Lílian de Macedo
Reporter - Agência Brasil

Brasília - Yesterday (3), the World Trade Organization (WTO) confirmed its decision ordering the government of the United States to stop subsidizing cotton growers, as requested by Brazil. The American government has until July 1, 2005, to eliminate cotton export subsidies, and the termination of domestic subsidies must take no longer than 16 months. The countdown begins on March 3.

The call for an end to subsidies was an initiative taken by the Brazilian government in October, 2004. For this reason the general coordinator of Litigation in the Ministry of Foreign Relations, Roberto Carvalho de Azevêdo, believes that the decision is a "reward for the cooperation between the government and cotton growers."

Brazil and the United States can now define a timetable for implementing the decision. However, if the US fails to comply with the deadlines, it will be liable to sanctions and fines, since the decision cannot be appealed.

The World Trade Organization's argument to justify ending the subsidies is that the American government's financial assistance to farmers is illegal, since it is greater than what WTO rules permit.

According to Azevêdo, the decision constitutes a victory for Brazil. "It consolidates the legitimacy of the Brazilian complaint to the organization. It represents an important step toward the liberalization of international agricultural trade and an end to the distortions introduced by international subsidies." He believes that, besides Brazil, African cotton producers will also be benefitted by the decision.

Soybeans, corn, and rice are also covered by the decision, but only in terms of loan guarantees. Azevêdo explains that the American government provides export incentives for these products to be sold at prices far inferior to those prevailing on the world market. The WTO also prohibited this practice.

Data from the Brazilian Association of Cotton Growers (Abapa) indicate that the United States spent approximately US$ 12.5 billion on cotton subsidies between 1999 and 2003. The subsidies caused Brazil to lose R$ 1.5 billion during this period.

Translation: David Silberstein