WTO Final Ruling Remains in Brazil's Favor

Congress will eventually have to re-evaluate all commodity and export programs that are deemed to be production, price or trade distorting. Compiled by staff

Published on: Mar 3, 2005

"It appears Congress will eventually have to re-examine all commodity and export programs that are deemed to be production, price or trade distorting," says the Senate Agriculture Committee ranking member after reviewing today's World Trade Organization (WTO) decision to uphold many aspects of the initial WTO panel's decision, which found U.S. cotton income and export programs in violation of international trade agreements.

Sen. Tom Harkin, D-Iowa, says the latest rule "failed to correct errors and misinterpretations contained the initial WTO panel's ruling" issued last summer.

The government of Brazil originally filed this case in September 2002, asserting that the U.S. cotton income support and export programs provide excessive subsidies to U.S. cotton producers, encourage overproduction and depress the world cotton market to the detriment of producers in Brazil and elsewhere.  The initial panel’s decision last summer supported Brazil's claims for the most part, prompting the appeal by the United States.

It is far more preferable to settle disputes over agriculture and export programs through WTO-wide negotiations rather than through litigation, Harkin says."This case will only raise the stakes in the current WTO round of negotiations."

A statement from Senate Agriculture Committee Chairman Saxby Chambliss, R-Ga., indicates that nothing in the ruling requires immediate action. Although Congress believes the Farm Bill and cotton programs meet WTO commitments he's willing to work closely with his "colleagues in the Congress and within the Administration to engage the issues raised in the appellate panel."

The bulk of the case centered on U.S. programs benefiting cotton, however all commodity are threatened by the decision. For instance, the panel ruling upheld the initial ruling that "production flexibility contract payments and direct payments are not green box measures that fully conform" to WTO obligations.

Harkin says the decision underscores the need to maintain and strengthen programs that are permitted under the WTO "Green Box," such as conservation and rural economic development programs.