Brasília, June 21, 2004 (Agência Brasil) - The final decision, Friday (18), by the World Trade Organization (WTO) panel granting Brazil a victory on the question of American cotton subsidies will have no impact on future international agricultural market negotiations, according to the Ministry of Foreign Relations.

According to the Ministry's Coordinator-General in charge of Litigation, Minister Roberto Carvalho de Azevedo, what the WTO decision determines is that the United States must comply with the rules and obligations it has already assumed. "There ought not to be any link between already existing obligations and others that may be adopted during the WTO's Doha Round," Carvalho affirmed.

The Ministry clarifies that domestic subsidies are not prohibited, but they should not cause serious harm to other WTO member-countries. The Peace Clause was one of the points questioned by Brazil at the WTO panel. According to the Brazilian government, this provision was not used to protect poor countries. The Peace Clause stipulated that, even if subsidies existed and prices were lowered vis-à-vis the world market, no country could complain to the WTO if these subsidies were inferior to the levels defined in 1992. Currently, with the termination of the Peace Clause, countries can appeal to the WTO to have subsidies reduced.

Therefore, as in the case of cotton, the Brazilian government awaits a positive outcome from the WTO preliminary panel on sugar subsidies granted by the European Union to European producers. The panel on sugar will hold discussions at the end of July. The difference between sugar and cotton, according to the Brazilian government, is that sugar is essentially a commodity produced competitively by developed countries, while cotton is a basis of agricultural production in developing countries.

Reporter: Nádia Faggiana
Translator: David Silberstein