U.S. shies from WTO cotton ruling

The United States will not unilaterally eliminate farm subsidies following a World Trade Organization decision that U.S. government payments to cotton farmers break international rules, Bush administration officials said yesterday.

“We will be defending U.S. agricultural interests in every form we need to, and have no intention of unilaterally taking steps to disarm when it comes to this,” White House spokesman Scott McClellan said yesterday.

The WTO on Monday issued a preliminary report that found U.S. cotton subsidies violate international agreements. Brazil complained that the payments boost U.S. production and depress world prices.

The report, not publicly released, is the first major attack on U.S. farm subsidies by a developing nation. U.S. farm groups worried that it could apply to other crops or open the door to new cases.

The United States pays farmers roughly $3 billion annually to grow and market cotton. Total U.S. subsidies for all crops reached almost $19 billion in fiscal 2003.

The administration yesterday said it hopes to negotiate a settlement that would defuse the WTO ruling.

“We’ve always believed that negotiations are the best way to resolve these issues. That is the direction we are encouraging others to take,” said Allen Johnson, chief agricultural negotiator at the U.S. Trade Representative’s Office.

U.S. trade negotiators have asked for other nations, such as Brazil, to open their markets to more U.S. farm products in return for lower subsidies. The United States also wants other nations to lower their farm supports.

WTO negotiations have repeatedly stalled on the issue, though officials are hopeful they can outline an agreement by June.

In the absence of a comprehensive deal, though, legislation signed into law in 2002 that set up a $180 billion, six-year farm program will not be changed.

“We believe that United States farm programs were designed to be and are fully consistent with our WTO obligations. And in any case, I would point out that there is no immediate impact on our farm programs,” Mr. McClellan said.

Mr. Johnson said the administration will appeal the WTO decision if the preliminary ruling becomes final. WTO panels can amend preliminary decisions, like the one released Monday, but rarely do.

Congress and farm groups were wary of the WTO decision.

House Agriculture Committee Chairman Robert W. Goodlatte, Virginia Republican, and Rep. Charles W. Stenholm, Texas Democrat, said they support an appeal but would prefer a broader settlement.

“Changes to countries’ agricultural policies should come through the give and take of negotiations, not through decisions that do not appear based on WTO rules,” they said.

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