The International Food and Agricultural Trade Policy Council  (IPC) presents:

The Cotton Panel:
Implications for US agricultural policy and the WTO negotiations

On June 18, the WTO ruled that US cotton subsidies violate international trade laws.  The official decision is not yet public, but press reports have indicated that Brazil has won on most points of its argument.

At an IPC seminar in Brussels, Pedro de Camargo, IPC Member and the former Brazilian Secretary of Production and trade who launched the cotton case showed rising US cotton production and exports despite decreases in the price that farmers received.  He claimed this was made possible by US farm subsidies, allowing the US to increase its world market share of cotton to the detriment of Brazil and other cotton-producing countries.

Mark Lange, President of the National Cotton Council of America argued that the US believed it was abiding by its WTO commitments in drafting its farm legislation.  Former WTO negotiators from the US and Canada echoed Lange’s frustration with WTO panels that interpret the agreement in ways they did not intend when they negotiated it.

The WTO Agreement on Agriculture classifies subsidies according to their purpose – income or production support vs. export assistance – as well as the degree to which specific types of subsidies distort trade.  At an IPC seminar in Washington, Stanford University professor Timothy Josling, this divide between what negotiators believe they agreed to in the last round of negotiations and the way the panel has interpreted that agreement is “blurring the distinctions” set out in the agreement itself.   Josling was concerned that this blurring of distinctions could create a two-track system where the categories negotiators established in the Agreement are irrelevant for the purpose of litigation, but continue to play a central role in the negotiation of future trade agreements.

The Cotton Panel: Implications for US agricultural policy and the WTO negotiations .pdf file

                       May 17, 2004 - Agricultural Trade Negotiations: Politics and Prospects