The United States has lost a key trade battle on cotton subsidies and given poor nations a victory in their battle against rich nations' farm subsidies, Brazil said last night.
In a landmark decision, the World Trade Organization (WTO) ruled in favor of Brazil's complaint that US cotton subsidies distort world prices, violate global trade rules and price developing nations' goods out of markets, Brazil said.
The United States gave out nearly $4 billion in cotton payments in the 2001-2002 season for a crop valued at only $3 billion.
The ability of US farmers to sell cotton below cost price meant Brazilian farmers lost $600 million in sales during the 2001 marketing season alone, Brasilia argues.
Brazil's decision to take the issue to the WTO in February 2003 was the first challenge to the domestic farm policy of a rich country.
The WTO interim ruling could lead to an wave of challenges against US, European and Japanese farm subsidies. It could weaken their defence of farm aid in the current Doha Round of global free trade talks meant to wrap up this year.
The export dumping of US cotton raises poverty, unemployment and debt in cotton-dependent West African nations such as Benin, Mali and Togo, according to aid group Oxfam.
US trade officials said their subsidies were consistent with WTO rules and they would appeal the WTO decision if the final report was not changed.