Global Processing

WTO authorizes Brazil sanctions over U.S. cotton

December 7, 2009
The World Trade Organization has authorized Brazil to impose trade sanctions on the United States over its support for cotton, according to Reuters. The ruling comes as Brazil is trying to turn up the pressure in Washington over the illegal subsidies. Brazil is not yet ready to levy the sanctions. The formal move at the WTO''s dispute settlement body (DSB) brought Brazil one-step closer to retaliating against the United States, the world''s biggest cotton exporter, in the highly sensitive 9-year-old row. The reduction of rich countries'' cotton subsidies is seen by developing countries as the litmus test of efforts to reform the world trading system in the WTO''s Doha round, with African producers in particular demanding radical change. Brazil''s request to go ahead and impose sanctions, following an award by WTO arbitrators, responds to the U.S. failure to comply with earlier WTO rulings condemning the subsidies, which distort the world market for cotton, hurting farmers in poor countries. But U.S. WTO diplomat Juan Millan told the dispute body that Washington did intend to comply with the rulings and so Brazil would not need to levy the sanctions. He said imposing sanctions could hurt the economies of both the United States and Brazil. The arbitrators allowed Brazil, the second biggest cotton exporter, in some circumstances to "cross-retaliate" against goods other than cotton, or even in services or intellectual property such as patents on drugs. To exercise that authorization," he said in a statement.