In a landmark decision, the WTO ruled against American cotton subsidies in a case brought by Brazil, officials from the two countries said on Friday.
The decision could eventually lead the US to reduce subsidies for its entire farm sector and encourage other countries to challenge such aid in wealthy nations, analysts said.
The WTO report, which was not made public, upheld a preliminary ruling in April that supported Brazil's claim that the more than US$3 billion in subsidies the US pays its cotton farmers distorts global prices and violates international trade rules.
"We are very satisfied with the panel's decision," Roberto Aze-vedo, who heads the trade disputes department at Brazil's foreign ministry, said in a phone interview from Brasilia.
"Once this is all over with, we expect the United States to comply with the ruling," he said.
In Washington, Bush administration officials criticized the decision, arguing that the best way to address distortions in world agriculture trade was through negotiations, not litigation. The officials also said the US would appeal, a process that could drag on for months, and possibly more than a year.
"We believe US farm programs were designed to be, and are, fully consistent with our WTO obligations," Richard Mills, a spokesman for the US trade representative, Robert Zoellick, said in a telephone interview.
"We will defend U.S. agricultural interests in every form we need to, and we have no intention of unilaterally disarming," he added, referring to the US$19 billion in annual subsidies paid out to American farmers.
The WTO ruling is not expected to be made public until late August. An arbitration panel will then decide what damages are due and to what extent Brazil can retaliate if the US does not comply with the ruling.
In its complaint, Brazil, the world's fifth-largest cotton producer, used data from the US Department of Agriculture to argue that the subsidies led to increased American cotton output, robbing Brazil of potential export markets and undermining the livelihoods of its farmers.
If Washington scrapped the subsidies, Brazil estimated, American cotton exports would fall 41 percent and production would drop 29 percent. That, in turn, would lead to a 12.6 percent increase in world cotton prices, helping struggling cotton farmers from Brazil to West Africa.
Brazil also claimed that the US was providing illegal export subsidies to American agribusiness companies, who were given US$1.7 billion to buy American cotton from 1999 to 2001, the period covered in the WTO challenge. The combined aid has helped make the US the world's top cotton exporter, with more than 40 percent of the world market.
As the first successful challenge of a wealthy nation's agricultural subsidies, the cotton case could help energize global trade talks, which have been stalled for more than a year over agriculture.
The decision also sets a precedent that could encourage more WTO complaints from other developing countries that feel unfairly punished by the US$300 billion in annual farm subsidies and supports paid to farmers in the world's richest nations.
"This has a value as a precedent that goes very far and broad," said Gary Hufbauer, a trade specialist at the Institute for International Economics in Washington.
"It opens the doors for countries who are affected by agricultural subsidies to challenge a lot of other subsidies: sugar, corn, almost any product.," he said.
Taiwan joined the case, along with Argentina, Australia, Benin, Canada, China, the European Community, India and several other countries as third parties.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source