WTO Ruling Rubs Cotton the Wrong Way

According to press reports, the WTO has largely ruled against the U.S. in a claim by Brazil against cotton subsidies.

The National Cotton Council said Friday that if press reports are true that the World Trade Organization has largely ruled against the U.S. in a claim by Brazil that Washington has failed to eliminate illegal subsidies to cotton growers, the finding would be "contrary to the facts in the world cotton market" and "unsupportable."

The Associated Press reported Friday that the WTO had largely ruled against the U.S. in an interim ruling that was handed out confidentially to the parties late Friday in Geneva, Switzerland. The office of the U.S. Trade Representative in Washington confirmed the ruling, AP says.

U.S. actions cutting back cotton subsidies brought cotton planted acreage down 28% in 2007 and exports down to 17 million bales, the lowest since 2002, the NCC says.

"It cannot be credibly argued that any payments under domestic support programs are causing any country serious prejudice in 2007 - the first year of their operation without the Step 2 program," the NCC says.

The NCC said it would be "surprised" by any finding in favor of Brazil when it is currently harvesting a cotton crop 38% larger than last year and "actually sold government cotton stocks during 2007 in an attempt to depress cotton prices."

The AP reports that a final verdict is expected in December.

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