Group of 20 slams US farm bill as Brazil celebrates WTO win over cotton subsidy

Mumbai: Developing countries today condemned the new US farm bill that increases agricultural subsidies to US farmers as trade-distorting even as the World Trade Organisation rejected a US appeal against its earlier decision that found the US subsidies for cotton farmers had put Brazilian producers at a serious disadvantage.

The new US farm bill will be an obstacle to global trade talks aimed at lifting millions worldwide out of poverty, the group of 20 developing countries that includes India, Brazil, China, Mexico, Argentina and other emerging economies said.

The developing countries echoed criticism by WTO chief Pascal Lamy, who last week said the new US farm bill sent a bad signal to the world while talks on a new global trade deal were continuing.

"The new bill heads agriculture policies in the wrong direction at a decisive juncture of the WTO Doha Round," the group said.

The US Congress last month passed a bill that raises subsidies to US farmers and increase the number of food stamps that help the poor buy food as grocery prices rise.

The US farm bill that allows higher subsidy payments for certain commodities, contradicts the purpose of the world trade talks, the group of 20 said.

In a joint statement at the WTO the 20 countries said the trade talks should bring significant reductions in trade-distorting subsidies in developed countries to boost agricultural trade and promote development.

"The 2008 Farm Bill not only runs counter the long-term process of reform in agriculture," but also intensifies competition between rich nations and farmers in poor developing countries, it said.

"The unfair competition brought by subsidies hinders the process of market liberalisation by developed and developing countries alike," it said.

Brazil, meanwhile, is planning to demand pay-backs from the US after it won a case against the United States over cotton subsidies in the WTO.

The WTO on Monday rejected a US appeal against an earlier decision that found the United States had breached trade rules over its subsidies for cotton farmers, putting Brazilian producers at a serious disadvantage.

The ruling gives Brazil the right to demand sanctions, once it is examined by the WTO's Dispute Settlement Body.

Brazil estimates that US subsidies for cotton producers were worth $12 billion between 1999 and 2002, compared with the value of the cotton produced of $13.9 billion during the period - a subsidy level of some 89.5 per cent.