Read Oxfam's letter to President Bush (PDF)
Washington, DC — International agency Oxfam raised concern Monday that the US government has not taken any action to meet the July 1 deadline set by the World Trade Organization (WTO) to eliminate the trade-distorting cotton subsidies. Delay in eliminating these subsidies threatens to undermine the WTO system and could mean increased poverty for millions of struggling farmers in poor countries who depend on agriculture for their livelihood.
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>In a letter to President George Bush, Oxfam America President, Raymond C. Offenheiser, urged the Administration to work with Congress to ensure that the US complies fully with the WTO ruling. Oxfam is concerned that special-interest groups may try to encourage Congress and the Bush Administration to find technical loopholes, rather than offer a good-faith reform.
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>"Failure to comply with the WTO ruling would signal to the world that the US is unwilling to uphold its multilateral commitments," stated Offenheiser in the open letter. "It is imperative that the United States uphold and abide by the rules that we helped to create."
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>In September 2004, a WTO dispute panel found that $3.2 billion in annual cotton subsidies and $1.6 billion in export credits paid by the US in cotton and other commodities were illegal under WTO rules. The US has until July 1 to remove export subsidies and to lay out a plan to reduce trade-distorting cotton subsidies or face possible retaliation by Brazil, who brought the case against the USA. Oxfam asserted that only a total elimination of Step 2 and export credit guarantees will begin to ameliorate the unfair advantage that American cotton has over cotton produced in developing countries. Losses for poor African cotton-producers in Benin, Burkina Faso, Chad and Mali could top $1 billion over the next eight years if the US delays full subsidy reform.
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>"A proposal for compliance that does not eliminate Step 2 and other export subsidies will only sustain programs that have already been proven to be trade-distorting, very costly to taxpayers, and have failed to make US farmers more competitive or more sustainable," wrote Offenheiser. "Complying with the WTO ruling will not only remove an unfair trade distortion, but it will help tens of millions of farmers in many of the poorest countries, many of whom are struggling to survive on less than a dollar a day."
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>Failure on the part of the US to implement the WTO decision would also damage prospects for a new global trade deal on agriculture in the Doha Round and beyond, according to Offenheiser.
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>"We expect other countries to abide by the rules and uphold a fair, transparent, and rule-based trading system a system that continues to benefit the US," wrote Offenheiser. "But our failure to comply would send the wrong signal to developing countries that rich nations don’t have to follow the rules."
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