Brazil Takes Formal Action on Cotton Case

Brazil formally asks for the WTO to establish a panel to determine whether the United States has compiled with the WTO's ruling.

Published on: Aug 21, 2006

Brazil Requests WTO Panel Determine Whether US Is Complying With Cotton Ruling

Decision may be a signal that Brazil has lost faith that the Doha round will move forward.

Brazil is seeking further litigation in the World Trade Organization cotton case, according to a report in Congress Daily.

In 2005, a panel found U.S. cotton subsidies caused serious damage to Brazilian cotton growers. The United States has repealed the Step 2 cotton program for domestic cotton users and exporters earlier this month to bring the United States into compliance. Congress Daily quotes a spokeswoman for Trade Representative Schwab explaining the United States "stopped operating two of the three challenged export credit guarantee programs and has overhauled the fee structure of the third to respond to a key finding by the WTO that the fees charged by the programs should be risk-based."

However, Brazil has requested the World Trade Organization establish a panel to determine if those changes do actually bring the United States into WTO regulation compliance.

Previously it was thought that negotiations were more effective than litigation. Brazil's latest move to pursue further litigation may indicate the growing agricultural superpower has given up on World Trade Organization talks, one U.S. trade lobbyist explains.

Congress Daily reports, "The WTO Dispute Settlement Body, which would make a decision about setting up the panel, next meets Sept. 1. The panel would have 90 days to make its decision, which would be subject to appeal. If Brazil wins, it would have the right to retaliate with punitive tariffs."