A World Trade Organization panel has agreed with Brazil's claim that the United States is not moving fast enough to comply with a 2005 ruling against the U.S. cotton program, according to press reports.
The WTO dispute panel's final ruling in the case was issued confidentially in Geneva Monday (Oct. 15). The Brazilian government released a statement in Portuguese expressing its satisfaction with the ruling, and the office of the U.S. Trade Representative later confirmed it.
National Cotton Council officials said they were disappointed that press reports of the findings appeared to bear out the interim conclusions of the panel released by the WTO last summer.
“We reiterate our concerns expressed when reports regarding the interim report surfaced,” the NCC said is a statement. “If the panel ruled for Brazil on its serious prejudice claims, we believe that it would be contrary to the facts in the world cotton market both then and now.”
The Council said U.S. actions taken to comply with the first WTO panel ruling in 2005 have had a significant impact on U.S. cotton producers with U.S. cotton acreage declining 29 percent in 2007. U.S. exports also have declined significantly since the 2005-06 marketing year.
“It is incomprehensible that a WTO panel could make a finding of serious prejudice against the United States when the international cotton market is strong,” it said. “World prices are up, and production outside of the United States is estimated to be a record high of 102 million bales. In the face of these facts, the U.S. cotton industry is left to puzzle the basis of such a decision.”
The ruling was the latest in a series of what have amounted to public “whippings” for the U.S. cotton industry. The propaganda surrounding the WTO ruling and complaints by other countries seemed designed to drive U.S. farmers out of the cotton business.
U.S. officials have said they believed eliminating the Step 2 competitiveness payments, most of which went to U.S. merchants to reduce the cost of U.S. cotton in world markets, satisfied the original WTO panel ruling.
But Brazil and the C-4 countries of Benin, Burkina Faso, Chad and Mali have continued to denounce the U.S. cotton program as the chief cause of poverty in those West African countries.
The office of the U.S. Trade Representative said it would not discuss details of the panel's ruling to respect the WTO confidentiality rules. However, in response to press reports, it said it could confirm the panel found the changes made by the United States were insufficient to bring the challenged measures into conformity with its obligations.
“We are very disappointed with these results,” the office said in a statement. “We continue to believe that payments and export credit guarantees under our programs are now fully consistent with our WTO obligations.
As expected, the British-based charity, Oxfam International, released a statement saying the ruling demonstrates the U.S. government must do more to reduce U.S. cotton subsidies in the 2007 farm bill and in the Doha Round agreement that continues to be debated at the WTO in Geneva.
Oxfam officials claimed the U.S. House reinstated some cotton subsidies in the farm bill it passed last July.
“Indeed, the cotton lobby, representing about 20,000 mostly large producers, has continued to fare well at the expense of the American taxpayer and family farmers both here and in Africa,” said Raymond C. Offenheiser, president of Oxfam America.