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WTO rules against U.S. on cotton subsidies

SAO PAULO (BRAZIL), APRIL 27. In a landmark decision against U.S. subsidies for cotton farmers, the World Trade Organization has sided with a complaint from Brazil claiming the payments unfairly boost U.S. production and exports while lowering world cotton prices.

Details of the decision issued yesterday were not made public, but top Brazilian trade officials said they were pleased with a long-awaited report by three WTO experts. U.S. trade officials plan an appeal if the report is not changed. Brazil, the world's fifth-largest cotton producer, says the U.S. has managed to keep its spot as the world's second-largest producer only because the government paid $12.47 billion in subsidies to farmers between August 1999 and July 2003. China is the world's top producer.

The ruling is the first time that a country has been challenged over its domestic agricultural subsidies, and the first case that looks at the effect of export subsidies on agricultural products.

And it is particularly important for Brazil, which has led Latin American efforts calling for the elimination of U.S. crop subsidies that make it difficult for poor farmers in the hemisphere to compete with their richer American counterparts.

If it stands, the decision could have far-reaching repercussions for American farmers. Tamping down subsidies for cotton would mean support for other U.S. crops could be vulnerable to trade challenges. — AP

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