WTO allows $295 million Brazilian sanctions against US cotton subsidies
01 Sep 2009
The World Trade Organisation (WTO) yesterday issued final rulings on a long-term Brazil-US cotton dispute, authorising Brazil to impose annual sanctions amounting to about $294.7 million against illegal US subsidies.
The US is the world's second-largest producer of cotton.
The ruling was based on US subsidies to cotton growers in 2006. It said the real amount of Brazilian sanctions should vary from year to year and have to be calculated according to a detailed formula set out by WTO arbitrators.
As per the ruling, Brazil can impose import restrictions on the US using a complex formula based on Brazilian imports of various categories of US goods.
US cotton subsidies were one of the most contested issues in the Doha round of world trade talks.
Producers in developing countries, especially in Africa, say the US subsidies squeeze their own farmers out of the market.
Brazil first initiated the cotton case at the WTO in September 2002, alleging that the US pays out billions of dollars to its cotton farmers each year in illegal subsidies.