International agency Oxfam has welcomed news reports today that Brazil has won a landmark trade battle at the WTO on cotton subsidies against the United States.

Oxfam's Make Trade Fair campaign has strongly condemned rich country subsidy regimes that help distort global trade, leading to the dumping of below-cost produce and worsening poverty. Oxfam has been especially vocal against the US, which gave nearly $4 billion in subsidies to its cotton farmers in 2001-2.

The Brazilian case against the US sought to answer a vital question: Did these subsidies artificially raise cotton production in the US, stimulate exports and therefore help depress world prices?

"According to reports in Brazilian press, the WTO has judged that these subsidies did depress world prices and violated WTO rules. If the report is upheld in appeal, the US would have to significantly reform its cotton subsidy program," said Oxfam spokesperson Celine Charveriat.

According to the same source, the panel gave six months to the US government to reform its subsidy program.

West African countries would also be vindicated: they had argued in Cancun that US cotton subsidies were hurting their farmers and needed drastic reform as part of the Doha Development Agenda negotiations.

"This would be a huge victory, not just for Brazil but particularly for ten million poor African farmers whose livelihoods have been crippled by unfair competition with highly-subsidised US cotton," Ms Charveriat said.

Brazil and the US will have a chance to comment on the interim ruling before it is finalized on June 18th, after which time it can also be appealed.