From: wolda002@umn.edu
Date: Mon Aug 31 2009 - 23:39:18 EDT
Monday August 31, 2009 MYT 12:31:12 AM
WTO allows Brazil sanctions in US cotton row
By Jonathan Lynn
GENEVA (Reuters) - The World Trade Organization set conditions for how
Brazil can retaliate against the United States over its cotton subsidies on
Monday, but the two sides began another fight over what the sanctions were
worth.
Brazil said the ruling would entitle it to about $800 million in sanctions
against the United States this year, including $340 million of
"cross-retaliation" against intellectual property or services.
The United States said the sanctions would be worth about $300 million, and
that Brazil would be unlikely in the near future be able to retaliate
against intellectual property -- for instance, lifting patent protection on
pharmaceuticals, rather than simply raising tariffs on U.S. goods.
"While we remain disappointed with the outcome of this dispute, we are
pleased that the arbitrators awarded Brazil far below the amount of
countermeasures it asked for," U.S. trade spokeswoman Carol Guthrie said in
a statement.
POLITICIZED ISSUE
The complex WTO arbitration ruling brings to a climax one of the most
politicized disputes in WTO history, which goes to the heart of developing
countries' calls to reform world trade in agricultural goods.
Brazil is the plaintiff in this case, but U.S. subsidies have affected
cotton producers all over the world, especially in sub-Saharan Africa,
where the entire gross domestic product of most cotton exporters is smaller
than subsidies paid by the United States to its 25,000 cotton farmers.
The United States is also under pressure to cut cotton subsidies in the
WTO's Doha round on a new trade deal, on which key ministers are meeting in
Delhi this week.
U.S. cotton farmers complained the decision is outdated. Now, hurt by
recession and competition from China, India and even Brazil, U.S. cotton
production has shrunk 46 percent since 2005 and exports by 25 percent.
CONFLICTING INTERPRETATIONS
Brazil had sought $2.5 billion in annual retaliatory trade sanctions in the
dispute but the United States had said a figure of $20-30 million was
appropriate.
In one 132-page ruling, the WTO said Brazil was entitled to annual
retaliation of $147.3 million because of the impact of U.S. marketing loan
and counter-cyclical payments.
In a second 152-page ruling, the WTO said Brazil was entitled to
compensation for U.S. export credit guarantees, this compensation would be
$147.4 million for the fiscal year ended September 2006, and set by formula
for other years.
Cross-retaliation would be possible if compensation in a given year rose
above a certain level of imports of U.S. consumer goods, the WTO said.
The Obama administration will talk to Congress and industry stakeholders
about cotton subsidies in the light of the ruling, the U.S. Trade
Representative's office said.
(Additional reporting by Raymond Colitt in Brasilia, Roberta Rampton and
Doug Palmer in Washington)