WTO OKs $295 million in Brazilian sanctions on US
As described by the Associated Press, the US now faces $295 million annually in sanctions as a result of illegal subsidies to cotton growers. The case was originally brought to the WTO’s attention by Brazil, the world’s 5th largest cotton exporter. It was seen as a victory for Brazil and other struggling nations who rely on cotton as a cash crop.
Carol Guthrie, spokeswoman for US Trade Representative Ron Kirk remarked that “While we remain disappointed with the outcome of this dispute, we are pleased that the arbitrators awarded Brazil far below the amount of countermeasures it asked for.”
In response to the legal defeats, the U.S. Congress has scrapped some export credits and in 2006 repealed the “Step-2″ cotton-marketing program that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton.
But last year it approved a new farm bill worth nearly $300 billion that left a
number of other contentious cotton programs intact.
“Few WTO disputes have been as difficult — or as politicized — as the fight over U.S. cotton subsidies,” says Brendan McGivern, a partner at White & Case law firm in Geneva who represented cotton-growing nations Benin and Chad in the case at no charge until 2004.
“The subsidies paid by the United States to its 25,000 cotton farmers exceed the entire gross national income of virtually every cotton-exporting country in West and Central Africa,” McGivern said. “Despite several rounds of litigation and ministerial-level negotiations, this issue remains unresolved.”
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In addition, Brazil’s government could target medical sector products as part of its $800 million retaliation against U.S. cotton subsidies granted in a World Trade Organization ruling, Brazilian Foreign Relations Minister Celso Amorim hinted Tuesday, according to the Estado news agency.
“We are going to choose the sectors that least effect us and most affect the U.S.,” he said.
Amorim said Brazil’s government would soon present a “little list” of U.S. goods, services, and patents that it believes should be subject to sanctions under the ruling.
For more on the ongoing retaliation story, visit the Wall Street Journal.
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