- The Washington Times - Wednesday, September 8, 2004

Brazil won two victories yesterday against subsidies that rich countries pay to farmers, a potential setback for programs that have supported U.S. agriculture with as much as $32 billion in a single year.

The World Trade Organization in separate reports said that U.S. cotton and some European Union sugar subsidies violate international rules.

The Bush administration disputed the cotton ruling.

“We strongly disagree with some aspects of the panel report, which we will be appealing. The facts do not show that U.S. farm programs have distorted trade and caused low cotton prices,” said U.S. Trade Representative Robert B. Zoellick.

The 25-nation European Union said it may appeal the ruling on sugar.

The decision against U.S. cotton subsidies, worth about $3 billion for American farmers each year, mirrored results of a preliminary report leaked this summer.

Mr. Zoellick said the overall decision was a mixed verdict, with the United States successfully defending some payments and export credits included in U.S. farm legislation.

But cotton farmers were furious with the WTO ruling.

“Now that the report has been publicly released, we are even more convinced that neither the facts, the economics nor the agreements support the panel’s primary decisions,” said Woody Anderson, chairman of the National Cotton Council, a Memphis, Tenn.-based group that represents cotton farmers.

William Gillon, international trade counsel for the NCC, said the report required no immediate changes to the U.S. cotton program.

The appeal process normally drags out for months, leaving other programs safe as well.

“Right now as a result of this [WTO decision], I don’t think it means anything for other programs yet,” said Dave Salmon-sen, senior director of congressional relations for the American Farm Bureau.

Oxfam International, an anti-poverty group and free-trade skeptic, said the WTO decision would eventually require the United States to roll back its subsidies for cotton, and potentially other commodities.

“If the U.S.A. loses on appeal, it will be faced with a ruling that demands a deep reform of current subsidy programs,” Oxfam said in a report.

Agriculture subsidies paid by Europe, the United States, Japan and other wealthy countries have been the main stumbling block during WTO negotiations to lower trade barriers.

Brazil, India and other nations that pay little or nothing in subsidies have complained that the aid lowers world prices and hurts their farmers’ incomes.

The countries have repeatedly demanded that wealthy nations stop the payments, or at least change the way programs work.

The WTO’s 147 members last month agreed to end export subsidies and cut domestic farm payments by 20 percent.

Brazil said yesterday’s rulings would step up pressure on wealthy countries to make such concessions during negotiations.

“We didn’t bring these [cotton and sugar] cases to interfere with the WTO negotiations, but without them” the European Union and United States “would never change their policies,” Brazil’s ambassador to the WTO, Luiz Felipe de Seixas Correa, told Bloomberg news.

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