Brasília - The Ministry of Foreign Relations reports that the Brazilian government is satisfied with the approval by the US Congress of a bill which eliminates the principal cotton subsidies that Brazil has complained about before dispute panels (known as "OSC" in Portuguese) at the World Trade Organization. The bill now goes to president Bush and, if he signs it, will go into effect in August.

The subsidies in question, known as "Step 2," are payments made directly to exporters and indirectly to US consumers of cotton goods to make up the difference between prices in the US (which are higher) and those on world markets. As a result of those payments, US cotton was more competitive on world markets.

In a note, the ministry says it will continue to monitor the cotton market and maintain contact with US authorities to ensure that all OSC decisions are complied with.

Translation: Allen Bennett