ECONOMICS REPORT - WTO Ruling on American Cotton Subsidies

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ECONOMICS REPORT - WTO Ruling on American Cotton Subsidies
By Caty Weaver¹

Broadcast: Friday, May 07, 2004

This is Bob Doughty² with the VOA Special English Economics Report.

Last week, a group of three World Trade Organization officials ruled against the United States in a case brought by Brazil. They ruled that government payments to American cotton farmers violate international trade rules.

Brazil seeks to stop the United States government from providing financial assistance to American cotton farmers. The assistance permits American farmers to plant more crops and produce extra cotton. This leads to lower prices for cotton on the world market. Brazil says the United States government unfairly hurts it foreign competition as a result. The United States is the world's largest exporter of cotton.

The ruling by the W.T.O. officials was not made public. The United States and Brazil are permitted time to seek changes to the ruling before a report is released. The W.T.O. is expected to announce a final decision on the issue in June.

United States Trade Representative Robert Zoellick says the government would appeal a W.T.O. decision supporting the ruling. He says the United States will fight for its agricultural interests by negotiation³ or through legal action. The United States says its payments to farmers are permitted under W.T.O. rules.

Mister Zoellick also criticized Brazil's method of dealing⁴ with the farm assistance issue. He suggested that Brazil could have saved time and protected relations by discussing its concerns in world trade talks.

But Brazil's Ambassador to the United States Roberto Abdenur objected to the criticism. Ambassador Abdenur said Brazil was forced to seek W-T-O judgement. He says the United States and other countries are unwilling⁵ to negotiate.

The United States pays about twenty-five-thousand cotton farmers more than two-thousand-million dollars a year. It also makes payments to other farmers. Japanese and European governments also provide such support to farmers. And Brazil is not the only country angry about the issue. Several African representatives opposed farm assistance policies at a W.T.O. ministers meeting earlier this year. They argued that such policies hurt developing nations.

Experts say other countries may seek similar action against American, European or Japanese farm assistance if the W.T.O. rules against the United States on the cotton issue.

This VOA Special English Economics Report was written by Caty Weaver. This is Bob Doughty.