U.S. Will Comply with WTO Cotton Ruling

Changes will need to be made to Step 2 and export credit programs for cotton production. Compiled by staff

Published on: Apr 20, 2005

Although it is not determined exactly how the Administration will comply with a March ruling that identified two cotton programs as trade distorting, the Administration has said it will fully comply with the ruling, DTN reports.

The DTN report goes on to say that USDA Undersecretary J.B. Penn is working with the U.S. Trade Representative and USDA to look at several options to resolve the programs.

The Step 2 and export credit cotton programs must come into compliance by July 1, 2005. The March cotton ruling also found other commodity programs, such as marketing loans and direct payments as trade distorting. However, the time frame to adjust those programs should align with future farm bill crafting.

EU wants cotton singled out

Also this week the European Trade Commissioner Peter Mandelson says the EU has changed its policy concerning a comprehensive, all embracing deal in agriculture. In announcing the EU's abandonment of a single undertaking process, the Commissioner singled out cotton for a separate, sectoral agreement with a focus on early harvest. Speaking in Bamako, Mali, the Commissioner denied the EU contributed in any measure to the difficulties of West African cotton farmers while noting the intention of the EU to provide development assistance.

Senate Ag Committee Chairman Saxby Chambliss, R-Ga., says the statements raise doubts about whether the European Union is serious about the agriculture negotiations in the WTO.

"While the United States will comply with our obligations under the dispute settlement panel and promote real reform in the agriculture sector, I do not support separating cotton from the comprehensive negotiations currently underway," Chambliss says. "Mr. Mandelson’s time and effort could better help developing countries by ensuring negotiators in Geneva reach agreement on a methodology to cut tariffs."

Chambliss' statements reminded Madelson to "focus on the immediate task at hand" as negotiations are at a critical point and depend on developments in the upcoming weeks to stay on track for a deal by the end of the year.

National Cotton Council Chairman Woods Eastland expressed disappointment at posturing by the European Union (EU) concerning the Doha Round Negotiations.

"The EU Trade Commissioner's call for cotton's early harvest is divisive and holds the potential to send the Doha round into a chaotic free-for-all," Eastland says. "The widely accepted single undertaking approach avoids country-by-country sensitivities and limits the potential for brinksmanship in negotiations. Any move away from this approach will seriously damage whatever confidence the U.S. cotton industry currently has in the WTO system."