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The WTO Dispute Settlement Body has adopted the report of the Appellate Body and the report of the compliance panel in relation to a dispute brought by Brazil against the US on its subsidies on upland cotton.
The Appellate Body recommended that the Dispute Settlement Body request the US to bring its measures -- found to be inconsistent with the Agreement on Agriculture and the Subsidies and Countervailing Measures Agreement -- into conformity with its obligations under those Agreements.
Apart from statements at the DSB relating to the adoption of the Panel and Appellate Body reports, Brazil, Australia and Canada also voiced their concerns over the US 2008 Farm Bill re-enacted by Congress last week, with continuation of the illegal cotton subsidy programmes, and more generally, continuing US trade-distorting agricultural subsidy and support policies.
Welcoming the adoption of the reports, Brazil said at the DSB that some of the conclusions of the Appellate Body are very important as they clarify the nature of the implementation obligations of Members with respect to subsidies that are found to cause adverse effects.
Brazil said, according to the Appellate Body, the option in Article 7.8 of removing the adverse effects instead of withdrawing the subsidy “cannot be read as allowing a Member to continue to cause adverse effects by maintaining the subsidies that were found to have resulted in adverse effects”.
All these findings go in the direction of safeguarding the effectiveness of the rules agreed by Members to discipline the use of subsidies. Brazil agreed with the Appellate Body that a different conclusion would have “serious implications for a complaining Member's ability to obtain relief against adverse effects of actionable subsidies”.
According to a report by the International Cotton Advisory Committee, “The 2008 Farm Bill introduces few modifications to the US cotton programme. The structure of subsidies will remain the same. Loan rates will be unchanged and the upland target price, currently 72.40 cents per pound, will be reduced to 71.25 cents per pound. In conclusion, the cotton programme introduced in the 2008 Farm Bill is little different from the cotton programme established by the 2002 Farm Bill. US farmers will face a similar set of policies between 2008/9 and 2012/13 as they faced between 2002/3 and 2007/8.”
On Thursday, the US Congress overrode for the second time a Presidential veto, and re-approved a $290 billion Farm Bill that becomes law.
The US expressed disappointment with the compliance panel and Appellate Body reports. It believed that it had brought the challenged payments and export credit guarantees into full compliance with the DSB's recommendations and rulings.
Canada welcomed the panel and Appellate Body findings that the US continues to violate the SCM Agreement through its marketing loan and counter-cyclical payments and its GSM 102 export credit guarantee programme.
Australia also expressed concern that the Farm Bill recently passed by the US Congress continues the cotton support programmes at issue in the dispute and reinstates certain elements of support programmes benefiting cotton production previously found to be WTO-inconsistent. (Source: Suns)
June 24, 2008
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