The World Trade Organization’s Dispute Settlement Body has removed the earlier ruling, and rejected the US final petition that allowed huge subsidies for domestic farmers. The panel found that the US has made serious breach on trade rules over its subsidies for cotton farmers, leaving Brazilian producers as well as some West African countries in dire straits. The Brazilian victory at the WTO means, they are well placed to demand authorities to take necessary action to impose trade sanctions on the US as a punitive measure. Last month, the US lawmakers superseded the veto of Mr. Bush by majority vote of a farm bill worth $290 billion that is largely scooped up to maintain the cotton payments for the next five years.
The chief of the foreign ministry’s economic department, Roberto Carvalho de Azevedo stated that Brazil would go ahead with the plans of seeking sanctions against the US and the government’s inter-ministerial external trade chamber has been assigned to work out on the amount which could be demanded for the same. Some Brazilian economists opined it would be preposterous to demand the likely amount of $4 billion on sanctions because the country still relies a lot on the US products and services. Initially, Brazil would be targeting the US patents and commercial services as a reprisal. Meantime, Brazil hopes that the US would modify the legislation to conform to the WTO ruling.
Azevedo said his government was very satisfied by the WTO’s decision on the multi-billion dollar dispute that had made losses to the tune of $3 billion a year to Brazil and some cotton producing nations in West Africa. He further added the decision has cemented the fact that the US subsidies have killed cotton producers in the process, and thereby, indulged in abusing international trade practices. Brazil estimates that the US subsidies for domestic cotton producers were about $12 billion between 1999 and 2002, and cotton produced during the same period in the US was just about $14 billion. This clearly suggests the subsidy was designed to position their cotton producers at an advantage.