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WTO Rules Against U.S. Cotton Subsidies & Export Dumping That Impoverish Millions Overseas

US Cotton Subsidies Declared Illegal By WTO, Again; Oxfam Says US Must Now
Comply to Make Trade Fair for Poor Country Farmers

3/3/2005 12:30:00 PM

To: National and International desks

Contact: Laura Rusu of Oxfam America, 202-496-3620

GENEVA, March 3 /U.S. Newswire/ -- International agency Oxfam calls on the
US to implement swiftly today's final World Trade Organization (WTO) ruling
against its illegal cotton payment programs and agree to new global trade
rules that would stop the dumping of cheap commodities.

Eliminating cotton subsidies is necessary to fulfill WTO obligations and
bring relief to the millions of struggling farmers in poor countries. It is
crucial that the US signals its readiness to reform its farm subsidies
within current WTO negotiations to successfully negotiate a new global trade
agreement.

"The case against US cotton dumping is overwhelming and now confirmed yet
again by the WTO," said Celine Charveriat, spokesperson for Oxfam's Make
Trade Fair campaign. "The debate is over. The US must now move quickly to
reform its programs and stop dumping cheap cotton onto world markets that
undermines the livelihoods of poor farmers in the developing world."

In September 2004, a WTO dispute panel found that $3.2 billion in annual
cotton subsidies and $1.6 billion in export credits paid by the US in cotton
and other commodities were illegal under WTO rules. The case, brought by
Brazil and supported by some West African cotton-producing countries (Benin
and Chad), was appealed by the US in October. Today's appeal decision is
final and the US has until July 1 this year to comply or face possible trade
sanctions by Brazil.

"The US must become aware that small developing countries also have rights
in the global trade system, otherwise they risk a new wave of resistance
from African countries and farmers," said Soloba Mady Keita, president of
the cotton producers association in Kita, Western Mali.

Oxfam estimates that US dumping caused losses of almost $400 million
between 2001 and 2003 for poor African cotton-producing countries, where
more than 10 million people depend directly on the crop. A typical
small-scale West African cotton producer makes less than $400 a year on his
crop. Two million cotton farmers in Mali were recently pressured to accept a
further price drop of 25 percent -- many of them will not now be able to
cover their production costs.

The majority (78 percent) of US cotton subsidies benefit the largest 10
percent of cotton producers. Loopholes in the subsidy rules allow
industrial-sized farms to collect payments in excess of $1 million, while
smaller farmers in the U.S. and abroad are driven out of farming by low
commodity prices and high land costs.

The case has implications beyond cotton. "This case raises deep questions
about the entire US subsidy system. US subsidies have distorted global
markets, failed to save small US farmers, and promoted environmental damage.
The US should see this ruling as an opportunity for reform," Charveriat
said.

"If the US fails to implement this WTO decision, the prospects for a new
global trade deal on agriculture will be severely damaged," said Charveriat.
"If recent calls by the US to conclude the negotiation round by the end of
2006 are to be taken seriously, cotton subsidies need to be reformed before
the next WTO Ministerial in Hong Kong."

Oxfam's short briefing note on the ruling is available at:
http://www.oxfamamerica.org/newsandpublications/press_releases/wto_cotton_ru
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