The World Trade Organization (WTO) ruling on sanctions against the United States that Brazil may impose against American goods as a result of U.S. cotton policy has been handed out. According to Bradley S. Klapper’s story for the Associated Press, goods coming from the United States will face roughly $295 million in annual sanctions.The two-part ruling spanned 269 pages and states in plain language that ‘“[t]he cumulated amount of countermeasures to which Brazil is entitled to is $294.7 million[.]”’ Still, as Klapper reports, Brazil was not completely satisfied with this ruling. Brazil had sought $2.5 billion in economic “retaliation” against American goods and pharmaceutical patents. The United States argued the sanctions should not exceed $30 million.
Brazil brought its cotton case against the United States to the WTO back in 2002. Brazil claimed that producer payments totaling $3 billion annually given out by the United States as part of the national farm policy allowed the U.S. to attain its place in the world cotton market unfairly. Since 2002 Brazil has won five “major” decisions in the case. The WTO rulings to date have essentially ruled that U.S. farm policy for cotton has “unfairly helped U.S. producers undersell foreign competitors and depress work market prices [.]”
The recently passed farm bill left many contentious programs intact, but Congress has eliminated some export credits and ended the “Step-2” cotton-marketing program to help appease the WTO. While the United States argues cotton issues should be considered as part of the ongoing Doha round of WTO negotiations, the round has consistently stalled and many countries have staked out seemingly unmovable policy positions based on their status as developed or developing nations. Agricultural trade issues remain among the most contentious between developed and developing countries.
According to the AP story, the cotton case was the first agricultural-based case a developing country has pursued through the WTO. To read the Associated Press story click here.
Posted: 08/31/09
