US 'disappointed' after WTO backs Brazil in cotton dispute

¹²³ · Aug 31, 2009

WASHINGTON — The United States voiced disappointment Monday over a WTO decision allowing Brazil to retaliate against American cotton subsidies and relief it gave the South American nation less than it sought.

The World Trade Organization ruled Monday that Brazil could take retaliatory sanctions against the United States in a case filed by the Brazilian government in 2002 with the global trade watchdog.

"While we remain disappointed with the outcome of this dispute, we are pleased that the arbitrators awarded Brazil far below the amount of countermeasures it asked for," said Carol Guthrie, spokeswoman for US Trade Representative Ron Kirk.

President Barack Obama's administration "will be actively consulting within the US government and with stakeholders on how to move forward" on the issue, she said in a statement minutes after the WTO announcement.

The National Cotton Council of America, an industry association, pointed at "increasing subsidization" of cotton by China and India and accused Brazil of making "unrealistic" claims in its move to impose retaliatory sanctions against the United States.

The WTO said Brazil could seek to "suspend concessions or other obligations" on US trade, equivalent to up to 147.4 million dollars for 2006, and, for subsequent years, an annual amount to be determined according to a specific mathematical formula.

Brazil had sought 2.5 billion dollars from the United States.

"At this time, we do not know when or if Brazil will move to obtain final authorization to suspend concessions or when or if Brazil would act on any such authorization," Guthrie said.

She noted that Brazil had asked for more than four billion dollars in annual countermeasures in its first request for countermeasures in the cotton dispute, before trimming the figure down to "more than" two billion dollars during the arbitration proceedings.

The United States, she said, was "grateful" and "pleased" that the arbitrators denied Brazil's requests for unlimited ability to suspend concessions on intellectual property or services as well as for an additional one-time 350 million dollars in countermeasures.

Brazil estimates that total US cotton subsidies were worth 12 billion dollars between 1999 and 2002.

It had sought the sanctions after a WTO panel upheld a Brazilian complaint that the United States had breached trade rules over its subsidies for cotton farmers.

Jay Hardwick, chairman of the National Cotton Council of America, said the award to Brazil was based almost exclusively on the situation in 2005, the peak of US cotton production.

"Today?s programs cannot possibly be determined to be causing injury in the world market," he said.

The US cotton program and export credit guarantee programs have "changed considerably" over the past four years, with production down 45 percent and an export credit guarantee program operating "at no net cost," he argued.

The council's chief executive, Mark Lange, said the WTO ruling should be "updated so the WTO can start focusing on the increasing subsidization of cotton by China and India."

US cotton production in 2008 declined 45 percent while that of Brazil, China and India increased more than 20 percent.

"The increased cotton production in Brazil, China and India has ensured that world cotton prices could not rebound," he said.
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US 'disappointed' after WTO backs Brazil in cotton dispute

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