washingtonpost.com  > Print Edition > Business > Articles Inside Business

WTO Backs Ruling on U.S. Cotton Programs

Farmers Receive Illegal Subsidies, Panel Says

By Jonathan Fowler
Associated Press
Friday, March 4, 2005; Page E03

GENEVA, March 3 -- The World Trade Organization on Thursday upheld a ruling condemning government help for cotton producers in the United States, saying that many U.S. programs include illegal export subsidies or domestic payments that are higher than permitted by WTO rules.

The WTO appeals body rejected a U.S. attempt to overturn a September ruling by an independent panel of trade experts, which acted on a complaint from Brazil.

_____Special Report_____
Globalization and Its Critics
In-depth Reports by Region
World News and Updates

Richard Mills, spokesman for Acting U.S. Trade Representative Peter F. Allgeier, said the result was a disappointment.

"Negotiation, not litigation, is the most effective way to address distortions in global agriculture," Mills said.

The National Cotton Council of America, a U.S. industry body, also said it was disappointed with the ruling, but a high-level Brazilian official called it a strong move toward the end of subsidies that rich nations give their farmers to the detriment of farmers in developing countries.

"It is a step toward the end of the distortions created by subsidies," Roberto Azevedo, a top trade official with Brazil's Foreign Ministry, told reporters in the capital of Brasilia via teleconference from Geneva.

Brazil had alleged that the United States kept its place as the world's second-largest cotton grower and the largest exporter because the U.S. government paid $12.5 billion in subsidies to American farmers between August 1999 and July 2003. Brazil is the world's fifth-largest cotton exporter.

The United States had insisted that its payments to farmers are within permitted levels. But in a 301-page report, the WTO panel upheld the earlier ruling that some U.S. credit-guarantee programs for cotton and other items are export subsidies because they are provided at rates that do not cover the long-term cost of running the program.

Thursday's appeals body ruling is final.

"We will study the report carefully and work closely with Congress and our farm community on our next steps," Mills said.

He also chastised Brazil, which has an advanced agribusiness industry dominated more by wealthy landowners and corporations than the subsistence farmers common in regions such as Africa.

"Those who live in glass houses shouldn't throw stones," he said. "Brazil itself is heavily involved in financially supporting its farmers."

Azevedo acknowledged that Brazilian agriculture is competitive with many other world players, but denied Mills's claim, saying Latin America's largest nation "is a developing country without the resources to subsidize."

Associated Press writer Vivian Sequera in Brasilia, Brazil, contributed to this report.

© 2005 The Washington Post Company