Oxfam Reaction to Final WTO Cotton Panel Ruling

By rbaker

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Washington, DC?As the United States lost yet another appeal today at the World Trade Organization (WTO) in the dispute over cotton subsidies, Oxfam America president Raymond C. Offenheiser made the following statement:

"Just weeks after Congress passed a new Farm Bill we're seeing the negative impacts of our broken agricultural policies played out on the international stage. The WTO has confirmed that the billions of dollars the US pours into cotton subsidies distort trade and hurt developing country farmers. But Congress chose to ignore our international obligations and continued a broken and bloated farm policy, leaving other sectors of the US economy vulnerable to retaliation by Brazil.

"The Farm Bill passed by Congress has no effective payment caps to limit farm subsidies to large scale cotton producers. According to the Congressional Budget Office (CBO), cotton subsidies in 2007 totaled $2.5 billion ? $1.2 billion of which went to very trade-distorting counter-cyclical payments alone ? and cotton subsides are projected to continue for the duration of the recently passed Farm Bill.

"The WTO ruled in the Brazil cotton case that direct payments needed to be reclassified from Green Box (least trade distorting) to Amber Box (most trade distorting) because of planting flexibility restrictions, but no such reforms made it into the final Farm Bill. Most disturbing is the inclusion of a new domestic subsidy to US cotton buyers to the tune of $309 million for the duration of the Farm Bill, restoring a key element of the "step 2" program that was ruled illegal by the WTO in 2005.

"This ruling should serve as a wake up call to Members of Congress. Failing to make substantive changes in farm policy when the opportunity presented itself, Congress has sent the signal that the US will continue to ignore of our international trade obligations. The result is that our trade partners have few options but to litigate and retaliate."
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