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WTO Examines Brazil Complaint That It Lost US$ 4 Bi from US Cotton Subsidies

The World Trade Organization (WTO) is going to analyze whether the subsidies granted by the United States to cotton farmers have been cancelled.

A panel opened at the end of September answers to a request by Brazil, which states that the decision taken in 2005, when the Dispute Settlement Body judged that the financing was against many of the international organizations norms, has not been fully complied with. The organization stated that up to July last year the subsidy programs should have been suspended.

According to the Ministry of Foreign Relations of Brazil, the US government programs for guarantee of export credit and for the internal support has suffered few modifications.

On August 1st this year, the United States government eliminated the Step 2 program, which paid exporters higher prices than those charged on the foreign market, increasing the competitiveness of the North American product.

However, Brazil considered the elimination insufficient, as it is just one program amidst another six. In the period between 1999 and 2003, the United States paid US$ 12.5 billion in subsidies to farmers and managed to remain in the second place in global production of cotton, losing only to China.

On September 1st, in a Dispute Settlement Body meeting, Brazil made a complaint asking for a panel to evaluate Brazilian losses. In case the panel’s conclusion is favorable, the Organization will grant Brazil the right to elevate the set of import tariffs on North American products to the same value of Brazilian losses – estimated at US$ 4 billion.

The Ministry of Foreign Relations recalls that the North American subsidies affected not only Brazil, but also the African countries, as the mechanism causes price losses on the international markets.

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