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US Appeals WTO Decision Saying Multi-Billion Dollar Cotton Subsidies Must End

The Washington Times
<www.washingtontimes.com>

U.S. appeals ruling against cotton subsidies
By Jeffrey Sparshott

October 19, 2004

The Bush administration yesterday formally appealed a World Trade
Organization ruling that subsidies paid to U.S. cotton farmers violate
global trade rules.

If the case goes against the United States, Congress would have to
change the way it supports U.S. agriculture or face retaliation and the
possibility of several new challenges to programs supporting farm income.
"We will be defending U.S. agricultural interests in every form we need
to and have no intention of unilaterally disarming," said Neena Moorjani,
spokeswoman for the U.S. Trade Representative's Office.

The WTO in September largely backed a charge by Brazil that U.S.
payments to cotton farmers skew competition, lower global cotton prices and
essentially rob Brazilian farmers of income.

A decision on the U.S. appeal would be final. The process normally
takes about three months, although the complex and highly charged cotton
case already has stretched deadlines.

The administration yesterday offered a point-by-point rebuttal of the
WTO's initial decision, saying there were a series of errors and "erroneous
findings" in the September ruling, which said export programs and direct
payments to farmers violated global rules.

Brazil expected the appeal. The country maintains that U.S. cotton
producers received $12.47 billion in subsidies from August 1999 to July
2003, spurring overproduction and lowering world prices by almost 13
percent.

The South American nation, a rising agricultural powerhouse, also has
won a WTO case against European Union sugar subsidies as part of an assault
on rich countries' farm subsidies. The European Union is appealing.
The world's wealthiest countries combined paid $257 billion in support
to their farmers in 2003, the Organization for Economic Cooperation and
Development said. The 25-nation European Union doled out the most at $121.4
billion, followed by the United States at $38.9 billion.

U.S. cotton subsidies reached $3.31 billion in 2002, the last year
included in Brazil's case, and then declined to $2.89 billion in 2003 and an
estimated $1.66 billion for 2004, according to U.S. Farm Service Agency
data.

The Bush administration promised to limit trade-distorting subsidies as
part of a broader global agreement among the WTO's 148 members, but details
still must be worked out.

"We prefer to focus our resources on negotiation, not litigation," Miss
Moorjani said.

But for Brazil, progress has been too slow.

The fight over cotton, an important cash crop for several developing
nations, has been especially sensitive, with countries making economic and
moral cases against subsidies.

Four African nations -- Burkina Faso, Chad, Mali and Benin -- elevated
U.S. cotton subsidies to a major issue at ongoing WTO talks, although they
have not filed a WTO case.