The US must do more to eliminate billions of dollars in illegal subsidies to its cotton farmers, a World Trade Organisation panel ruled on Tuesday 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 against the ruling. “We very disappointed with the compliance panel’s findings,” a spokeswoman for the US Trade Representative’s Office said. “We continue to believe that support payments and export credit guarantees under our programs are fully consistent with our WTO obligations.”
Critics say US 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 particularly sensitive with the US now 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 worth $1bn or more a year.
The panel report came a day after Brazil and Canada secured a WTO investigation of US farm subsidies for a wide range of 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. But the panel said yesterday that the US had failed to tackle two other trade-distorting subsidies – marketing loans and countercyclical payments that compensate farmers for low prices.
Washington is also under pressure in the Doha round of global trade talks to slash overall farm subsidies, and to go even further and faster on reducing support for US cotton farmers, a demand it has so far resisted. The USTR said yesterday that agricultural reforms should be discusssed in the world trade negotiations rather than being pushed through litigation.
Just last week the US Senate approved its version of a new farm bill that envisages spending in support of US agriculture of $286bn over the next five years, including additional help for US cotton mills. The House of Representatives has passed a similar measure.
Fonte Financial Times