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Wto rules against us farm subsidies Original Source Link: (May no longer be active)
http://www.forbes.com/markets/newswire/2004/04/27/rtr1348561.htmlhttp://www.forbes.com/markets/newswire/2004/04/27/rtr1348561.html
WTO cotton move sends shock wave through farm talks
Reuters, 04.27.04, 8:05 AM ET
By Richard Waddington
GENEVA, April 27 (Reuters) - Brazil's emphatic win over the United States in a key trade ruling over cotton will send shock waves through world trade talks and embolden those demanding all farm subsidies be slashed, analysts said on Tuesday.
The Geneva-based World Trade Organisation (WTO), in a confidential decision, told Washington to halt much of the lavish aid it gives the country's some 25,000 cotton farmers, ruling it illegal, sources close to the ruling said.
The decision goes to the heart of the debate at troubled WTO negotiations to reform world farm trade, where angry poorer countries argue the massive subsidy schemes of their richer rivals depress prices and keep them out of lucrative markets.
"It is a good win for Brazil," said one trade source, who declined to be named but who had seen the ruling. "It strengthens the hands of the reformers in the negotiations."
"These subsidies have not only been shown to be hurting other countries, they have been called illegal by the WTO," he added.
The cotton ruling by a panel of WTO trade judges, which has not been made public, will be particularly welcomed by West African producers. They had been pleading for their crop to be given special consideration at the Geneva farm talks because of the heavy losses they have suffered.
World cotton prices have recovered slightly over the past year, but the international aid agency Oxfam calculates that West African countries, which are often heavily reliant on cotton exports, have lost hundreds of millions of dollars in needed foreign earnings because of U.S. policy.
At the WTO, trade sources said Brazil had successfully argued that the United States had gone above agreed limits for cotton subsidies and that this had led to over-supply which in turn had helped depress world cotton prices.
"They did not go into all the aspects of the Brazilian case, they focused on the price argument," one trade source said.
It was the first time that a developing country had challenged the crop support programmes of a big trade power and analysts and diplomats said that other cases could follow.
The European Union, another big user of farm subsidies, is already under attack from Brazil, Australia and Thailand, all major sugar exporters, over the massive assistance it gives its sugar beet growers in a case that could be decided this summer.
Trade sources said many U.S. and EU crops, including soyabeans, wheat and rice, as well as beef and dairy produce were possible future targets for WTO challenges.
"People are looking at other cases," said Argentina's ambassador to the WTO, Alfredo Chiaradia. "We might move on dairy."
But the United States has said it will appeal the WTO verdict, if, as is usually the case, the ruling is confirmed in a final decision to be made public around June 18.
Even if the U.S. Congress, which is growing increasingly suspicious of the WTO, agrees to reform cotton policy, implementing changes could take one to two years, analysts said.
Congressional opposition could act as a further incentive to the United States to agree to a deal on overall farm reform at the WTO, because then concessions on cotton could be passed off as just part of the package, analysts said.
Copyright 2004, Reuters News Service
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