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'Them cotton pickin' days is
over'
By Emad Mekay
WASHINGTON - Upholding the contention of
developing countries led by Brazil and potentially
undermining American agriculture support programs,
the World Trade Organization on Thursday said
United States subsidies to its cotton farmers
violate global trade rules.
The case
aroused world interest as it was the first formal
challenge to the massive agricultural subsidies
handed out by rich nations to their farmers, a
practice that critics say destroys the
competitiveness of agricultural exports from the
developing world. The ruling will also put to the
test the George W Bush administration's commitment
to abide by the rules of the global trade arbiter
and its frequent urging that developing countries
do the same.
The WTO made an initial
ruling last September on a petition by Brazil that
challenged several types of US agricultural
support measures, including financial backing for
cotton farmers. Brazil alleged that subsidies paid
to US farmers growing cotton from 1999 to 2002,
and others mandated through 2007 in the latest US
farm bill, violate WTO rules. Argentina,
Australia, Benin, Canada, Chad, China, India, New
Zealand, Pakistan, Paraguay, Taiwan and Venezuela
joined Brazil in the case.
The WTO dispute
panel had found that US$3.2 billion in annual
cotton subsidies and $1.6 billion in export
credits paid by the US in cotton and other
commodities were illegal under WTO rules.
Washington appealed that decision in October.
Thursday's decision upholding the first ruling is
final, and the US has until July 1 to comply or
face possible trade sanctions by Brazil.
Washington reacted cautiously to the
ruling. "We will study the report carefully and
work closely with Congress and our farm community
on our next steps," said Richard Mills, spokesman
for the US Trade Representative (USTR) office.
"Getting the results that our farmers want is best
achieved through ambitious global agriculture
reform, through ongoing multilateral trade
negotiations which address market access, export
competition and domestic support, including for
cotton," he said.
Critics say that
subsidies unfairly boost US agricultural
production, flooding the world market with cheaper
goods and driving down prices. Washington counters
that the payments have only minimal effects and
denies that all US support payments, including
export credit guarantees for some agricultural
commodities, distort production and trade.
International development group Oxfam on
Thursday reiterated that eliminating cotton
subsidies is necessary to fulfill WTO obligations
and bring relief to the millions of struggling
farmers in poor countries. "The case against US
cotton dumping is overwhelming and now confirmed
yet again by the WTO," said Celine Charveriat,
spokeswoman for Oxfam's Make Trade Fair campaign.
"The debate is over. The US must now move quickly
to reform its programs and stop dumping cheap
cotton in world markets that undermines the
livelihoods of poor farmers in the developing
world," she said.
The group says it is
crucial that the US signal its readiness to reform
its farm subsidies within current WTO negotiations
to successfully negotiate a new global trade
agreement. In its Trade Policy Agenda submitted to
Congress on Tuesday, the US administration said
that concluding multilateral trade negotiations
will be a top priority for 2005. "If the US fails
to implement this WTO decision, the prospects for
a new global trade deal on agriculture will be
severely damaged," said Charveriat. "If recent
calls by the US to conclude the negotiation round
by the end of 2006 are to be taken seriously,
cotton subsidies need to be reformed before the
next WTO Ministerial in Hong Kong."
Earlier this year, another trade
think-tank, the Institute for Agriculture and
Trade Policy (IATP), issued a report on US dumping
that found that in 2003, the latest year for which
numbers are available, cotton was exported from
the US at 47% below its cost of production. "The
US must become aware that small developing
countries also have rights in the global trade
system, otherwise they risk a new wave of
resistance," said Soloba Mady Keita, president of
the cotton producers' association in Kita, Western
Mali.
Development groups estimate that US
dumping caused losses of almost $400 million
between 2001 and 2003 for poor African
cotton-producing countries, where more than 10
million people depend directly on the crop.
According to Oxfam, a typical small-scale West
African cotton producer makes less than $400 a
year on his crop. Two million cotton farmers in
Mali were recently pressured to accept a further
price drop of 25%, and many of them will now be
unable to cover their production costs.
Most US cotton subsidies benefit the
largest 10% of cotton producers. Loopholes in the
subsidy rules allow industrial-sized farms to
collect payments in excess of $1 million, while
smaller farmers in the US and abroad are driven
out of farming by low commodity prices and high
land costs. After the September ruling, many trade
experts said it could open a Pandora's box of WTO
challenges against several other US subsidies and
to similar programs in Europe and elsewhere.
"This case raises deep questions about the
entire US subsidy system," Charveriat said. "US
subsidies have distorted global markets, failed to
save small US farmers, and promoted environmental
damage. The US should see this ruling as an
opportunity for reform."
According to
recent media reports, Brazilian soybean growers
are considering pushing their government to bring
another WTO challenge of US subsidies to soybeans.
IATP says that soybeans were exported from the US
at an average price that was 10% below their cost
of production in 2003. As many as 43 developing
countries depend on a single commodity for more
than 20% of their total revenues from merchandise
exports. Most of these countries are in
sub-Saharan Africa or Latin America and the
Caribbean, and depend on exports of sugar, coffee,
cotton and bananas. Most suffer from widespread
poverty.
In February, the UN Food and
Agriculture Organization said in its annual report
titled "The state of agricultural commodity
markets 2004" that problems facing farmers in poor
nations are exacerbated by market distortions
arising from "tariffs and subsidies in developed
countries", among other factors.
(Inter
Press Service) |
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