Global Policy Forum

US Must Do More to Reform Cotton Subsidies-WTO


By Jonathan Lynn and Missy Ryan

December 18, 2007

The United States is not doing enough to bring its support for cotton into line with international trading rules, the World Trade Organization said on Tuesday. The published ruling by the WTO appeal body opens the way for Brazil, which brought the original case against the United States in 2002, to seek billions of dollars in sanctions against Washington.

The WTO compliance panel's findings had already been circulated confidentially in an interim report in July and then finally in October, but were made available to the public for the first time on Tuesday.

"We are very disappointed with the compliance panel's findings," said Gretchen Hamel, a spokeswoman for U.S. Trade Representative Susan Schwab. She said that certain subsidies and export credit guarantees the WTO panel found at fault were "fully consistent with our WTO obligations." The Bush administration will consider an appeal, Hamel said.

U.S. farm subsidies have become a flash point in the six-year-old Doha round of talks to open up world trade, with both rich and poor countries calling on Washington to cut its trade-distorting support for farmers. Only on Monday, the WTO launched an investigation into U.S. farm support at the request of Brazil and Canada.

But cotton is particularly sensitive. Development campaigners say subsidies in the United States, the world's biggest cotton exporter, are depressing world prices and deepening poverty in West Africa. While the White House has indicated that it could cut overall farm subsidies, cotton is a much more difficult issue given the political clout of cotton-producing southern states.

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