WTO arbitrators ruled in favour of Brazil last month, saying US cotton subsidies of $3 billion a year violated trade rules.
It was the first case to target domestic farm aid..
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That might increase pressure on wealthy economies such as the US, Japan and the EU to reduce the $97 billion they spend compensating farmers for low prices and which, in turn, depresses world commodity markets. .
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According to a statement issued in Brussels, Lamy told an EU-Africa forum in Paris that the cotton dispute was “another reason to find quickly an agreement in the current negotiations – this agreement must find a solution specific to cotton”. .
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Negotiators in Geneva are trying to draft the outline of a WTO agreement by the end of the month that would commit the body 147 members to slashing farm subsidies, ending agricultural compensation for exports and cutting tariffs on manufactured products ranging from cars to computers.
Without cotton aid US production would shrink by nearly 30 percent and world prices would jump by more than 12 percent, according to research done on behalf of the Brazilian government by Daniel Sumner, an economist at the University of California. .
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Lamy said rich nations, including the US, should scrap all subsidies that compensated farmers for higher domestic prices when they sold to the world market. .
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The EU was ready to drop import restrictions on cotton from the world poorest nations, such as Chad, Mali, Burkina Faso and Benin, he said. More than 10 million people in west Africa rely on the crop for their livelihood. .
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The WTO, in its initial dispute ruling, said US payments to its 35 000 cotton farmers were unfair because they exceeded caps agreed to a decade ago. Brazil government estimates that its farmers have lost more than $600 million in sales because of US cotton aid. .
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Source: Agencies.
Date:7/8/2004
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