U.S. Appeals WTO Compliance Ruling

The United States filed a notice to appeal a compliance panel finding that the country hasn't complied with the World Trade Organization's ruling regarding Brazil's complaint that support programs skew world cotton prices.

Published on: Feb 19, 2008

The United States has complied with the World Trade Organization's finding in the Brazil cotton case and the findings a compliance panel that ruled otherwise is wrong, according to a notice of appeal filed by the U.S. Trade Representative's Office.

"The appeal is from the report of a compliance panel that found that certain changes made by the United States to its cotton programs were insufficient to bring the challenged measures - certain support payments under the 2002 farm bill and export credit guarantees - into conformity with U.S. WTO obligations," said Gretchen Hamel, USTR spokeswoman.

In response to the original case the United States, among other things, dropped Step II payments.

"We are appealing because the changes made by the United States have brought its programs into full compliance with the WTO's recommendations and rulings in the original cotton case," Hamel said. "We were very disappointed with the compliance panel's findings."

Hamel explained that the appeal "challenges the erroneous findings on both U.S. support payments and export credit guarantees."

The USTR's appeal is bolstered by production numbers around the world, according to the National Cotton Council.

"It is difficult to understand how the United States could be deemed to be depressing world prices of cotton when world prices are rising, U.S. production is declining and expenditures under the cotton loan program have fallen to zero for 2007 and are expected to continue to be small or non-existent," NCC Chairman Larry McClendon said. "We appreciate the action of the Trade Representative's office and we look forward to working with them to reverse the compliance panel's ruling against U.S. cotton."

McClendon noted that as U.S. production has declined, production and exports from Brazil and India have increased to take its place in the world market and China's domestic production also has increased – benefiting from trade barriers that keep internal prices high.

"I have trouble with countries blaming the United States for depressing world market prices, while at the same time, they are expanding their production and exports," the Arkansas cotton ginner and producer said.

Though the United States will continue to fight such litigation, the hope is that other countries will work harder at negotiation, Hamel said.

"Given the opportunity presented in the Doha negotiations, we have emphasized all along the importance of delivering reform in agricultural trade through negotiations rather than litigation," Hamel said. "We therefore hope that WTO Members, including developing countries like Brazil, will see the benefit of working together to deliver real progress in the Doha negotiations."