazil to West Africa an incentive to increase production and get what they call a fair price. “This ruling will attack the multibillion-dollar corporate welfare at the heart of global trade,” said Celine Charveriat, a spokeswoman for the humanitarian group Oxfam International. “It’s a wake-up call for all rich countries to change the way they’ve mismanaged and manipulated world trade rules for years.” Critics of farm subsidies also predicted the cotton decision would embolden poor countries to mount more WTO cases against US and European farm subsidies. Brazil alleged the US has kept its place as the planet’s second-largest cotton grower and largest exporter because the US government paid $12.5 billion in subsidies to US farmers between August 1999 and July 2003. The US has insisted that its payments to farmers are within permitted levels, claiming many aren’t subsidies as defined by the WTO and shouldn’t be included in the calculations. Moorjani said the US is already working to reduce agricultural subsidies in the Doha round of WTO negotiations aimed at slashing the subsidies, tariffs and other barriers. A US proposal will open new market access opportunities for all countries by reducing annual global trade distorting domestic support by over $100 billion, eliminating global export subsidies and slashing global agricultural tariffs from an average 62% to 25%, she said. But, Moorjani added: “We can assure everyone that we will be defending US agricultural interests in every form we need to and have no intention of unilaterally disarming.” Brazilian President Luiz Inacio Lula da Silva hailed the WTO decision as a first step toward the elimination of payouts for US farmers that give them a competitive edge not only in cotton, but also for grain and sugar produced more cheaply in developing countries. “Brazil isn’t only giving a contribution to our own producers, but also helping other countries that otherwise wouldn’t have a chance to fight in the WTO,” Silva said. Brazil is the world’s fifth-largest producer of cotton. The Brazilian Cotton Producers Association says South America’s largest country could double cotton production to 2.4 million metric tons within two years if the US subsidies were lifted. (Comtex News Network)