MEMPHIS – The National Cotton Council agrees with today’s filing by the U.S. Trade Representative’s office of an appeal in the Brazil/U.S. World Trade Organization (WTO) case.
The WTO Panel that heard Brazil’s challenge of the U.S. cotton program ruled against the United States on many of Brazil's substantive points. The document, which became public in early September, found that the United States violated the Peace Clause; that the Step 2 program and the export credit guarantee program constitute prohibited subsidies; that direct payments do not qualify as “green box” payments; and that the presence of the domestic cotton program caused "serious prejudice" to Brazil’s cotton interests.
William Gillon, the National Cotton Council’s international trade counsel, said the NCC is hopeful that the Panel’s initial ruling will be substantially revised by the WTO appellate body. He said the appeal process will take several more months and even then, parties are given a reasonable amount of time in which to comply with any WTO rulings upheld on appeal.
NCC Chairman Woody Anderson reiterated the U.S. cotton industry’s disagreement with the Panel’s decision regarding the U.S. cotton program and expects no immediate changes to the U.S. cotton program.
Following the public release of the Panel’s decision last month, the NCC issued a statement saying the Panel's finding of serious prejudice seems contrary to 33 years of stability in the share of the world market held by United States cotton and, indeed, a loss of market share in 2002. The decision also runs counter to recent findings by an independent Texas Tech University study that showed estimated price impacts from the U.S. cotton program ranging from less than 1/2 of a percent to just more than two percent. That's about a quarter of a cent to 1.2 cents per pound.
Anderson said, “a more decoupled U.S. cotton program, a lower loan rate, a lower target price, a stable world market share, an unbiased economic study showing minimal price impacts and Brazil's own dramatic increase in cotton production all point to a U.S. cotton program that is not causing serious prejudice to Brazil, or any other country in the world.”